Global markets for rare earth minerals and battery-grade lithium have become highly volatile in recent years. The rapid expansion of clean energy technology, particularly electric vehicles (EVs), has transformed the mining sector. Composite demand and derived demand provide much of the explanation for these market shifts.
One significant link stems from the growing transition away from fossil-fuelled vehicles. Lithium is not typically purchased directly by final consumers; instead, it is demanded as a vital input for lithium-ion batteries. In turn, these batteries are demanded by automotive manufacturers to produce electric vehicles. As consumer demand for electric vehicles surges, the demand for battery-grade lithium has grown exponentially, causing sharp fluctuations in global mineral prices.
Define the term 'derived demand' (Extract Y, paragraph 2).
