EIA: It Is Difficult to Track Many Critical Minerals Supply/Demand and Markets

Written by Paul Wiseman for IIR News (Sugar Land, Texas)

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Summary

Many minerals deemed critical for the data center revolution and for the energy transition have no standard reporting mechanisms for supply, demand, reserves, or mining costs. This challenges forecasters and planners for producers and end users.

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Critical Minerals Market Information

Most days for most minerals, traders can check current market price fluctuations and make decisions on buying, selling, or mining. Oil, gas, gold, silver, and others go through trading hubs in New York, London, or elsewhere because the markets are large enough to be so established. And there are production figures, analysis of reserves, and other data critical to planning and forecasting.

But with the relatively new surge in demand for minerals related to the energy transition and the data center boom, those that previously were under the radar are increasing in value. But critical data for them can lag by a year or more due to delays in reporting systems. This creates challenges for traders and investors on both the supply side and the demand side, says the U.S. Energy Information Administration (EIA).

"The lack of transparency in both supply and demand data compounds throughout the supply chains of energy-relevant critical minerals, muting price discovery and complicating in-depth analysis and forecasting," says the EIA.

Supply-Side Issues

Here are some of the top issues the EIA sees for supply evaluations:

• Timely Data on Reserves and Production: Different from the aforementioned oil and gas reporting, critical minerals data can lag by a year or more. Small operations, remote locations in countries with limited or lax reporting requirements, and restriction of proprietary information are some of the causes.
• No Price Benchmarks: Unlike more-common operations, there aren't any for many lesser-produced critical minerals.
• Many Critical Minerals Are Byproducts: When a critical mineral is a byproduct of, say, oil and gas production (lithium, for example), how does one assess said byproduct's production costs? The first-tier mineral bore the extraction cost, regardless of any other associated content. Supplies often vary as well, as byproduct concentrations are not consistent. And reserve estimates usually focus on the main mineral, making it difficult to determine supplies of the byproduct for forecasting models.

Demand Side

These are some top issues regarding demand:

• Lack of Inventory and Consumption Data: It's hard to track demand for these minerals. The EIA says, "Buyers often purchase through bilateral contracts, such as offtake agreements, in part because of concentration in the market. Offtake agreements are typically confidential, obscuring details useful for price discovery." This is another factor that challenges the benchmarking of commodity prices.
• Quality Variation: Different applications require varying grades--and grades and concentration of supplies also vary. All of this challenges the setting of a standard price.
• Advancing Technology: As new chemistries and products are developed, it can create sudden new demand. This also creates challenges in forecasting and planning the sometimes years-long development of new sources for critical minerals.

Rapidly Changing Public Policy and Regulations

Changes in legislation, regulations, tax incentives, subsidies, public-private partnerships and more--these can influence supply and demand directly and indirectly. And they can vary widely from nation to nation.

For example, in the U.S., the One Big Beautiful Bill and President Donald Trump both added incentives for certain critical minerals. They also expanded the list of minerals considered critical.

And the December 12 nine-nation White House meeting designed to augment collaboration in investment (read the related news story here), production, trade, and utilization of critical minerals among non-Chinese nations could significantly affect markets.

On the other hand, backpedaling on climate goals by the Trump Administration--cancelling a number of offshore wind projects--and other nations, along with influencers such as Bill Gates, could dampen global demand and hurt profitability of in-process mining development.

Key Takeaways

• New mines and extraction systems can take years to develop, so lack of data on many minerals increases investment risk.
• Rapidly changing government support and regulatory environments further clouds demand forecasting.
• Technology for both processing and for end users is also in flux.

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