Energy Transition & the Battery-Metals Supercycle: A New EV Order

📌 The Energy Transition & the Commodity Supercycle — A New Order in the EV & Battery Era

The 21st-century energy transition isn’t just an environmental policy. Using real cases and numbers, this piece explains how the battery-metal supercycle—lithium, nickel, cobalt—is reshaping global supply chains and investment strategies.

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Part I. The Massive Shift Triggered by the Energy Transition

1. Why an energy transition?

One of humanity’s greatest challenges in the 21st century is global warming and climate change. For roughly two centuries since the Industrial Revolution, we’ve powered economic growth by burning fossil fuels—coal, oil, and natural gas. But the resulting buildup of greenhouse gases, including carbon dioxide (CO₂), in the atmosphere has driven a rapid rise in average global temperatures.

According to the UN’s Intergovernmental Panel on Climate Change (IPCC), average global temperatures have already increased by about 1.1°C compared to pre-industrial levels. If the current trend continues, temperatures could climb by more than 2°C by the end of the century—raising the risk of coastal flooding, heat waves, droughts, and other extreme events.

That’s why the international community has set “Net Zero by 2050” as a shared goal. The International Energy Agency (IEA) says that to reach net zero by 2050, the share of renewables in global power generation must jump from roughly 30% today to nearly 90%. That’s not a modest tweak; it’s a structural overhaul of the entire energy industry.

In other words, solar and wind power, EVs, batteries, and hydrogen are moving to replace the coal- and oil-based systems of the past. The world has entered a sweeping paradigm shift known as the “energy transition.”

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2. From oil to lithium

In the 20th century, oil sat at the center of the global economy and geopolitics. Often called “black gold,” it powered cars, airplanes, fossil-fuel plants, and the plastics industry. The oil shocks of the 1970s shook the global order and proved that a disruption in a single resource can rattle the entire world economy.

In the 21st century, however, lithium, nickel, cobalt, and copper have emerged as new strategic resources. They are essential to EVs, energy-storage systems (ESS), and renewable-energy infrastructure.

If oil was the “lifeblood” of internal-combustion cars and power plants,

lithium and nickel are the “lifeblood” of EV batteries and renewable-energy storage.

For example, internal-combustion vehicles primarily rely on steel, aluminum, and plastics. EVs need those—and large amounts of lithium, nickel, cobalt, and copper on top.

A 2023 IMF report estimates that an EV requires about six times more mineral inputs than a conventional car.

Per vehicle, that’s roughly 8 kg of lithium, 35 kg of nickel, 14 kg of cobalt, and 70 kg of copper—and larger battery packs mean even more.

Building 1 MW of solar PV capacity uses about 4 tons of copper and 10 tons of aluminum, and wind turbines require rare-earth magnets and specialized alloys.

Bottom line: oil powered the 20th century’s strategic industries; battery metals and new-energy materials are poised to determine 21st-century economic and industrial leadership.

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3. A new resource map—and new tensions

This shift is remapping geopolitics and the global economy. Where Middle Eastern oil producers once dominated the energy map, countries rich in lithium, nickel, and cobalt now wield growing influence.

Lithium: Production is concentrated in Chile, Australia, and China.

Nickel: Indonesia is the dominant supplier.

Cobalt: The Democratic Republic of Congo (DRC) accounts for roughly 70% of global output.

Such concentration heightens the risk that supply disruptions or political tensions will trigger sharp price spikes. Expect “resource diplomacy”—and outright resource conflicts—to intensify.

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Takeaway: The energy transition isn’t just an eco movement; it’s a wholesale reshaping of the world’s resource geography and industrial structure. The oil era is fading. Lithium and nickel are rising as the new strategic assets.

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Part II. The Return of the Commodity Supercycle

1. Looking back — “Resources mirror their time”

Commodity markets aren’t just about price swings. When a resource climbs for an extended period, it often reflects deeper changes in industrial structures and global power balances—a pattern we call a commodity supercycle.

The 1970s oil shocks.

Supply controls by Middle Eastern producers upended the world economy. Oil went from about $3/bbl in 1973 to over $30 by 1979, a near 10× jump, fueling severe inflation and stagflation across advanced economies. Oil proved to be more than fuel—it was a political weapon.

China’s 2000s boom.

As the “world’s factory,” China’s double-digit growth vacuumed up steel, cement, copper, and oil.

