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Biden Leads the build-out of an EV market critical minerals supply chain outside of China parade
Originally posted on Investorintel.com
By Matt Bohlsen
For the past decade it has been China that has massively supported its battery and EV industry resulting in China now being by far the leader in EV production globally; and quite frankly a threat of totally dominating the future global auto industry as it goes electric.
Now, finally, the tide is turning with the Western governments starting to make very significant moves to support the EV and energy storage sectors (including batteries & the electric grid) and its supply chain. Today’s article gives a summary of major western governments’ new policies to support the EV and energy storage supply chain so far in 2022.
USA
As announced last week the DoE awarded US$2.8 billion of grants to accelerate U.S. manufacturing of batteries for electric vehicles and the electric grid. As stated by Energy.Gov.:
“The 20 companies will receive a combined US$2.8 billion to build and expand commercial-scale facilities in 12 states to extract and process lithium, graphite and other battery materials, manufacture components, and demonstrate new approaches, including manufacturing components from recycled materials.”
A key component of the US$2.8 billion in grants is that they will be matched with US$9 billion in recipient funds. Furthermore, the 20 company’s projects are spread across the key areas of the battery supply chain with the key purpose to build a new U.S lithium-ion battery industry.
As shown below some of the winners were lithium companies Albemarle Corporation (NYSE: ALB) and Piedmont Lithium Inc. (Nasdaq: PLL | ASX: PLL), spherical graphite (soon to be a producer) company Syrah Resources Limited (ASX: SYR), nickel junior Talon Metals Corp. (TSX: TLO) and several others.
Location map showing the planned project locations of the DoE project grant recipients
Source: Energy.Gov DoE
Earlier in 2022, the U.S government announced funding in the Inflation Reduction Act of US$369 billion towards clean energy and climate change initiatives.
The Biden Administration is certainly leading the West in supporting the environment and building up a new clean energy industry with factories and jobs in the USA.
Canada
Canada has recognized that it is extremely well positioned to be a supplier of EV metals and components due to its inherent wealth of critical raw material resources. In the 2022 Canadian Budget the government allocated an additional “C$3.8 billion for critical minerals, including those that feed into clean technologies”. Clean Energy Canada stated:
“This new funding will help Canada realize its vision of building an “end-to-end” battery supply chain through which Canada can do it all, from sourcing the materials to building the parts, batteries, and clean cars.”
Specifically, the Canadian government will spend up to C$1.5 billion over seven years, starting in 2023-24, for infrastructure investments that would support the development of the critical minerals supply chain, with a focus on priority deposits. Many very promising Canadian projects, such as Frontier Lithium Inc.’s (TSXV: FL | OTCQX: LITOF) PAK Lithium Project, need roads to be built to help bring their projects to production. Canada has a plan to make this happen, albeit rather slowly.
Australia
The Australian government under Prime Minister Albanese has brought a new focus towards EVs and climate change. As announced last week the “support for critical minerals breakthroughs” policy is designed to accelerate the growth of the critical minerals sector. The announcement stated:
“The Strategy will complement other Government initiatives including the National Battery Strategy and the Electric Vehicle Strategy. The National Reconstruction Fund will include the $1 billion Value Adding in Resources Fund which will work alongside the $2 billion Critical Minerals Facility…….The Government will also allocate $50 million over three years to the Critical Minerals Development Program for competitive grants to support early and mid-stage critical minerals projects, building on the $50 million recently committed to six key projects across Australia.”
The winning “six key projects” are owned by Alpha HPA Limited (ASX: A4N), Cobalt Blue Holdings Limited (ASX: COB), EQ Resources Limited (ASX: EQR), Global Advanced Metals Pty Ltd, Lava Blue Ltd., and Mineral Commodities Ltd. (ASX: MRC).
Europe
Last month the European Commission announced a new policy proposal called the ‘European Critical Raw Materials Act’. The announcement emphasized Europe’s need to secure a safe and secure supply of critical minerals, notably lithium and rare earths. The announcement stated:
“Lithium and rare earths will soon be more important than oil and gas. Our demand for rare earths alone will increase fivefold by 2030. […] We must avoid becoming dependent again, as we did with oil and gas. […] We will identify strategic projects all along the supply chain, from extraction to refining, from processing to recycling. And we will build up strategic reserves where supply is at risk. This is why today I am announcing a European Critical Raw Materials Act.”
The European Critical Raw Materials Act is still being developed but it looks like it will follow along similar footsteps as the U.S Inflation Reduction Act, supporting and building local supply chains, but also relying on ally countries. The European Commission stated one objective as:
“To facilitate the roll-out of targeted raw materials projects in the EU, the Commission should be empowered to list Strategic Projects – which would be labelled as of European interest – based on proposals from Member States. These projects could benefit from streamlined procedures and better access to finance.”
An excerpt from the recent 2022 State of the European Union address discussing the need for Europe to source critical raw materials
Source: European Commission
Some possible winners might be rare earths processing company Neo Performance Materials Inc. (TSX: NEO) and European Metals Holdings Limited (ASX: EMH | AIM: EMH | OTCQX: EMHXY). The former owns the only commercial rare earth separations and rare metal processing plant in Europe and the later has a JV 49% ownership of the largest hard rock lithium project in Europe.
Closing remarks
The Western governments have woken up from a decade long slumber and are now finally moving to build key critical raw material, battery, and EV supply chains both locally and with ally countries. Project funding and permitting are key obstacles being addressed as they are the reason why much of USA and Europe have virtually no EV supply chain today.
As we approach COP 27 starting on November 6, the 2022 awakening of the Western governments should lead to one of the biggest investment themes this decade. That is, investing in quality companies that are likely to succeed in supplying the EV and energy storage supply chains as the Western world looks to gain independence from China.
InvestorIntel has been bringing attention to these companies for more than a decade and provides the ideal starting point to research and learn about promising critical raw materials companies. Stay tuned.
Analysis: Biden’s EV minerals cash fruitless without permitting reform
Originally Posted on Mining.com
By Ernest Scheyder; Editing by David Gregorio
US President Joe Biden. (Credit: Edward M. Kennedy Institute for the United States Senate )
Washington’s growing financial support for companies that produce metals used in electric vehicles will likely prove fruitless unless the federal government streamlines the mine permitting process, investors, executives and consultants told Reuters.
President Joe Biden last week doled out $2.8 billion to miners developing new US sources of lithium, nickel, copper and other EV minerals, as well as battery parts manufacturers and recyclers. Those grants followed August’s Inflation Reduction Act, which links EV tax credits to minerals extracted domestically or from 20 allies.
Both measures aim to spur domestic mining and push the country closer to Biden’s goal for half of all new US vehicles to be electric by 2030.
But it currently takes a decade or longer to obtain a US mining permit, an arduous process that frustrates miners who welcome the financial support but want more permitting transparency. Biden’s administration has also opposed permits for several proposed mines.
