Goodbye OPEC, Hello OMEC. A Shift From Petroleum Power To Minerals Power
As OPEC fades OMEC might move into view, a shift that recognizes the replacement of petroleum and other fossil fuels with battery metals needed in the drive for cleaner energy.
Long a thorn in the side of leading western economies the Organization of Petroleum Exporting Countries (OPEC) has seen its grip on global energy loosened by the rise of critical energy metals such as lithium, copper, cobalt, nickel and graphite.
The importance of those metals, and a few others such as vanadium, prompted a senior partner with the accounting firm of KPMG to suggest that there was scope for an Organization of Mineral Exporting Countries (OMEC).
A key difference between OPEC and OMEC, according to Trevor Hart, is that there should be no attempt to form a price-rigging cartel like OPEC but a collaboration between countries with aggressive climate change targets and mining companies with access to critical minerals.
Hart is KPMG’s global head of mining, based in Australia as well as leading the audit practice of the firm in Western Australia.
His report is due to be published this week, according to the Australian Financial Review newspaper, which also outlined the salient points which support the case for OMEC.
Shifting Geopolitical Power
A key observation is that geopolitical power could change from oil-dominated countries to those that produce minerals used in the production and storage of renewable power.
“Access to these strategic resources will be politicized in the name of national security given the centrality of their use in broader economic development and technology innovation as well as energy transition,” he is reported to have said.
Examples of countries with major deposits of critical metals include Chile and Australia in lithium, Congo in cobalt, and Indonesia in nickel.
China is also a potential member of OMEC thanks to its dominance of rare earth and graphite as well as being the major refiner of those minerals.
Hart said he was not advocating the formation of a mineral producing and price fixing cartel like OPEC but said there was a need to recognize the start of a shift in energy globally.
The key factor in OMEC would be collaboration to ensure that countries which require critical minerals have sufficient access to supplies.
Hart said there was an under-appreciated risk to energy transition in that the supply of clean energy depended on mined natural resources which are: “steeped in geological, geopolitical and governance challenges”.
“The world’s attention has been focused on the cost of renewable technologies themselves and comparatively little attention has been paid to the supply chain that makes these technologies possible,” Hart said.
“The core issue is not necessarily one of quantity of the minerals because global known reserves are in fact sufficient to meet current projections of demand.
A National Security Issue
“A society keen to accelerate the energy transition must now prioritize working with the mining sector to help it deliver.”
Hart’s suggestion of a critical minerals organisation follows a suggestion last month from billionaire mining investor Robert Friedland that access to copper would increasingly be seen as a national security issue.
At the same time of Friedland’s warning Goldman Sachs, a leading investment bank, dubbed copper as the new oil, a tag borrowed from an earlier description of lithium as the white petroleum.
The constant reference to battery metals as replacements for fossil fuels has led inevitably to Hart’s proposal for an organisation such as OMEC.