JOHANNESBURG (miningweekly.com) – Structural macroeconomic and industry shifts will contribute to changing demand patterns for various commodities over the coming decades, says research firm BMI.
“We believe demand for commodities such as coal, iron-ore, steel and fertilisers will slow over the years to 2050, while demand for copper and tin will hold up,” it said in a statement on Friday.
Coal is expected to lose dominance over the years owing to tougher global environmental rhetoric and growth in affordable alternative energy sources.
“We expect the growth of coal use in electricity generation to slow past 2025 and reach a peak between 2030 and 2050. During this time, there will be a geographic shift of coal use from the West to the East, where it will peak.”
In developed markets, a stronger emphasis on environmental protection will see the decline in coal use, while attractive price competitiveness will ensure coal-fired power remains elevated in China and India, as well as in second-tier markets such as Indonesia, Vietnam, Pakistan and Egypt.
Meanwhile, BMI expects steel and iron-ore demand to slow over the coming years mainly owing to a more subdued economic growth outlook in China and a rise in efficiency in the steel sector that is likely to lead to lower consumption.
China will, however, remain the biggest driver of demand growth for iron-ore and steel in the decades to come.
Stricter environmental regulation and improved technology will also increase recycling and the use of steel substitutes, such as in the automotive industry which has seen rising use of aluminium and plastics in replacement of steel in the last 30 years.
Demand for copper is, however, expected to remain strong owing to ongoing investment in electricity infrastructure.
“China accounts for approximately 50% of copper consumption, and although we expect demand to slow in the coming years, consumption growth will be faster than that of pure construction metals like steel and iron-ore.
Demand for fertiliser, such as nitrogen, potash and phosphate, will continue to expand in the coming years, driven by agricultural growth, government subsidies and increasing farming revenues in developing markets.
“However, demand for these fertilisers will stagnate on a multidecade horizon, as we see a broad move towards smart farming, precision agriculture and the fight against land degradation, which will all limit the need for fertiliser use,” BMI noted.
Excessive application of fertilisers in both developed and developing markets and its negative impact on crop yields is well documented, and precision agriculture will allow this issue to be addressed.
LITHIUM AND COBALT
The battery revolution will support lithium and cobalt demand in the coming decades.
“We anticipate solid global lithium demand growth over the coming years, underpinned by the growing role of lithium-ion batteries in key markets such as the US, the European Union and China.”
BMI expects the lithium-ion battery storage market to see demand growth from various segments including portable electronics, residential and utility-scale electricity storage, and electric and hybrid vehicles.
The firm said it believes the ability of lithium-ion battery technology to perform a variety of battery storage tasks will be a key facet of why the technology will register strong investor interest over the coming decades.
A lithium-ion battery can charge and discharge power over long and short timeframes, has relatively high energy density and boasts good cycle-eﬃciency. The technology will enable developers to make inroads into an increasingly lucrative market that encompasses multiple sectors.