Copper: ~$1,500/ton in 2003 → $10,000+ by 2011

Iron ore: $30s/ton → $200+

Oil: $20/bbl in 2000 → $140/bbl just before the 2008 crisis

This wasn’t just demand growth. The “China effect” reoriented global supply chains and turned raw materials into strategic geopolitical tools.

Conclusion: Past supercycles have emerged from structural industrial shifts combined with major relocations in the global growth engine.

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2. Today’s protagonists: battery metals

In the 2020s, battery metals have moved to center stage. Soaring EV adoption and a rapid build-out of renewables have elevated lithium, nickel, and cobalt to strategic status on par with oil.

Lithium

~$6,000/ton in 2020

~$80,000/ton at the 2022 peak — a 13× surge in just two years, as battery supply chains failed to keep pace with exploding EV demand. In 2022, Tesla CEO Elon Musk called lithium prices “insane” and even floated the idea of entering mining.

Nickel

In March 2022, the LME halted trading after nickel prices spiked ~250% in a single day. The catalyst: a massive short position by China’s Tsingshan Holding Group ran into a short squeeze—exposing just how speculative and fragile commodity markets can be.

Cobalt

A key stabilizer in EV batteries:

~$25,000/ton in 2016

~$90,000/ton in 2018

As automakers rushed into EVs, demand converged on DRC-sourced cobalt.

Pattern recognized: EV penetration ↑ → raw-material demand ↑ → prices spike. While there will be cyclical pullbacks, the structural uptrend supports the view that a new supercycle has begun.

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3. The politicization of supply — “Resources are weapons”

A hallmark of supercycles is the politicization of supply. When a few countries dominate output, resources become weaponized and spark international friction.

Lithium: Chile, Australia, and China control 80%+ of supply. Chile’s 2023 nationalization push rattled global supply chains.

Nickel: Indonesia supplies ~40%+ of global output and has banned ore exports while forcing local smelting—pulling foreign capital into on-shore processing.

Cobalt: The DRC produces ~70% of global supply but faces conflict, child-labor concerns, and political instability—an ESG minefield with few easy alternatives.

Concentrated supply turns commodities into national strategic assets. Layer on U.S.–China rivalry, nationalizations, and environmental rules, and price volatility is likely to remain elevated.

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Takeaway: If oil and iron ore led past supercycles, battery metals now wear the crown. With EVs and renewables on an unstoppable march, the long-term uptrend in lithium, nickel, and cobalt looks rooted in structural demand, not just speculative froth.

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Part III. Opportunities for Korean Companies & Investors

1. Korean champions on the move

For Korean companies, the energy transition and commodity supercycle can be more opportunity than cost. Korea is already a critical node in battery, materials, and clean-energy supply chains, and its leading firms are executing distinct strategies.

LG Energy Solution (LGES)

The world’s No. 2 battery maker is building giga-scale plants in Michigan and Arizona to qualify directly for U.S. IRA subsidies. Because U.S. EV tax credits (up to $7,500 per vehicle) hinge on local content, on-shore manufacturing is a survival mandate, not just expansion. LGES has JVs with GM, Hyundai, and Honda, securing stable demand.

Samsung SDI

Focused on high-performance cells, including high-nickel NCA chemistries (≥90% Ni), with expanding supply to BMW, Stellantis, and other premium European OEMs. Targeting commercialization of solid-state batteries after 2027 to stay on the leading edge.

POSCO Future M

Evolving from steel to a battery-materials powerhouse. Direct investments in Argentine brine secure raw lithium, while integrated cathode/anode production builds a vertical stack to dampen price risk and stabilize supply.

Ecopro Group

Units like Ecopro BM and Ecopro Materials are leaning into recycling (lithium/nickel recovery). The “urban mining” market—dismantling end-of-life batteries to reclaim metals—should expand rapidly, aligning with ESG priorities and positioning Korean players as preferred partners to global automakers.

HD Hyundai Energy Solutions

A solar-module producer leveraging the IRA to grow U.S. share. While Korean solar once lagged China on cost, Washington’s China-focused trade curbs are opening a window for Korean firms.

In short, Korean companies aren’t just manufacturing parts; they’re competing end-to-end across mining stakes, materials processing, finished products, and recycling.

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2. Investor checklist

(1) Price cycles

Commodities are volatile. Prices can slump on short-term demand dips or oversupply, even if the long-term EV/renewables trend remains a tailwind. Look through the noise and focus on the structural arc.

