--The green-energy transition could be delayed by lack of investment in critical metals supply, the IEA says

--Energy agency says demand for critical metals used in the green-energy transition needs to quadruple by 2040 to meet Paris climate agreement goals

--Concentrated supply of critical metals in certain countries threatens global energy security, the IEA says

By Will Horner

Global efforts to curb carbon emissions could suffer if mining companies and governments don't invest rapidly in ramping up production of the metals used in electric vehicles, wind turbines and solar panels, the International Energy Agency said Wednesday.

Demand for these metals--such as lithium for batteries and copper which is used in electricity networks--would need to quadruple by 2040 if the world is to meet the goals of the Paris climate agreement which seeks to keep global warming below 2 degrees Celsius, the IEA said. A more ambitious target of achieving net zero emissions by 2050 would require a supply six times larger than currently available.

The looming gap between rapidly rising demand for these metals and the slow pace at which mining companies can begin new supply projects threatens to make metals such as lithium, graphite or nickel, prohibitively expensive, which could slow down efforts to reduce carbon emissions, Fatih Birol, the IEA's executive director, said.

"This increase may be so strong that the world may not be able to respond to the demand and we may see a significant price increase which in turn could slow down the clean energy transition," Dr. Birol told The Wall Street Journal.

While many states are encouraging the transition away from fossil fuels by incentivizing things like electric vehicles or wind and solar power, little is being done to ensure a ready supply of metals and minerals that those technologies require, he said.

"Our main worry is that there is not adequate investment on the supply side to meet the demand," he said. "Policy makers are currently focusing almost exclusively on providing incentives for electric cars, windmills, hydrogen technology, which is good, but we have to see the other side of the coin," he said.

Prices for many metals tied to emerging green technologies have already seen significant price rises over the past year. Strong demand from China has met lingering supply disruptions caused by the coronavirus pandemic. Other metals, such as copper, have seen strong speculative involvement as investors have bet big on the energy transition by investing in the metals that will power it.

Copper prices traded on the London Metal Exchange rose above $10,000 a metric ton for the first time in a decade the week prior. Prices for lithium in China have jumped more than 100% so far this year, according to Benchmark Mineral Intelligence.

Supply of some critical metals is also heavily concentrated in a few countries, raising security concerns, the IEA said.

The Democratic Republic of Congo produces 70% of the world's cobalt, which is used to make batteries. China produces 60% of the world's rare-earth elements which are used in everything from smartphones to wind turbines.

The processing of critical metals is even more concentrated, with China accounting for over 80% of rare-earth processing, around 60% of lithium and cobalt processing, and 40% of copper processing, the IEA said.

The need for fresh supply and the long lead times of new mining projects, means miners need to immediately invest in new projects, the IEA said. Governments, meanwhile, should give investors confidence to invest in new mines by making clear that they are serious about the energy transition as well as scaling up recycling of critical metals.

However, mining companies and their investors have been scarred by past boom and bust cycles in metals prices, said Julian Kettle, senior vice president at consultancy Wood Mackenzie.

"Miners are not in growth mode, they are in dividend distribution mode," he said. "They have promised their investors they won't commit the sins of the past and engage in capital destruction."

Miners need to spend approaching $2 trillion over the next 15 years investing in new projects if the goals of the Paris climate agreement are to be met, Mr. Kettle estimates. In the last 15 years, capital expenditure has totaled $500 billion, he said.

Write to Will Horner at william.horner@wsj.com

(END) Dow Jones Newswires

05-05-21 0803ET