As more clean energy technologies such as solar photovoltaics and batteries are deployed around the globe, growth in the critical minerals markets has exploded, according to the International Energy Agency’s Critical Minerals Market Review 2023.

The record demand from the energy sector over the last five years has tripled the overall demand for lithium, led to a 70% jump in demand for cobalt and a 40% rise in demand for nickel, according to the July 2023 report. In 2022, the share of clean energy applications in total demand reached 56% for lithium, 40% for cobalt and 16% for nickel, up from 30% for lithium, 17% for cobalt and 6% for nickel five years ago.

As a result, the market size of key energy transition minerals has doubled over the past five years, reaching $320 billion in 2022—far surpassing the modest growth of bulk materials like zinc and lead. These materials are now “center stage” of the mining and metals industry.

“This brings new revenue opportunities for the industry, creates jobs for the society, and in some cases helps diversify coal-dependent economies,” according to the report. “The affordability and speed of energy transitions will be heavily influenced by the availability of critical mineral supplies.”

Many critical minerals experienced broad-based price increases in 2021 and early 2022, accompanied by strong volatility, particularly for lithium and nickel, according to the report. Most prices began to moderate in the latter half of 2022 and into 2023 but remain well above historical averages. Higher or volatile mineral prices during 2021 and 2022 highlighted the importance of material prices in the costs of transforming our energy systems.

“According to the IEA’s clean energy equipment price index, clean energy technology costs continued to decline until the end of 2020 due to technology innovation and economies of scale, but high material prices then reversed this decade-long trend,” the authors wrote. “Despite these recent setbacks, it is noteworthy that the prices of all clean energy technologies today are significantly lower than a decade ago.”

Countries are enacting laws and implementing policies to ensure adequate and sustainable mineral supplies, including the European Union’s Critical Raw Materials Act, the United States’ Inflation Reduction Act, Australia’s Critical Minerals Strategy and Canada’s Critical Minerals Strategy, among others. The IEA Critical Minerals Policy Tracker identified nearly 200 policies and regulations across the globe, with over 100 of these enacted in the past few years.

“Many of these interventions have implications for trade and investment, and some have included restrictions on import or export,” according to the report. “Among resource-rich countries, Indonesia, Namibia and Zimbabwe have introduced measures to ban the export of unprocessed mineral ore.”

Globally, export restrictions on critical raw materials have seen a fivefold increase since 2009, according to the report. Investment in critical minerals development recorded another sharp uptick by 30% in 2022, following a 20% increase in 2021.

“Our detailed analysis of the investment levels of 20 large mining companies with a significant presence in developing energy transition minerals shows a strong rise in capital expenditure on critical minerals, spurred by the robust momentum behind clean energy deployment,” the authors wrote.

The IEA asserts that three layers of supply-side challenges need to be addressed to ensure rapid and secure energy transitions: whether future supplies can keep up with the rapid pace of demand growth in climate-driven scenarios; whether those supplies can come from diversified sources; and whether those volumes can be supplied from clean and responsible sources.

“Limited progress has been made in terms of diversifying supply sources in recent years¾the situation has even worsened in some cases,” the authors wrote. “Compared with the situation three years ago, the share of the top three producers in 2022 either remains unchanged or has increased further, especially for nickel and cobalt. Our analysis of project pipelines indicates a somewhat improved picture for mining, but not for refining operations where today’s geographical concentration is greater.”

The majority of planned projects are developed in incumbent regions, with China holding half of planned lithium chemical plants and Indonesia representing nearly 90% of planned nickel refining facilities, according to the report.

“Many resource-holding nations are seeking positions further up the value chain while many consuming countries want to diversify their source of refined metal supplies,” the authors wrote. “However, the world has not yet successfully connected the dots to build diversified midstream supply chains.”

There has been “mixed progress” toward improving sustainable and responsible practices, according to the report. There is also “a question mark regarding the extent to which sustainability is being seriously considered by consumers.”

The IEA will host an international summit on critical minerals on Sept. 28, inviting various stakeholders to brainstorm measures “for collectively promoting a secure and sustainable supply of critical minerals.”

“A broad and bold strategy is needed that brings together investment, innovation, recycling, rigorous sustainability standards and well-designed safety nets,” according to the report.