Global decarbonization goals have sparked a “materials transition.” A new report by management consulting firm McKinsey & Company explains the actions that will be required in materials supply chains to safeguard the speed of the transition. According to the report, with the decarbonization trajectory trending toward 2.4°C, the supply of many minerals and metals required in key lower-carbon technologies will face a shortage by 2030. While some materials, like nickel, may experience modest shortages of around 10 to 20 percent, others, such as dysprosium, used in most electric motors, could see up to 70 percent of demand. Unless actions are taken, these shortages will hinder the global speed of decarbonization as customers cannot shift to lower-carbon alternatives amidst price spikes and volatility across materials. The report recommends adopting harmonized supply, demand, innovation, and policy actions. Specifically, investments in mining, refining, and smelting should increase to around $3 trillion to $4 trillion by 2030, namely about $300 billion to $400 billion per year, suggests the report. Labor capacity should be increased by 300,000 to 600,000 specialized mining professionals, and an additional energy supply of 200 to 500 GW will also need to come online.
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