A few weeks ago, a surprising – and positive – news story took the world by storm: a mining company announced the discovery of a massive deposit of phosphate rock in Norway that could literally double the proven global reserves of the primary source of phosphate. The media wasn’t shy about extolling the importance of this story, proclaiming that it could meet global battery demand for the next century without disrupting the fertilizer market. The Norway discovery may be the environmental feel-good story of the year in certain circles, but it’s not time to break out the good champagne just yet. That’s because the path from discovery to market adoption is never a straight – or fast – one.
So why does this discovery matter? Phosphate is a key element in solar panels and lithium-iron-phosphate (LFP) batteries, making it critical for the green technologies in use today. It’s also a vital component of the fertilizers used to grow crops across the globe. There has been concern that as the demand for LFP batteries grows, battery companies and fertilizer companies will find themselves competing for existing supply, driving up prices of both products. So in theory, the discovery of more than 70 billion tonnes of new phosphate should make alternative energy more affordable and easy to produce. In addition, most of the world’s existing phosphate reserves are located in politically volatile countries that are not US or EU free trade partners. It’s no wonder that the European Commission described the discovery as “great news” for meeting the objectives of its raw material objectives.
Through that lens, the recent announcement out of Norway is a real game changer. But anyone who thinks that this news will magically transform the world overnight is mistaken. For starters, it’s likely to take at least a decade before the Norwegian phosphate rock enters the global supply chain in any meaningful way. According to mining consultancy MINEX, it takes an average of 12.7 years to go from discovery to development. And as it turns out, Norge Mining doesn’t anticipate even opening its mine for another five years. If you’re looking for instant supply chain relief, you’re not going to get it.
Another consideration is how the phosphate will be used. While the global alternative energy industry is dependent on this element, fertilizer companies buy at a far higher scale than solar panel and battery makers. The computer and semiconductor industries also rely on phosphate, pulling even harder on more demand – and increasing competition. So, while this discovery in Norway is exciting from a production standpoint, it doesn’t guarantee lower prices or preferred access for the clean energy industry.
So how should we feel about the recent announcement, and is the seemingly universal optimism warranted, or is this all just a mirage? The answer, as with most things in life, lies somewhere in the middle. The long-term benefits could be significant, but perhaps the biggest potential game-changer is the shift of control toward an EU nation with a commitment to “clean mining” practices that do far less environmental harm than traditional approaches to mineral extraction. And, of course, the promise of the global supply of phosphate doubling has massive potential for a variety of industries, including energy. But it’s going to be at least a decade before this discovery bears fruit, and companies need to function, at least in the short term, under current market conditions.