Rise of the machines: How 1 billion humanoid robots by 2050 will drive a surge in critical minerals demand

There could be 1 billion humanoid robots coexisting with humans by 2050. This is an estimate by Morgan Stanley’s Global Research Team in a recently published blue paper on the future of AI and its impact on robotics, specifically in the area of what the research and broking firm calls “humanoids”.

Yep, that’s “billion”, not “million”. Consider that the United Nations predicts the Earth’s population will reach 9.7 billion by 2050 – so give or take, we’re talking 1 humanoid for every 10 flesh-and-blood people. Also consider, that pretty much every Hollywood movie tells us this level of AI-robot penetration is surely going to end in tears! Clearly then, the smart folk at Morgan Stanley either haven’t seen Terminator or iRobot, or they’re very optimistic!

We’re going to need a whole lot more critical minerals

Putting aside ethics and safety issues, more interesting for Aussie investors, is the fact that Morgan Stanley predicts producing so many humanoids is going to require a whole bunch of critical minerals. Ok, so what if we’re bowing down to our AI-overlords in 25 years when there’s a chance we could all get rich by buying critical minerals stocks in the meantime!?

Here’s a shopping list of critical minerals Morgan Stanley predicts will be required to produce just one humanoid (on average, approximately):

• 0.9kg NdPr (neodymium praseodymium, i.e., one of the main “rare earth” minerals)
• 2kg Lithium
• 6.5kg Copper
• 1.4kg Nickel
• 180g Cobalt
• 3kg Graphite

Now times that by a billion. Get the drift? Good, now add this on top of the growing demand of these future minerals from other future technology applications such as electric vehicles, energy storage, data centres, smart homes, smart appliances, and well, smart everything else – and it’s clear we’re going to need a whole lot more of these minerals than we can produce right now.

Just how much? About $800 billion of cumulative incremental demand by 2050, says Morgan Stanley, and this is what it says demand will look like in terms of percentage increases in production from current levels:

• NdPr: +40% by 2040; +110% by 2045; +167% by 2050
• Lithium: +20%
• Copper: +15%
• Nickel: +10%
• Cobalt: +5%
• Graphite: +5%

The thing that struck me the most about these values, is NdPr appears to have by far the greatest contemporary deficit, with lithium and copper still seemingly pretty decent, but then also perhaps seemingly fewer opportunities in nickel, cobalt, and graphite. But wait, there’s more!

Morgan Stanley goes on to model how much the above deficits represent of the total market for each mineral. This is where things change significantly, and the potential big winners among these critical minerals becomes most apparent.

• NdPr: Supply deficit of 13% by 2040; 26% by 2050
• Lithium: Supply deficit of 75% by 2040; 78% by 2050
• Copper: Supply deficit of 0.6% by 2040; 1.5% by 2050
• Nickel: Supply deficit of 17% by 2040; 25% by 2050
• Cobalt: Supply deficit of 16% by 2040; 34% by 2050
• Graphite: not modelled

Also, don’t forget these values represent Morgan Stanley’s modelling just for humanoid robots and don't include any modelling for potential deficits arising from other technologies.

The big, red elephant in the room

Rare earth minerals are typically used in the production of powerful permanent magnets that are used in future technologies such as EVs, wind turbines, and of course, humanoids/robotics. Generally, they’re not that "rare" within the Earth's crust, but they can be very expensive to mine and process, and there’s often substantial environmental issues arising from their production.

China is the major global force in rare earth minerals. It’s the best-endowed in terms of identified resources, and it’s also the biggest producer and consumer of them. According to the United States Geological Survey (USGS), there are approximately 90 million tonnes (Mt) of identified rare earth mineral reserves. Of these, around half are in China, with other major reserves in Brazil (23%), India (8%), and Australia (6%).

As for production of rare earth minerals via mining and refining, the balance tips substantially further in China’s favour. Morgan Stanley estimates that China produces 65% of the world's NdPr and refines around 88% of it. For the other minerals, the numbers are 27%/73% for lithium, 50%/50% for copper, 70%/70% for nickel, 55%/70% for cobalt, and 82%/93% for graphite.

The problem for the rest of the world is China has also done its modelling, and as a result, it's taking strategic steps to solidify its position as dominant producer and refiner of each one of these critical minerals. It’s also taking steps to ensure that as much of its critical minerals production stays within its boundaries.

“China has continued to tighten its grip on the rare earth and permanent magnet supply chain over the last 18 months”, notes Morgan Stanley, citing export controls on both rare earth minerals and permanent magnets, as well as the ban on the export of rare earth processing technology.

China’s moves to dominate the broader critical minerals supply chain remains “a key issue” for Western countries, says Morgan Stanley, who insists the world ex-China must commit to “build supply chains and support projects” in order to develop future technology industries. One major problem the broker identifies, however, is the fact that ex-China ESG standards may impede a great deal of the requisite progress.

Rare earth minerals price forecasts

As a result of their new modelling on humanoids, Morgan Stanley has increased their long term price forecast (i.e. to 2031) for NDPr to US$209/kg, up from their previous forecast of US$135/kg. Both values exclude value added tax (VAT). The current price for NdPr is US$56/kg, so Morgan Stanley is therefore predicting roughly a four-fold increase over the next 6-years.

• MS cites BHP’s copper exposure
• Rates OVERWEIGHT with a $39.50 price target (3% upside from current price)

Lynas Rare Earths (ASX: LYC)

• MS cites ILU’s exposure to zircon, rutile and synthetic rutile, plus its planned rare earth minerals refinery capabilities.
• Rates OVERWEIGHT with a $4.65 price target (20% upside from current price)

This article first appeared on Market Index on Tuesday 27 May, 2025.