Metals scarcity could slow energy transition

While the movement to an electrified future is already picking up pace, it will be much slower than some of the optimistic projections in the market today, CPM Group founder and MD Jeffrey Christian told an industry audience at the Vancouver resource Investment Conference on May 17.

He took silver as a prime example, pointing out that hundreds of millions more silver ounces would need to be produced to keep up with the projected linear magnitude of the industry’s growth.

The impact of solar power growth on silver because of the green revolution is meaningful.

“Solar power has gone from virtually no silver use 25 years ago to about 120 million oz. a year now, and that’s going to continue to grow,” he said.

He said he has seen many “overly optimistic expectations” of how fast the green revolution can come.

Christian cites the International Energy Agency (IEA), projecting that by 2050 the primary source of energy for humankind will still be oil. The second-largest will be natural gas. “And all renewables combined will have supplanted coal only after 2040 to be the third-largest,” he told the conference.

“The IEA and everybody else who’s sober knows that those governments have not lived up to their Paris Accord commitments, and really have no ability to live up to those. It’s an idealistic scenario. It’s just not there now,” he said.

According to Christian, solar power will continue to grow exponentially. Even if the market successfully recycles significantly more silver from end-of-life panels, the world will need substantially more silver to cover the gap.

“Recycling will slow the growth rate of new silver required by the industry, but it won’t slow the growth rate of total silver used in the industry,” said Christian.

“While silver goes into EV electronics, there are other constraints to the green revolutions such as the world not having enough clean energy to power the vehicles with, the grids are not stable enough, there’s not enough lithium, high-purity nickel, verifiable cobalt and manganese, and there’s not enough capital for the smaller companies that actually make these components and mine the stuff.”

Jim Lewis, the co-founder of Wall Street Silver’s popular news site, provided some more context.

“The figure that Mr. Christian used of 120 million oz. silver used in solar today accounts for only 2% of our electric grid being powered by solar. Various governments worldwide are mandating 10% or even 20% coming from wind and solar soon,” he said.

“Let’s assume that silver solar power grows fivefold over some period of time. That means that solar power would be using half a billion ounces. And total demand is currently a billion ounces. This is sort of pie in the sky-type of stuff,” he said.