“The US government is saying ‘Go! Go! Go!,’ but the environmental review process is extremely cumbersome,” said Jerry Hicks at the Optica Rare Earths & Critical Materials ETF, which holds shares of Albemarle Corp, Freeport-McMoRan Inc and Glencore Plc.
“China has the infrastructure in place, and it’s going to take a long time for the US to get anywhere close.”
Related: US to support new mines that avoid ‘historical injustices’, Biden says
Senator Joe Manchin, a West Virginia Democrat, failed to push permitting reform through Congress last month, though he is expected to try again later this year.
“What I would like, if I could ask for something, is predictability,” said Arne Frandsen, chief executive of mining investment group Pallinghurst and a director at Talon Metals Corp, which received $114.8 million from Biden to partially fund a nickel processing plant in North Dakota that will supply Tesla Inc.
“It’s difficult to get capital to commit if you don’t know if you’ll get a permit in 12 months or five years.”
Some projects receiving government funding may have an easier path to permitting than others. Recycling plants, for example, are more akin to manufacturing operations than open-pit mines.
Privately-held Nth Cycle Inc is building a recycling plant in the US Midwest expected to be producing 5,000 tonnes of nickel annually by 2025. That is about when the only current US nickel mine prepares to close.
“People have a misconception about how quickly we can get mines up and running given the US permitting process,” said Megan O’Connor, Nth Cycle’s CEO.
Albemarle is betting that the $149.7 million grant it won last week will ease its path to obtain permits to reopen a mothballed North Carolina lithium mine.
“Hopefully, they’ll give us some help and fast track some of the permitting process,” said Kent Masters, Albemarle’s CEO.
Yet most proposed US mining projects would be new mines that face widespread pushback, several from Biden himself.
Lithium Americas Corp’s efforts to build the largest US lithium mine are mired in a court battle. Piedmont Lithium Inc, which received $141.7 million from Biden, faces opposition to its North Carolina mining project.
“What really needs to happen is not for permitting to be relaxed, but to be expedited to ensure we can build the mines that can supply the automakers,” said Jordan Roberts, a minerals analyst at consultancy Fastmarkets.
Permitting delays may paradoxically keep EV prices high by limiting the domestic supply of minerals needed to reduce battery prices, said Hicks of the Optica Rare Earths & Critical Materials ETF.
The yawning divide between America and China’s approaches to funding the EV supply chain is now a top concern for many policymakers and their advisers in the nation’s capital.
“Unless you can break ground on these sites, you’re not going to be able to take advantage of those funds,” said Abigail Wulf at SAFE, an energy-focused think tank.
Biden awards $2.8 billion to boost US minerals output for EV batteries
Originally posted on Mining.com
By : David Shepardson, Ernest Scheyder and Nandita Bose; Editing by Bernadette Baum, Matthew Lewis and Paul Simao
US president Joe Biden. Credit: Wikimedia Commons
The Biden administration said on Wednesday it is awarding $2.8 billion in grants to boost US production of electric vehicle batteries and the minerals used to build them, part of a bid to wean the country off supplies from China.
Albemarle Corp is among the 20 manufacturing and processing companies receiving US Energy Department grants to domestically mine lithium, graphite and nickel, build the first large-scale US lithium processing facility, construct facilities to build cathodes and other battery parts, and expand battery recycling.
The grants, which are going to projects across at least 12 states, mark the latest push by the Biden administration to help reduce the country’s dependence on China and other nations for the building blocks of the green energy revolution.
“As the world transitions from a fossil fuel to a clean energy powered economy, we cannot trade dependence on oil from autocrats like (Russian President Vladimir) Putin to dependence on critical minerals from China,” said a senior administration official briefing reporters on the program.
The funding recipients, first reported by Reuters, were chosen by a White House steering committee and coordinated by the Department of Energy with support from the Interior Department.
The funds are being doled out to a range of companies, some of which could self-fund projects and others that will see the grants as a financial lifeline to further expand their US plans. The funding, though, does nothing to alleviate permitting challenges faced by some in the mining industry.
Albemarle is set to receive $149.7 million to build a facility in North Carolina to lightly process rock containing lithium from a mine it is trying to reopen. That facility would then feed a separate plant somewhere in the US Southeast that the company said in June would produce as much lithium for EV batteries as the entire company produces today.
Albemarle, which also produces lithium in Australia and Chile, said the grant “increases the speed of lithium processing and reduces greenhouse gas emissions from long-distance transportation of raw minerals.”
Piedmont Lithium Inc is receiving $141.7 million to build its own lithium processing facility in Tennessee, where the company will initially process the metal sourced from Quebec and Ghana. Piedmont’s plans to build a lithium mine in North Carolina have faced strong opposition.
Shares of Piedmont rose 7.5% after Reuters broke the news of its funding award earlier on Wednesday. Piedmont did not immediately respond to a request for comment.
Talon Metals Corp will receive $114.8 million to build a processing plant in North Dakota in a strategy shift for the company, which has a nickel supply deal with Tesla Inc. Talon now aims to extract rock from its planned underground mine in Minnesota and ship it to a North Dakota processing facility that will be funded in part by the grant.
Talon said the grants are “a clear recognition that production of domestic nickel and other battery minerals is a national priority.”
Other grants include $316.2 million to privately-held Ascend Elements to build a battery parts plant, $50 million to privately-held Lilac Solutions Inc for a demonstration plant for so-called direct lithium extraction technologies, $75 million to privately-held Cirba Solutions to expand an Ohio battery recycling plant, and $219.8 million to Syrah Technologies LLC, a subsidiary of Syrah Resources Ltd, to expand a graphite processing plant in Louisiana.
Biden’s goal
By 2030, President Joe Biden wants 50% of all new vehicles sold in the United States to be electric or plug-in hybrid electric models along with 500,000 new EV charging stations. He has not endorsed the phasing-out of new gasoline-powered vehicle sales by 2030.
Legislation Biden signed in August sets new strict battery component and sourcing requirements for $7,500 consumer EV tax credits. A separate $1 trillion infrastructure law signed in November 2021 allocates $7 billion to ensure US manufacturers can access critical minerals and other necessary components to manufacture the batteries. The announcement on Wednesday was linked to that 2021 legislation.
The White House said in a fact sheet that the United States and allies do not produce enough of the critical minerals and materials used in EV batteries.
“China currently controls much of the critical mineral supply chain and the lack of mining, processing, and recycling capacity in the US could hinder electric vehicle development and adoption, leaving the US dependent on unreliable foreign supply chains,” the White House said.
In March, Biden invoked the Defense Production Act to support the production and processing of minerals and materials used for EV batteries.
The White House is also launching an effort, dubbed the American Battery Material Initiative, to strengthen critical mineral supply chains as automakers race to expand US electric vehicle and battery production.
Digging for green minerals a priority for the North, says federal minister
Originally posted on Cbc.ca
By : Liny Lamberink
Heavy machinery clears brush from where the Nechalacho mining project's pit will be, back in 2021. One of the federal government's priorities as it moves to a net-zero economy is to make it easier to step up critical mineral mines like this one, which extracts rare earths. (Liny Lamberink/CBC)
Speeding up the regulatory process for critical mineral mines in the North is a goal of the federal government, according to Canada's natural resources minister.
