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Antoine CHACUN - Managing director – ODDO BHF Metals 

“In the next 30 years, we will have extracted as much [metals] as since the start of humanity!” – Philippe Varin in his report on Securing the Supply of Mineral Raw Materials.

At several decisive moments in our history, metallurgy has played a critical role in developing human civilizations, including during the Bronze Age (-3000/-1200 BC) and the Iron Age (-1200/-550 BC). However, its role has been somewhat overlooked since we entered the fossil fuel era, powered by coal in the 19th century and, even more so, by oil and gas in the 20th and 21st centuries.

In the coming decades we will face a radical transformation of the foundation of the global energy system, encompassing buildings, transport and many other areas, particularly in industry. This is a considerable challenge, as the world’s current primary energy mix is 80% based on fossil fuels – i.e., oil & gas and coal. 

This exit from fossil fuels can only  happen  with massive electrification. Electricity’s share in global primary energy consumption will have to increase from 20% to 53% by 2050.

Electrification is based on three main pillars:

• Electricity generation, most of which will have to be decarbonated (via renewables and partly nuclear)
• Densification of the electric grid, mainly to adapt to intermittent production. It will also be crucial to integrate greater means of electricity storage.
• Electrification of uses, particularly in the transport and industry sectors.

In each of these pillars, metallurgy will play a key role, and we are seeing a direct correlation between reduced consumption of fossil fuels and increased investment in metals.

The table below illustrates how critical aluminium and copper are in the energy transition and the development of new technologies: 

The necessary rapid adaptation of our economies raises questions on the EU policy that will allow it to maintain and expand its industrial competitiveness and ensure its sovereignty. Europe faces two giants: China, with its dominant state- and - highly subsidized industrial sector*, and the United States, which are ramping up their re-industrialization thanks to unparalleled energy costs and to subsidies of policies such as the Inflation Reduction Act (IRA).

ELECTRIFICATION RELIES MOST OF ALL ON METALLURGY

According to the International Energy Agency (IEA), global electricity generation will rise more than 2.5-fold under the “Net Zero Emission” scenario between 2022 and 2050, with far more rapid growth during this period (3,5% annually) than during the last decade (2.5%). This will require simultaneous and consistent policies in three areas:

1. Electricity generation

The IEA trajectory assumes annual additions of 630 gigawatts (GW) of photovoltaic (PV) solar power and of 390 GW of wind power by 2030 worldwide. These figures are almost four times the record levels set in 2020.

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Disclaimer

This document has been prepared by ODDO BHF for information purposes only. It does not create any obligations on the part of ODDO BHF. The opinions expressed in this document correspond to the market expectations of ODDO BHF at the time of publication. They may change according to market conditions and ODDO BHF cannot be held contractually responsible for them. Any references to single stocks have been included for illustrative purposes only. Before investing in any asset class, it is strongly recommended that potential investors make detailed enquiries about the risks to which these asset classes are exposed, in particular the risk of capital loss. 

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