Why energy transition minerals will see a period of low investment

As the first wave of investments in energy transition minerals such as lithium, nickel and copper is subsiding, a second wave is not on the horizon despite persistent high demand.

"We know that another wave of investment will come for lithium and nickel, but there will be five, six or seven difficult years for projects that aren't under construction," Patrick Barnes, a director of metals and mining consulting at Wood Mackenzie, told a sector event in Quito.

Participating online, Barnes said copper and gold could see a similar situation, so producers must take advantage of the current opportunity these minerals offer.

Barnes said the energy transition and geopolitical polarization that drive the West's efforts to secure critical minerals supply are the two major trends that are impacting the metals price cycle, but they also create a window of opportunity.

“These two trends are generating a lot of investment and international incentives for the development of supply and are a great opportunity for Ecuador, especially regarding copper,” Barnes said.

Considering the needs of offshore wind energy, electric vehicles, energy transmission and energy storage infrastructure, it is evident that demand will be high, he added.

He also said that US$700 billion will be needed in global copper investment before 2050, and that instability related to the energy transition also pushes up gold prices, creating another opportunity for Ecuador.

Barnes recommended Ecuador eliminate any discretion in mining processes to reduce risks and determine which are the biggest fiscal, legal and security obstacles in each local mining jurisdiction.

Ecuador's only two industrial-scale mines in production are the Fruta del Norte gold and the Mirador copper mine, but officials expect four or five additional ones to start production by 2034.