"Critical minerals are essential for us to be able to successfully execute an energy transition," said Jonathan Wilkinson. If Canada doesn't mine more critical minerals, he said, it can't make batteries for electric vehicles needed to reduce emissions from transportation.
Rare earths, for example, are a critical mineral said to be crucial in technology like computers, LED displays, wind turbines and electric vehicles. Canada's first rare earth operation is the Nechalacho mining project in the N.W.T.
Of the 31 minerals deemed critical by the federal government, 23 can be found in the N.W.T. and 25 are in the Yukon.
"We have to find ways to expedite [these projects] in a manner that's consistent with environmental sustainability," said Wilkinson. He also said getting such projects down to zero emissions or close to zero emissions is important, and suggested biomass, biofuels or synthetic fuels as an option for mines that can't connect to hydroelectric power.
But Kevin O'Reilly, the MLA for Frame Lake in the N.W.T., believes the federal government is suggesting to deregulate critical mineral mines. He said it's not environmental regulations that keep mines from opening.
"The evidence shows most of the delays, if there are any with projects, are because of proponents. It's not because the process takes too long. It's because proponents don't supply the right kinds of information, they don't answer questions in a timely fashion," he said.
O'Reilly said if the federal and territorial governments want to speed up the review process, it should settle outstanding Indigenous land claims of the Dehcho and Akaitcho regions.
Agreeing on priorities
Natural Resources Canada announced Thursday that the N.W.T. and Yukon had signed up to participate in its Regional Energy and Resource Tables, along with three more provinces.
The tables are meant to be conversations, set up by the federal government, to help figure out what common goals it has with territories and provinces for reducing emissions and building a net-zero economy. A spokesperson said Nunavut would be invited to participate in the next phase.
"This is not the federal government telling the territories what their priorities should be within this process. It's about sitting down and agreeing on what the priorities are and then advancing some of these particular projects," said Wilkinson.
He said discussions with the two territories will likely revolve around renewable energy projects, infrastructure adaptation and the mining industry.
In a statement to CBC News, Caroline Wawzonek, the N.W.T.'s minister of industry, tourism and investment, said a net-zero economy "may be a challenge for the N.W.T." and that because of its location, it's not ready for net-zero mining either.
"We are trucking, barging and flying energy-intensive diesel into our territory to live — let alone mine," she said. "Federal investments in roads and especially our hydro potential are needed to get us to the point where we can talk about [economic] opportunities."
Critical mineral Vanadium finds new interest in grid energy storage battery applications
Originally posted on Investorintel.com
By : Alastair Neill
Vanadium (V) is a critical mineral element named after the Scandinavian goddess of beauty and fertility Vanadis. It is the 20th most abundant element in the earth’s crust. Global production in 2020, according to Statista, was about 105,000 tonnes. China accounted for 70,000 tonnes or two-thirds of global production. Russia was next at just over 19,500 tonnes, followed by South Africa at 8,584, and Brazil at 7,582. India produced 100 tonnes and the USA 17 tonnes. Vanadium occurs in magnetite and in China and Russia it is produced from steel smelter slag. Other sources are bauxite, crude oil, coal and tar sands, or as a byproduct of uranium mining.
About 85% of all vanadium is used as an alloy for steel to improve its strength and wear resistance, particularly in tool steel where the amount of vanadium used ranges from 1% to 5%. A few years ago China passed requirements for rebar to use vanadium but the advent of COVID and the current malaise of the Chinese construction/real estate business has not seen the potential increase in demand that the industry widely expected. Vanadium is also used in titanium/aluminum alloys in jet engines and dental implants. Recently there has been renewed interest in the large potential capacity of the vanadium redox battery, also known as the vanadium flow battery (VFB), for grid energy storage. An advantage of vanadium flow batteries is they have no limit on energy capacity and long charge/discharge cycle lives of between 15,000-20,000 cycles making them useful for power plants and electrical grids. Also, Lithium vanadium oxide has been explored for a high-density anode.
Earlier this year the Ferrovanadium price in Europe was $62.8/kg but recently has fallen to about half at $31/kg. In late 2018 and early 2005 Ferrovanadium prices spiked over $120/kg but these were short lived peaks. It has short periods where producers can make significant profits.
There are two producers of vanadium outside China and Russia that are of particular interest. The first is Largo Inc. (TSX: LGO | NASDAQ: LGO), which listed on the Nasdaq last year. Largo is a Toronto based company with operations in Brazil from one of the world’s highest grade vanadium deposits. Largo reported revenues in Q2 of this year at $84.8 million, which was due to the spike in vanadium prices. Volume sold was 3,291 of V2O5 equivalents while production of V2O5 was 3,084 tonnes. Expected production for the full year is estimated at 11-12,000 tonnes of V2O5. Their cash operating cost is reported at $4.10-4.50/lb. V2O5 ($9.03-9.92/kg). Recent pricing inside China is shown to be $16.80/kg, so Largo is in a good position relative to the market. In addition, Largo is investigating diversification in 2022-23 in an ilmenite concentration plant with a nameplate of 150,000 TPY. This will feed a titanium oxide (TiO2) pigment at a rate of 30,000 TPY beginning in 2024. This is a very small operation compared to the size of the TiO2 industry, but this will diversify their product line and possibly soften the impact of the swings in vanadium pricing.
Another part of Largo’s business is Clean Energy Storage. They boast a “unique, vertically integrated business model” to “supply some of the world’s most advanced vanadium redox flow battery solutions for the integration of renewable energy.” By supplying their own vanadium Largo can lower the upfront cost to its customers. To that end Largo signed a non-binding MOU with Ansaldo Green Tech to negotiate the formation of a Joint Venture for making and deployment of Vanadium Redox Flow Batteries in the European, African and Middle East markets. In their latest press release Largo announced it had completed its qualifying transaction for Largo Physical Vanadium Corp. (TSXV: LPV). According to Largo’s President and CEO Paulo Misk, “this listing will allow investors direct exposure to vanadium.”
Another vanadium company is Bushveld Minerals Limited (LSE: BMN), a South African company, which owns 2 of the 4 world’s operating primary vanadium processing facilities. Last year they produced just under 3,600 metric tonnes of vanadium. Bushveld has announced they plan to grow production by 40-50% this year, and subject to funding and market conditions they would increase their output to 8,000 TPY.
It is also worth mentioning that Glencore International AG, one of the world’s largest global diversified natural resource companies, is also in the V2O5 market with production around 6,900 tonnes in 2021.
Vanadium is an interesting element, though the pricing swings make it challenging to plan budgets and investments, but the use in vanadium redox flow batteries has given a new growth market for the industry.