(2) Policy risk

The U.S. IRA, EU CRMA, and Korea’s Value-Up initiatives have direct earnings and pricing implications. The IRA is an opportunity but imposes local-production burdens; the EU’s CRMA encourages diversified sourcing—potentially creating new collaboration lanes for Korean firms.

(3) Technology shifts

Battery tech moves fast. Solid-state could alter lithium intensity per kWh; some argue it reduces lithium needs, but with EV volumes rising, aggregate lithium demand could still grow. The spread of LFP (lithium iron phosphate) can soften nickel/cobalt demand—so material exposure must be tuned to chemistry mix.

(4) Risk management

Single-country dependence is dangerous. A cobalt shortfall from the DRC can ripple across the entire chain. As ESG scrutiny tightens, environmentally damaging or labor-abusive supply routes face sanctions. Diversification and recycling capability are core competitive moats.

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Bottom line: Korean players are graduating from “component suppliers” to full-fledged actors in a global raw-materials contest. Investors should analyze not just charts, but policy regimes, technology roadmaps, and supply-chain topology.

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Part IV. Stories from the Raw-Materials Front

1. The 2022 nickel shock — +250% in a day

In March 2022, the London Metal Exchange (LME) witnessed a once-in-a-lifetime event: nickel surged ~250% in a single session, briefly topping $100,000/ton.

The spark was a massive short position by Tsingshan Holding Group, China’s largest nickel producer. A global short squeeze detonated, sending prices vertical. The LME halted trading and even canceled some transactions—damaging trust in the market and revealing how vulnerable commodities are to geopolitics and speculative flows.

2. Chile’s nationalization move — a shift in lithium power

In 2023, Chile—No. 2 in global lithium reserves—announced plans to nationalize its lithium industry, stunning the market.

Along with Argentina and Bolivia, Chile forms the “Lithium Triangle,” home to more than half of the world’s reserves. Policy shifts here inevitably rock the global battery supply chain.

After the announcement, Korean, U.S., and Japanese companies scrambled to explore new partnerships with Chile or to secure stakes in Argentina and Australia. Lithium isn’t just a commodity—it’s a strategic weapon.

3. Korea’s response — POSCO’s “mine-to-battery” play

Korean firms are moving aggressively to stabilize supply. A prime example is POSCO.

Once steel-centric, POSCO is transforming into a materials conglomerate, with lithium at its core.

Direct brine assets in Argentina

A vertical chain from extraction → refining → cathode/anode production → supply to cell makers

This isn’t merely buying feedstock; it’s about owning the value chain—“from mine to battery.” Korea’s industrial champions are no longer subcontractors; they’re emerging as strategic actors in the global resources arena.

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Conclusion — The energy transition is a resource war

This isn’t about nudging up the renewable share. It’s a high-stakes contest over resources and a race for industrial primacy.

Just as oil defined the 20th century,

lithium, nickel, and cobalt are becoming the 21st century’s geopolitical weapons.

For Korean investors, the focus shouldn’t be on short-term price spikes alone. Analyze policy shifts (IRA, CRMA), tech breakthroughs (solid-state, recycling), and supply-chain dependence (by country) from multiple angles.

The next decade may be less an industry race and more a wholesale reordering of global power around resources.

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Part V. The Global Resource War — A New Map of Power

1. United States — The IRA and allied supply chains

Washington treats the energy transition as an industrial-policy project to reclaim manufacturing leadership. The spear tip is the Inflation Reduction Act (IRA) of 2022.

What is the IRA?

A sweeping climate and industrial-investment law directing about $369 billion (₩500 trillion-plus) toward renewables, EVs, semiconductors, and clean industries. Despite its name, it functions as a massive subsidy package.

EV tax credits

Consumers can get up to $7,500 per vehicle—but only if the battery and critical minerals are sourced from North America or trusted partners. The aim is to reduce reliance on China and lock allies like Korea, Japan, and Europe into a U.S.-centric supply chain.

Mineral alliances

Because U.S. domestic reserves can’t meet lithium and nickel demand, Washington is deepening ties with Australia, Canada, India, and other resource-rich partners. It supports mine finance and long-term offtakes to head off any “Lithium OPEC.”

In short, America is using policy, subsidies, and alliance diplomacy to seize the next-gen raw-materials high ground.

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2. China — Weaponizing resources and scaling recycling

China is both the world’s largest EV market and its battery-materials processing hub.

