The risk of a bubble on commodity prices
There is a price for green house and car And it could be much higher than we imagine. The fast pace imposed by Brussels runs the risk of generating a bubble effect on commodity prices with devastating results for the pockets of families.
“Although forecasts vary quite quickly, all current scenarios agree that between now and 2050 the need for mineral resources will be very high. In some cases we are talking about 3,000 percent compared to the current one,” he explains Fiorenzo Fumantiresearcher of theIspra, Higher Institute for Environmental Protection and Research. With all the annexes and related prices of resources already scarce today.
A replica of what happened on the price of gas is expected
This time however, in addition to geopolitical pressures of Russia and Chinathere is also the big picture with the roadmap imposed by Brussels on the new green economy.
“We are moving to a development model that has replaced mineral resources for fossil energy sources. This is a fact” continues the expert. “All the electronics our world is based on is only possible through mineral resources in the various elements: from platinum to gold, from copper to tin. All the hyperconnectivity of today without sea cables and copper circuitry or without the tin needed for soldering” Fumanti points out.
Not just electric cars, therefore, but all of the digital and green economy. Including technologies to produce alternative energies to fossil ones. “An offshore wind turbine has permanent magnets made from neodymium – continues the expert – Each blade, depending on the type of technology, also employs 200 kg of neodymium. To get such an amount, you pull down a mountain. To get a gram you have to pull up a kg of material”. In other words, without mineral resources the entire current development model would stop.
The problem is that mining is non-existent in Europe
Thus, with Brussels’ targets on the green economy on the one hand and the shortage of raw materials on the other, the perfect storm is expected with the boom in the prices of commodieties. Prices which, moreover, have already begun their run for some time. According to reports from Anie, an association to which they belong 1,300 companies in the electrotechnical and electronic sector, in December 2020 a ton of copper for cables was worth around 6,500 euros. In February 2023 we were at 8600. In three years, the price has risen by about 30%.
And the prospect is of further increases linked to the new green economy. Suffice it to say that, according to reports from the ministry for the ecological transition, for the production of a traditional car takes about 25 kg of copper. For an electric car, on the other hand, it takes more than double that. Not to mention the fact that the clean car, in addition to ferrous materials and copper, also requires the use of lithium, magnesium, cobalt, nickel and chromium. Extremely rich in raw materials, the production of one megawatt of clean energy from offshore wind also requires 8,000 kg of copper, in addition to about 5,000 kg of cobalt.
This is why Brussels accelerates its plan for mineral resources
The next March 14, the Commission will present a draft law on critical raw materials to make us less dependent on China which has conquered much of Africa. As explained by the Vice-President of the European Commission, Maros Sefcovic, it is a text that “can turn into a turning point, sending a clear political signal” to help Europe cut “the excessive dependence on third countries, and in particular on China”. The provisions envisaged by the Union can “help to increase the EU’s sustainable extraction, processing and recycling capacities, and to streamline and accelerate authorization procedures for strategic projects”. And perhaps deflate part of the commodity price bubble.