Canada will fast-track energy and mining projects important to allies: Freeland
Originally posted on Financialpost.com
By : Meghan Potkins
Deputy Prime Minister Chrystia Freeland speaking during a press conference at Bison Transport in Calgary. PHOTO BY GAVIN YOUNG/POSTMEDIA FILES
Canada will have to fast-track energy and mining projects if it is to help its democratic allies and achieve its own net-zero ambitions, Deputy Prime Minister Chrystia Freeland said in a speech this week in Washington — the most tangible signal to date that the federal Liberal government is prepared to address regulatory hurdles that have hampered economic development in this country for years.
In a swing through the U.S. capital to attend meetings of the IMF and World Bank, Freeland told a gathering at the Brookings Institution that a deepening of trade ties between allied democracies will be necessary to combat powerful autocratic regimes such as Russia and China. Democracies, Freeland said, must make a conscious effort to build supply chains through each other’s economies — a phenomenon U.S. Treasury Secretary Janet Yellen has described as “friendshoring.”
Freeland went on to say the Canadian government must be prepared to expend some “domestic political capital” in the name of economic security for its democratic partners — as Europe did during the COVID pandemic when European vaccine makers honoured their contracts with non-European allies.
“Canada must — and will — show similar generosity in fast-tracking, for example, the energy and mining projects our allies need to heat their homes and to manufacture electric vehicles,” Freeland said. “I cite these examples because, critically, friendshoring must be green. The curse of oil is real, and so is the dependence of many of the world’s democracies on the world’s petro-tyrants.”
Freeland’s pronouncement set off a shockwave in Canada, surprising some trade experts and drawing praise from energy and mining groups who have been pushing for more regulatory certainty to encourage investment in Canada’s natural resource sector.
History is shifting
CARLO DADE
“This could be really important,” said Carlo Dade, director of the trade and investment centre at the Canada West Foundation, noting that it would amount to a “sea change” if the shift is sustained and serious.
“This certainly seems to be an astute response to the moment — a realization that the moment has shifted, history is shifting,” Dade said. “The question is, though, will it be long term?”
Critics of the Canada’s current regulatory process have argued it has hampered investment in oil and gas, renewables, hydrogen, mining and emissions-reduction projects, stalling growth in production and preventing Canadian resources from reaching global markets. While improvements have been made to strengthen consultations with Indigenous people under the federal Impact Assessment Act — the changes have not yet translated to more regulatory certainty for investors.
“How many boards of directors are going to approve their CEO to go and spend billions of dollars on a project and a process and an application that is highly uncertain at the end of that?” said Adam Legge, president of the Business Council of Alberta, at a recent Alberta Securities Commission conference. “At the very end of it, after all the due diligence is done and checks have been done and studies have been done, it’s still a highly uncertain politicized decision.”
It’s not yet clear what steps the federal government is prepared to take to improve the process, though Freeland’s remarks have some precedent.
Natural Resources Minister Jonathan Wilkinson speaking to the Calgary Chamber of Commerce. PHOTO BY JIM WELLS/POSTMEDIA FILES
Natural Resources Minister Jonathan Wilkinson has said that the federal government hopes to align regulatory and permitting processes to “speed up” the rate at which projects are built through so-called Regional Energy and Resource Tables. The tables would bring together federal, provincial and Indigenous partners to identify and accelerate resource projects — though, critically, Alberta, Ontario and Quebec have not yet signed on to the process. So far, British Columbia, Manitoba, Newfoundland and Labrador, New Brunswick, Nova Scotia, Price Edward Island, the Northwest Territories and the Yukon have all agreed to join the regional tables initiative.
“It is certainly my hope that Alberta will be part of this process as soon as possible,” Wilkinson told a recent gathering of business leaders at the Calgary Chamber of Commerce.
Still, Canadian industry groups have welcomed the deputy prime minister’s recent comments, urging the government to use the tools at its disposal to move critical minerals and energy projects forward more quickly.
“There are definitely ways to improve the timeliness and efficiency of federal project reviews and we’re keen to see the government use the tools they have more effectively,” said Pierre Gratton, president of the Mining Association of Canada, citing the Ring of Fire project in northern Ontario, as well as nickel projects near Sudbury and copper projects in B.C. such as the joint Teck Resources-Newmont Corporation Galore Creek Mine as examples.
It is certainly my hope that Alberta will be part of this process as soon as possible
JONATHAN WILKINSON
However, the recent visit to Canada by German Chancellor Olaf Scholz and his departure from the country without an agreement on liquified natural gas (LNG) has exacerbated pessimism in the resource sector that the Liberal government will ultimately be willing to facilitate further fossil fuel production.
Freeland appeared to open the door to additional investment in LNG on Friday, calling it “an important transition fuel” that could keep the world from burning coal amid the current energy crunch.
“We will always be looking at economically viable LNG projects,” Freeland told reporters as the IMF meeting concluded on Friday.
Freeland also addressed calls for the federal government to create incentives to decarbonize on par with those in the U.S. Inflation Reduction Act — legislation that could prompt a surge in investment in emissions reduction and renewables south of the border over the next decade.
“It is something we are very, very focused on,” Freeland said Friday. “We need to act even more energetically and aggressively than we have hitherto…. We need to find ways to attract even more private capital.”
Those comments came after Canada’s largest oilsands companies announced earlier in the day that their ambitious plan to cut emissions by 22 million tonnes by 2030 will require a $24-billion investment in carbon capture and storage and other emission-reducing technologies — a sum that proponents say will require assurances from governments on the long-term price of carbon.
Canada’s ability to deploy renewables and low-emission fuels and technologies also face the prospect of being bogged down in the same regulatory processes that are hampering conventional energy production.
“It’s just too slow,” Legge said. “We have countries that we’re competing with in some of these more transition-oriented fuels like hydrogen, like rare earth minerals, in countries like Australia, who are doing a far better job, far faster job of approving these projects that are going to be essential to enabling these countries to compete in the low-to-zero emitting future.
“We’re going to miss that boat if we don’t begin to think more competitively, more nimbly.”
Autonomous driving boosts copper use in cars – report finds “minimal” substitution
Originally posted on Mining.com
New research commissioned by the International Copper Association (ICA) reveals demand for copper in the wire harness in the light-duty automotive industry is expected to grow to more than 1.7 million annual tonnes of copper by 2025, a 14% increase from today’s levels.
New technologies in battery electric and hybrid vehicles and autonomous driving systems are expected to add an annual 344,000 tonnes of demand over the next decade.
The shift to autonomous driving is expected to increase a vehicle’s copper content by around 2kg (4.5lb) as copper’s conductivity (second only to that of silver) makes it the ideal material for the high-speed data wires needed for cameras, short-range and long-range radar, lidar and sensors for advanced driver assistance systems.
The research, conducted by Martec Group, found that while some original equipment manufacturers and suppliers are testing aluminum in place of copper in the wire harness, the overall level of substitution will remain minimal.