Lithium refining: ~60% of global capacity

Cobalt refining: 70%+

Rare earths: ~37% of reserves; 60%+ of output

Many DRC cobalt mines operate under Chinese ownership stakes. Even without massive domestic ore deposits, China controls the midstream—refining and processing.

Beijing is also betting big on recycling. As EV and battery output rises, end-of-life battery volumes surge; China already has the technology and plants to lead “urban mining.” When primary raw-material prices spike, recycling becomes the second mine.

So while the U.S. pursues allied bloc-building via the IRA, China counters with a strategy of processing dominance, recycling scale, and equity stakes in upstream assets.

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3. European Union — Countering with the CRMA

The EU has limited resource endowments. It long relied on Russia for oil and gas and imports most of its lithium, nickel, and cobalt. To offset this structural weakness, Brussels is leaning on regulation and standards.

(1) What is the CRMA?

The Critical Raw Materials Act (CRMA), introduced in 2023, secures key inputs for Europe’s energy transition and digital economy. It designates 34 critical raw materials (including lithium, nickel, cobalt, rare earths, and manganese) and sets 2030 targets:

10% domestic extraction (up from ~3%)

40% processing within the EU

15% recycling share

The goal: build a domestic ecosystem from mining to processing to recycling and reduce reliance on any single country—especially China. Projects are advancing in Norway and Sweden, while Germany and France deepen mineral partnerships across Africa.

(2) What is CBAM?

The Carbon Border Adjustment Mechanism, phased in since 2023, imposes a carbon-equivalent cost on imports of emissions-intensive goods—leveling the playing field with EU producers subject to the ETS.

Scope: steel, aluminum, fertilizers, cement, electricity, hydrogen (initial list)

Purpose: prevent carbon leakage, spur global decarbonization, and shield EU industry

In practice, CBAM acts as a trade barrier via environmental standards, pressuring exporters with high carbon footprints (e.g., China, India, Russia) and letting the EU indirectly steer global supply chains.

(3) CRMA × CBAM = leverage

The CRMA builds internal supply capacity; CBAM exports EU standards. Together, they let a resource-poor Europe lead through rules and norms. If Brussels dictates “only CRMA-compliant inputs in batteries,” global suppliers must conform to EU-preferred mining and processing practices.

(4) Global spillovers

To avoid exclusion, China may expand EU partnerships. Korean and Japanese firms will harden ESG strategies to meet EU thresholds. African and Latin American resource holders gain leverage—and investment inflows—by aligning with EU rules.

Takeaway: The EU is turning a resource deficit into regulatory power, staking out an independent role in the resource contest.

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Summary:

CRMA = Europe’s resource-security play (diversify supply + build self-sufficiency)

CBAM = Europe’s environmental-trade lever (a de facto carbon tariff)

Together, they signal Europe’s bid to become a “regulatory and standards superpower” in raw materials.

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4. Emerging markets — Nationalization & stronger bargaining power

Traditional resource exporters are rewriting the rules to capture more value.

Chile: Announced lithium nationalization in 2023, jolting the industry and redirecting Korean, U.S., and Japanese capital toward Argentina and Australia.

Indonesia: The world’s No. 1 nickel source has banned ore exports since 2020 and mandates local smelting—drawing investments from Tesla, LG, CATL, and others.

DRC: Holds 70%+ of cobalt reserves but faces conflict, child labor concerns, and political risk—an ESG flashpoint.

Bolivia: No. 1 in lithium reserves but slowed by technology gaps and political instability.

These countries now use resources as diplomatic chips and aim to capture value-added through local processing and industrial policy.

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5. A multipolar map of resource power

The 21st-century resource struggle features four interlocking poles:

United States: Alliance-centric bloc-building (IRA)

China: Processing and recycling hub strategy

European Union: Rule-setting via regulation and ESG leadership

Emerging markets: Nationalization and enhanced bargaining power

This contest is about more than prices—it’s about supply-chain rewiring and a new industrial order. As oil once shaped geopolitics, battery metals—lithium, nickel, cobalt—are becoming both weapons and growth engines.

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📚 References & Further Reading

U.S. Congress, Inflation Reduction Act (IRA), 2022

European Commission, Critical Raw Materials Act (CRMA), 2023

International Energy Agency (IEA), Critical Minerals Market Review, 2023

World Bank, Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition, 2020

Financial Times, “Nickel trading suspended after price surges 250% in a day,” 2022

Reuters, “China dominates battery metals processing,” 2023

Financial Times, “Indonesia bans nickel ore exports,” 2020