Lead: The first base metal without an energy transition tailwind

Copper, nickel, aluminium, tin, zinc can all point to electrification, renewable energy, or AI as structural demand drivers. Lead, however, is one of the few major industrial metals where the energy transition is a structural headwind rather than a tailwind. The shift to electrification is creating a multi-decade boom for copper, but it is gradually eroding lead's largest end market - lead-acid batteries, particularly those used for internal combustion engine (ICE) vehicles.

Commodity prices are often influenced by speculation and headlines in the short term. Over the long term however, demand determines not only price, but investments and innovation across an entire industry. Understanding where demand comes from is just as important as understanding how much demand exists.

Refined lead's main end use is in the battery market. Batteries comprise around 90% of all global refined lead consumption. Of that demand, a large majority goes into automotive batteries, with a significant minority used in industrial applications such as telecoms, energy storage, and stationary backup power. Other markets such as radiation shielding, ammunition, extruded products, and alloys account for most of the remaining 10%.

Up until the push for EVs, the lead industry was fairly insulated from demand hits. A typical lead-acid battery needs replacing every 3-6 years depending on how much a vehicle is driven. This is due to age, heat, cold, and repeated charge/discharge cycles. Lead-acid batteries have the advantage of being nearly 100% recyclable so the lead is reclaimed and put back to work in a replacement battery. Demand for refined lead was highly predictable, almost boring.

So what happens when the largest consumption point for an entire metal faces replacement by a new technology?

Currently, a typical ICE vehicle uses a 12V lead-acid starter battery that will weigh between 10-18kg. Of that, roughly 6-12kg is refined lead, depending on the battery size. Despite common perception, today's EVs still require lead. EVs use a smaller 12V lead-acid battery because they don't have to crank an engine. Typically it will weigh 7-12kg and contain around 4-8kg of lead. This represents a reduction of 20-50% in refined lead demand for that sector.

If that was the only risk to refined lead demand, it would still be a headwind but not necessarily disastrous. However, EV manufacturers are moving away from lead-acid batteries. Newer EVs are now using 12V lithium-ion (LiFePO₄ or similar) auxiliary batteries instead of lead-acid. These batteries are lower weight, longer lifespan (often 8-15 years), faster charging, and importantly, contain no lead at all.

So every ICE car that is replaced by an EV lowers lead demand by 20-50%. And every EV that replaces the lead-acid battery with a different technology, lowers demand for that original 6-12kg refined lead to zero. For that vehicle, the demand is permanently lost.

Now it's not immediate doom and gloom for the lead industry. As the developed world continues to make the switch to EVs, there are large parts of the developing world such as Africa, India, Southeast Asia and parts of Latin America where ICE vehicle use will remain, potentially even increase, partially offsetting the decreased lead demand from EVs. However, as EV costs continue to come down, this will only offer a temporary respite for global refined lead demand.

The most likely path is European demand declining first, followed by North America, rapid transitions in China, and developing markets supporting lead-acid battery demand for another 20-30 years. Rather than a cliff edge, lead demand is more likely to experience a prolonged plateau before entering a gradual decline.

Unfortunately for lead, it is not just automotive batteries facing competition. Many of lead's remaining end uses are also seeing viable alternatives emerge.

Uninterruptible Power Supply (UPS) battery systems - essentially emergency backup power - are increasingly using lithium. Telecom is also moving toward lithium. Radiation shielding can use tungsten or concrete depending on the application, although lead remains the lowest-cost solution in many installations. Even ammunition could gradually reduce over the long term through regulation.

Even AI, which requires huge amounts of back-up power, originally relied on large banks of lead-acid batteries because they are proven, cheap, safe, and highly recyclable. But even here, lithium-ion systems are steadily gaining market share because they occupy less space, require less maintenance, and have longer service lives.

Lead produced from mined concentrate (primary lead) is a very interesting part of the equation. At first glance, there would appear to be enough production from secondary sources to meet demand. However, some applications of lead require a higher purity than you can achieve by recycling lead. Typically recycled lead contains 99.97% lead, whereas primary lead is normally 99.99%. If impurities like antimony, bismuth, tin, tellurium, copper, and arsenic cannot be reduced sufficiently through conventional battery recycling, then an interesting paradox develops.

As automotive batteries disappear, less lead is consumed overall, less scrap becomes available, and recycled production declines. The remaining demand becomes increasingly concentrated in applications that can't use recycled lead.

Lead concentrate (mined material) itself is unlikely to become the bottleneck since a lot of concentrate is mined from combined zinc-lead deposits. However, primary smelters require increasingly high amounts of capital investment to keep up with environmental regulations, particularly in a commodity facing increasing environmental scrutiny. It is difficult to envisage investment in new primary lead smelting capacity. Much more likely is a quicker push to substitution from more efficient or readily available materials. Or we could see a much smaller market that periodically experiences supply shortages because no one wants to invest in new capacity.

Lead is unlikely to disappear any time soon, there will still be applications where its density, reliability, and cost make it difficult to replace. But unlike copper, aluminium, or even zinc, it is becoming increasingly difficult to identify where future growth comes from.

The challenge for the lead industry over the coming decades will not be a collapse in demand overnight, but adapting to a world where long-term structural growth becomes increasingly difficult to find. The question for producers is no longer simply whether lead has a future, it is whether that future will be large enough to justify continued investment in new mining, smelting, and recycling capacity.