Trends toward fuel economy regulation, weight reduction and miniaturisation are expected to drive demand for copper in favour of aluminum, which has roughly 60% of the conductivity of copper. Martec points out that aluminum bus bars are a threat to copper wire harnesses within the battery pack, “but still have plenty of downfalls compared to the reliability of copper.”
The contribution of EVs to overall demand will rise to 36% through 2032 while SUVs share of demand will average 1.1 million tonnes per year between 2022 and 2032, based on copper weight per unit and production forecast volumes.
Martec: Automotive Wire Harness Market Assessment 2022
Three reasons why vanadium redox flow battery technology has NOT hit the mainstream… yet
Originally posted on Stockhead.com
Pic: Getty Images
Vanadium redox flow batteries have shown plenty of promise over the past few years and delivered very little, however, big developments in China plus a perceived shortage of battery metals may be the spark this battery technology needs to lift off.
Stockhead took that question to vanadium expert David Gillam, the principal and CEO of financial consultancy Mastermines, who reckons while a lithium or Elon-Musk-style moment will come for vanadium redox flow batteries (VRFB) in the next two years, there are several reasons why this battery technology hasn’t taken off yet.
For a quick summary, vanadium redox flow batteries (VRFB) are used in large scale, battery storage systems that store excess power from the grid for use during peak demand periods.
Whether in combination with solar PV, biogas generators, wind power, or in parallel operation, the bulk storage capacity of these batteries allows consumption to be shifted completely to off-peak hours with cheaper electricity.
As the name suggests, VRFBs use vanadium-ions in the electrolyte solutions and are considered safer, more scalable, and longer lasting than their lithium counterparts with a lifespan of more than 20 years.
Other battery types like lithium-ion or leach-acid are subject to a charging cycle but VRFBs come with vanadium electrolyte storage tanks, which can be replenished even when the system is supplying power.
According to Gillam, investors are sitting back watching vanadium stocks wondering why market penetration has taken so long, but the situation is “very complex,” he says.
“Vanadium is quite unique as far as a battery metal goes and investors don’t really understand the basis of the problem.”
Vanadium cost drives up the cost of VRFBs
The initial investment for vanadium batteries is considerably more expensive compared to lithium, Gillam says, and while the price of lithium is increasing, VRFBs face a bigger issue.
Vanadium is an expensive metal and significantly drives up the cost of a VRFB system compared with other battery types.
If the uptake of VRFBs increases dramatically, so does the price of vanadium pentoxide (V205) – the material used in the electrolyte solutions.
“We believe anything under $10/lb is viable but let’s say there is a huge uptake in vanadium batteries – what happens when the price goes to $20?” Gillam asks.
“It has happened before, and it happens very quickly.
“You’ve got this very volatile price of the major component, so you can imagine battery companies would be worried about the cost because it could add 30% overnight to the batteries.
“At the same time, the financiers and miners would also be worried about the volatility of V205 – it’s great when it’s going up but what happens when a major starts up and there’s 10% additional capacity?” he explains.
The International Renewable Energy Agency (IRENA) reports installation costs for both vanadium redox flow and zinc bromine flow in 2016 ranged between US$315 and US$1680 per kWh as compared with lithium iron phosphate at US$200 to US$840 per kWh.
By 2030, IRENA says the installation cost for VRFBs is expected drop to between US$108 and US$576/kWh.
“Although they presently indicate high upfront investment costs compared to other technologies, these batteries often exceed 10,000 full cycles, enabling them to make up for the high initial cost through very high lifetime energy throughputs,” IRENA points out.
“Their long-term electrolyte stability, however, is key to this longevity and is the focus of an important avenue of research effort.”
Mine development
In 2019, China was the world’s top vanadium producing country with output totalling 40,000Mt followed by Russia at 18,000Mt and South Africa at 8,000Mt where major players include LSE listed Bushveld Minerals and Glencore.
China is also a large spot market, which makes everything more difficult for ASX vanadium stocks, Gillam says.
“While off-take agreements will not be difficult, getting the funding from China to move towards mining is another matter that would take considerable effort.
“All investors want to see is new mine development outside China, but the problems are many.”
Around 90% of vanadium production is used to strengthen steel, making it economically vulnerable owing to its sensitivity to market demand by developing countries.
As Geoscience Australia notes, the vanadium price surged from US$5.70 in 2004 to US$16.89 in 2005 due to the growth of global steel production that caused an increase in vanadium consumption and a commensurate depletion of stockpiles.
Over the years, Australia’s reserves and resources of vanadium have also fluctuated in response to the volatile nature of the vanadium market but of the few main contenders in the space, Gillam believes we are beginning to see real effort from management.
“Investors will need to be patient and hope for a massive uptake that forces a market development outside China that can attract finance,” he says.
Competition and market outlook
The question of whether flow batteries based on vanadium electrolyte are the main event is even more complex.
As it stands, China is leading the charge in the vanadium redox flow battery space where a hot bed of activity is taking place.
Last month, Shanghai Electric – a Chinese multinational power general and electrical equipment company – held the ‘Energy Integration, Smart Future’ Enterprise Summit where Yang Linlin, vice chairman of Shanghai Electric Energy Storage Technology Co revealed up to now, the company had 3GWh of orders for vanadium batteries.
In a LinkedIn post, Bushveld Energy CEO Mikhail Nikomarov said Shanghai Electric also announced the delivery of more than 50 vanadium battery energy storage projects and a cumulative installed capacity exceeding 50MWh.
But Gillam says we need to be cautious of wild claims by Chinese entities as there can be confusion between what they wish for and reality.
“That being said, there is no doubt we are seeing a substantial increase in real projects utilising vanadium in 2022 along with many new entrants.
“There is also competition emerging from iron flow batteries and we are watching how that plays out carefully,” he says.
“From conversations we know the Chinese are also watching but probably lack the technology so will continue to favour vanadium flow batteries within China in the short to medium term.
“We can see this competition emerging rapidly and just last month the start of construction for a $70M factory to produce ESS IFBs in Queensland – how serious that competition is, remains to be seen.”
There is also a distinct possibility that no single winner will emerge due to a dramatic uptake in demand.
“We may just need everything we can produce on a number of fronts – I don’t se this a mere market shift, rather as a new energy revolution that will drive markets for years to come,” Gillam adds.
“A combination of better scale and lower manufacturing costs for flow batteries as well as higher prices for lithium will push the market towards flow batteries and iron flow batteries, if they are successful, will be a real threat if they don’t have that high electrolyte cost and we all know how cheap iron ore is.”
ASX vanadium stocks to watch
AUSTRALIAN VANADIUM (ASX:AVL)
One of the biggest players on the ASX is AVL whose subsidiary, VSUN Energy, develops renewable energy storage solutions using VRFB technology.
At the end of 2021, AVL signed an an agreement with VSUN Energy for a project utilising a stand-alone power system (SPS) based on VRFB energy storage tech at its Nova Nickel Operation.
The VRFB will be initially free issued, with ownership or rental options after a period of 12 months.
AVL marketing manager Sam McGahan says this will be the first standalone power system in Australia using the vanadium flow battery.
“Over east there are a few vanadium flow batteries installed at different universities, all up I’d say there is around eight vanadium flow batteries in Australia,” she says.
“It is important to have the right solution for the right setting but with the huge demand for lithium in electric vehicles, the market is beginning to look at other materials for stationary storage.
“The world is going to need a lot of energy storage – pumped hydro, iron flow batteries, vanadium, lithium ion – the way we see it, there isn’t a winner and a loser.”
AVL is also developing the Australian Vanadium Project in WA’s Murchison project, where a bankable feasibility study (BFS) released in April confirmed the project as a potentially globally significant primary producer.
TECHNOLOGY METALS (ASX:TMT)
TMT’s subsidiary, vLYTE, was formed to add value to the high-quality feedstock from the Murchison Technology Metals Project (MTMP) in Western Australia – right next door to AVL – on downstream processing opportunities such as vanadium electrolyte production.
vLYTE is working with global battery manufacturers and renewable energy suppliers as it progresses its downstream processing strategy.
Recently, TMT revealed it will collaborate with the Government backed Future Battery Industries Cooperative Research Centre (FBICRC) to enhance the performance of vanadium redox flow batteries, with product from the Murchison project to be utilised as feedstock for vanadium electrolyte research.
Molybdenum – securing a domestic supply of the vital but underappreciated mineral
Originally posted on Investorintel.com
By : Alastair Neill
Element 42 on the periodic table is Molybdenum (Mo), commonly referred to in the industry as the easier to pronounce moly. Most of the world’s moly production comes as a byproduct from copper or tungsten mining. Most people know it as a lubricant. The main use of moly is in steel production as it gives weather and acid resistance in certain steel alloys, particularly stainless steel. This is an element largely overlooked as current production is in the range of 290,000-300,000 metric tonnes per year, which makes it a $10 billion annual business at its current pricing of $16/lb. Pricing earlier this year reached $20 per pound. Those are prices that have not been seen since 2008. Two years ago, the price was under $8 per pound.
According to the CPM Group, there are 76 mines globally that produce moly and 36 are inside China, with China producing over 40% of the world’s output. Between 70-80% of that output is from copper mines. In 2021 the world’s top 10 moly producing countries were:
Outside China, there are only two pure moly plays, and both of these are in Colorado and operated by Freeport-McMoRan (NYSE: FCX) subsidiary Climax Molybdenum. 90% of western-sourced moly comes from copper production. This means that the main driver for moly production is copper production, so output and pricing can be counterintuitive. An example of this was in 2020 when prices dropped 30% but production went up, while in 2021 prices climbed 96% but production went down.
According to a World Bank report on the impact of low carbon technologies (LCT) in 2018, 21 million tonnes of copper were produced compared to 0.3 million tonnes of moly, or about 1 tonne of moly per 7,000 tonnes of copper. Moly is used in wind turbines, with one megawatt of output requiring 130 kilograms of moly. A typical offshore turbine is 12MW, which requires 1.56 tonnes of molybdenum.
One of the issues facing the industry is Chile’s production. According to CPM, moly production in 2021 dropped 7.5% from 2020. The main drop was from Codelco, a state owned Chilean company, whose production declined 24%. A presentation by Codelco in 2019 indicated they needed new investment, otherwise production would fall by 74% by 2029. The Chilean government has asked Codelco to find $1 billion in annual savings and make a $8 billion cut in planned investments. This may delay investments. The Chilean government is talking about privatizing the mining industry and taking a royalty of up to 12%. These steps will likely give companies pause for thought on new investments. Based on this, the CPM Group is looking at a deficit position for moly over the next five years.
There is one potential new moly mine opportunity that is intriguing – Stuhini Exploration Ltd. (TSXV: STU) based in British Columbia. The CEO, David O’Brien, pulls a monthly salary of $2,000 which is different than a lot of junior mining companies. The share structure is very tight with 26.1 million shares issued and fully diluted at 28.3 million shares. Insiders hold 43% and Eric Sprott is a strategic investor.
Stuhini’s project is in Northwestern British Columbia and is called Ruby Creek. It has an option to earn 100% interest with a 1% NSR. There is a $22 million road built by a previous operator so there is access to the site. The mine was under construction by Adanac Molybdenum Corp. when it went bankrupt because of the 2008 financial crisis. This is a pure moly play, like the two mines in Colorado. A resource was released earlier this year with a measured and indicated resource of 433 million pounds. This gives an in situ value of $6 billion at current prices. Additionally, there are gold and silver indications on the property. Interestingly the market cap is $14 million while the previous operator had a market cap of $300 million.
It bears keeping an eye on this moly as low carbon technologies expand and what decisions Chile makes over the next few years. At present pricing, it can support new mines but there are few stand-alone opportunities. It is well worth keeping an eye on this market.
More than half of US car sales will be electric by 2030
Originally posted on Mining.com
By : Ira Boudway, with assistance from Kyle Stock
GM Ultium battery. Credit: General Motors
Just over half of passenger cars sold in the US will be electric vehicles by 2030, according to a report from BloombergNEF, thanks in part to consumer incentives included in the $374 billion in new climate spending enacted by President Joe Biden.
Those incentives, among them a point-of-sale tax credit of up to $7,500 for a new EV purchase, are likely to boost the pace of adoption, BloombergNEF analysts found in the report. Prior to passage of the Inflation Reduction Act (IRA) in August, projections for EV sales by 2030 2030 came in at 43% of the US market. With the climate-spending measure in place, that estimate was revised upwards to 52%.
The latest projection from BloombergNEF puts the US on track to hit a key target set by Biden last year, for half of all cars sold in the US to be battery-electric, plug-in hybrid or fuel cell-powered by the end of the decade.
In 2021, electric vehicles accounted for less than 5% of sales in the US, below the global rate of nearly 9% and well below the adoption rate in countries like China, where plug-ins currently account for roughly 24% of new car sales. Norway became the first country to see electric overtake combustion engine vehicle sales last year. Under the revised forecast from BloombergNEF, the US will surpass the global average in 2026 instead of 2028.
The three automakers with the most domestic battery production coming online in the near term—Tesla, GM, and Ford—are set to benefit most from the new law, according to the report. At the insistence of West Virginia Senator Joe Manchin, the IRA restricts the full $7,500 credit to vehicles assembled in North America, with additional phased-in thresholds for manufacturing batteries in North America.
In the new report, analysts noted that these requirements “will take time to adjust to,” particularly as automakers contend with critical minerals and battery rules. But those challenges are expected to lessen over time, a shift that could also bring more electric cars into an affordable price range.
“In the next year or so, there shouldn’t be too much of a difference [in sales],” said BloombergNEF electric car analyst Corey Cantor. “Later in the decade, we expect not only the EV tax credit but the battery production tax credit to drive a steeper decline in EV costs.”
A Great Copper Squeeze Is Coming for the Global Economy
Originally posted on bbnbloomberg.ca
An open pit copper mine near Calama, Chile. Photographer: Cristobal Olivares/Bloomberg , Bloomberg
The price of copper — used in everything from computer chips and toasters to power systems and air conditioners — has fallen by nearly a third since March. Investors are selling on fears that a global recession will stunt demand for a metal that's synonymous with growth and expansion.
You wouldn't know it from looking at the market today, but some of the largest miners and metals traders are warning that in just a couple of years' time, a massive shortfall will emerge for the world's most critical metal — one that could itself hold back global growth, stoke inflation by raising manufacturing costs and throw global climate goals off course. The recent downturn and the under-investment that ensues only threatens to make it worse.
“We'll look back at 2022 and think, ‘Oops,’” said John LaForge, head of real asset strategy at Wells Fargo. “The market is just reflecting the immediate concerns. But if you really thought about the future, you can see the world is clearly changing. It's going to be electrified, and it's going to need a lot of copper.”
Inventories tracked by trading exchanges are near historical lows. And the latest price volatility means that new mine output — already projected to start petering out in 2024 — could become even tighter in the near future. Just days ago, mining giant Newmont Corp. shelved plans for a $2 billion gold and copper project in Peru. Freeport-McMoRan Inc., the world's biggest publicly traded copper supplier, has warned that prices are now “insufficient” to support new investments.
Commodities experts have been warning of a potential copper crunch for months, if not years. And the latest market downturn stands to exacerbate future supply problems — by offering a false sense of security, choking off cash flow and chilling investments. It takes at least 10 years to develop a new mine and get it running, which means that the decisions producers are making today will help determine supplies for at least a decade.
“Significant investment in copper does require a good price, or at least a good perceived longer-term copper price,” Rio Tinto Group Chief Executive Officer Jakob Stausholm said in an interview this week in New York.
Why Is Copper Important?
Copper is essential to modern life. There’s about 65 pounds (30 kilograms) in the average car, and more than 400 pounds go into a single-family home.
The metal, considered the benchmark for conducting electricity, is also key to a greener world. While much of the attention has been focused on lithium — a key component in today’s batteries — the energy transition will be powered by a variety of raw materials, including nickel, cobalt and steel. When it comes to copper, millions of feet of copper wiring will be crucial to strengthening the world’s power grids, and tons upon tons will be needed to build wind and solar farms. Electric vehicles use more than twice as much copper as gasoline-powered cars, according to the Copper Alliance.
How Big Will the Shortage Get?
As the world goes electric, net-zero emission goals will double demand for the metal to 50 million metric tons annually by 2035, according to an industry-funded study from S&P Global. While that forecast is largely hypothetical given all that copper can't be consumed if it isn't available, other analyses also point to the potential for a surge. BloombergNEF estimates that demand will increase by more than 50% from 2022 to 2040.
Meanwhile, mine supply growth will peak by around 2024, with a dearth of new projects in the works and as existing sources dry up. That’s setting up a scenario where the world could see a historic deficit of as much as 10 million tons in 2035, according to the S&P Global research. Goldman Sachs Group Inc. estimates that miners need to spend about $150 billion in the next decade to solve an 8 million-ton deficit, according to a report published this month. BloombergNEF predicts that by 2040 the mined-output gap could reach 14 million tons, which would have to be filled by recycling metal.
To put in perspective just how massive that shortage would be, consider that in 2021 the global deficit came in at 441,000 tons, equivalent to less than 2% of demand for the refined metal, according to the International Copper Study Group. That was enough to send prices jumping about 25% that year. Current worst-case projections from S&P Global show that 2035’s shortfall will be equivalent to about 20% of consumption.
As for what that means for prices?
“It’s going to get extreme,” said Mike Jones, who has spent more than three decades in the metal industry and is now the CEO of Los Andes Copper, a mining exploration and development company.
Where Are Prices Heading?
Goldman Sachs forecasts that the benchmark London Metal Exchange price will almost double to an annual average of $15,000 a ton in 2025. On Wednesday, copper settled at $7,690 a ton on the LME.
“All the signs on supply are pointing to a fairly rocky road if producers don’t start building mines,” said Piotr Kulas, a senior base metals analysts at CRU Group, a research firm.
Of course, all those mega-demand forecasts are predicated on the idea that governments will keep pushing forward with the net-zero targets desperately needed to combat climate change. But the political landscape could change, and that would mean a very different scenario for metals use (and the planet).
And there’s also a common adage in commodity markets that could come into play: high prices are the cure for high prices. While copper has dropped from the March record, it’s still trading about 15% above its 10-year average. If prices keep climbing, that will eventually push clean-energy industries to engineer ways to reduce metals consumption or even seek alternatives, according to Ken Hoffman, the co-head of the EV battery materials research group at McKinsey & Co.
Scrap supply can help fill mine-production gaps, especially as prices rise, which will “drive more recycled metals to appear in the market,” said Sung Choi, an analyst at BloombergNEF. S&P Global points to the fact that as more copper is used in the energy transition, that will also open more “opportunities for recycling,” such as when EVs are scrapped. Recycled production will come to represent about 22% of the total refined copper market by 2035, up from about 16% in 2021, S&P Global estimates.
The current global economic malaise also underscores why the chief economist for BHP Group, the world’s biggest miner, just this month said copper has a “bumpy” path ahead because of demand concerns. Citigroup Inc. sees copper falling in the coming months on a recession, particularly driven by Europe. The bank has a forecast for $6,600 in the first quarter of 2023.
And the outlook for demand from China, the world’s biggest metals consumer, will also be a key driver.
If China’s property sector shrinks significantly, “that's structurally less copper demand,” said Timna Tanners, an analyst at Wolfe Research. “To me, that's just an important offset” to the consumption forecasts based on net-zero goals, she said.
But even a recession will only mean a “delay” for demand, and it won’t “significantly dent” the consumption projections going into 2040, according to a presentation from BloombergNEF dated Aug. 31. That’s because so much of future demand is being “legislated in,” through governments’ focus on green goals, which makes copper less dependent on the broader global economy than it used to be, said LaForge of Wells Fargo.
Plus, there’s little wiggle room on the supply side of the equation. The physical copper market is already so tight that despite the slump in futures prices, the premiums paid for immediately delivery of the metal have been moving higher.
What’s Holding Back Supplies?
Just take a look at what’s happening in Chile, the legendary mining nation that’s long been the world’s largest supplier of the metal. Revenue from copper exports is falling because of production struggles.
At mature mines, the quality of ore is deteriorating, meaning output either slips or more rock has to be processed to produce the same amount. And meanwhile the industry’s pipeline of committed projects is running dry. New deposits are getting trickier and pricier to both find and develop. In Peru and Chile, which together account for more than a third of global output, some mining investments have stalled, partly amid regulatory uncertainty as politicians seek a greater portion of profits to resolve economic inequalities.
Soaring inflation is also driving up the cost of production. That means the average incentive price, or the value needed to make mining attractive, is now roughly 30% higher than it was 2018 at about $9,000 a ton, according to Goldman Sachs.
Globally, supplies are already so tight that producers are trying to squeeze tiny nuggets out of junky waste rocks. In the US, companies are running into permitting roadblocks. While in the Congo, weak infrastructure is limiting growth potential for major deposits.
Read More: Biggest US Copper Mine Stalled Over Sacred Ground Dispute
And then there’s this great contradiction when it comes to copper: The metal is essential to a greener world, but digging it out of the earth can be a pretty dirty process. At a time when everyone from local communities to global supply chain managers are heightening their scrutiny of environmental and social issues, getting approvals for new projects is getting much harder.
The cyclical nature of commodity industries also means producers are facing pressure to keep their balance sheet strong and reward investors rather than aggressively embark on growth.
“The incentive to use cash flows for capital returns rather than for investment in new mines is a key factor leading to a shortage of the raw materials that the world needs to decarbonize,” analysts at Jefferies Group LLC said in a report this month.
Even if producers switch gears and suddenly start pouring money into new projects, the long lead time for mines means that the supply outlook is pretty much locked in for the next decade.
“The short-term situation is contributing to the stronger outlook longer term because it's having an impact on supply development,” Richard Adkerson, CEO of Freeport-McMoRan, said in an interview. And in the meantime, “the world is becoming more electrified everywhere you look,” he said, which inevitably brings “a new era of demand.”
©2022 Bloomberg L.P.
Investing abroad could be the solution to America’s clean energy future
Originally posted on Mining.com
By Bruno Venditti and Frik Els
Benchmark Mineral Intelligence Executive Editor Henry Sanderson (Image: Benchmark Minerals Intelligence)
Asked about how many cars Tesla will have made by August 2032—10 years from now—the company founder Elon Musk said: “I’d say 100 million is pretty doable.”
Reaching the 100 million mark by the end of the decade is also considered essential to reduce carbon emissions and achieve the Paris Agreement.
In total, 22 US states have set the goal to have 100% carbon-free electricity before 2050. A massive and rapid deployment of renewable energy is also central to Europe’s drive to end its dependency on Russian fossil fuels.
However, even as president Biden declared this week ‘Detroit is back’ and announced $900 million to build EV charging stations across America, the question remains how quickly the transition to renewable energy can be made.
In his latest book “Volt Rush: The Winners and Losers in the Race to Go Green,” Benchmark Mineral Intelligence Executive Editor Henry Sanderson discusses the global supply chain of materials and mining needed for the electric push.
Sanderson elaborates in an interview with MINING.COM:
MINING.COM: Is it feasible for us to transition to clean energy over the next decades?
We have to. You look at the extreme weather, this year was the hottest in Europe. China is dealing with record heat waves. So we have to move to clean energy. Countries like China are victims of climate change that also produce many of the solutions. So I think there’s a huge incentive to scale up clean energy and the costs.
The Russian invasion of Ukraine highlights how our reliance on fossil fuels is so problematic.
It may be difficult if we don’t want to rely on China at all. Does the US and Europe want to do it on their own without China? That’s going to be more difficult in the timeframe, by 2030, but with China, I think it’s possible.
MINING.COM: Is there enough metal to replace oil?
I think few people are aware that to solve climate change, we need speed and scale. Scale is critical. So when you’re talking about the scale of batteries for EVs, for energy storage, there are enough raw materials on the earth. The problem we have is that this energy transition is quite a policy-driven one.
More than 300 new mines could need to be built over the next decade to meet the demand for electric vehicle and energy storage batteries, according to a Benchmark forecast.
More than 300 new mines could need to be built over the next decade to meet the demand for electric vehicle and energy storage batteries, according to a Benchmark forecast.
It has to be fast to meet the climate goals. We’ve left it so late. So when you have this exponential demand increase this decade and the next, it’s gonna be hard for mines to keep up. And also what sort of social environmental cost are we willing to bear to get all these mines into production? Where are we willing to mine?
MINING.COM: Mining in America is not a really popular topic. How do you see Biden’s Administration’s push to clean energy so far?
The Inflation Reduction Act is important because it’s a signal and action. The critical mineral requirements are very strict and difficult to meet. If mines can get approved in the US, then I think there’ll be policy support for it but it is difficult.
So what I see happening is probably more Canada. There’ll be more mine development in Australia, in these free trade agreement countries. What you need to do is build up the processing in the US or North America and Canada. So you know that you can divert the raw materials from Australia to North America, not to China. It’s just an industrial facility, it’s not rocket science.
If the US and Europe want to completely develop their own supply chains by scratch, that’s going to be very challenging
I think probably the best thing is to help these mineral-rich countries with mining backgrounds to develop their mines. That’s probably easier than building in the US. Why aren’t we helping the DRC? There’s graphite in Mozambique, for example, and these are all places that will suffer from climate change but can benefit from these minerals.
MINING.COM: What do you say to those worried about the CO2 emissions in the green metals supply chain?
When it comes to metals, we have this perception that maybe is going to be colossal, a gigantic effort to put that supply chain to work.
The fossil fuel infrastructure is just so colossal. Just take a look at Europe and the energy crisis. The fossil fuel infrastructure is so key to our economies, and so massive. The battery minerals pale in comparison to fossil fuels.
The point in my book is saying, if you are building this battery supply chain from scratch, let’s try to avoid some of the old problems. Every additional tonne of CO2 emitted is an environmental cost. So let’s try and keep it as low CO2, as least environmentally destructive as possible.
MINING.COM: What are the biggest challenges right now for the energy transition?
The biggest challenge is geopolitical. If the US and Europe want to completely develop their own supply chains by scratch, that’s going to be very challenging. Given the urgency of this energy transition, we probably all need to work together a bit more.
The second challenge is the poorer countries. What are we going to do to help them? What we can do to help them mine sustainably and responsibly?
There are a couple of risks. First is that tensions escalate to a point where China considers using its leverage. We’ve seen China boycott foreign companies and foreign goods. The second risk is that a lot of these Chinese companies are very innovative, especially battery companies. If there is a shortage of batteries or raw materials, how much will they get priority over Western companies?
MINING.COM: When it comes to EVs, how do we move from premium models like Teslas to a more mass market?
China’s quite a lesson in this space because the best-selling EV there is this tiny Hongguan Mini, which uses a tiny battery. Consumer choice will play a big part in determining raw material demand. If we are gonna just replace big SUVs with electric SUVs or pickup trucks with electric pickup trucks, then we need lots of metals. Are we willing to use this transition as an opportunity to change some of our motor transport? Can we accept smaller cars in the city? If you look at average driving distances, they’ve been coming down in the Western world.
MINING.COM: Stanford professor Mark Jacobson estimated that in a clean energy world, the total mining burden would drop 80% but yet there’s this great fear about expanding mining for green metals. Why?
I think probably the answer is just for a Tesla or other big automaker to really invest in mining, given its sort of stamp of approval, to say we need this mine. But I think some companies may be afraid of certain projects in the US, where there are still issues with indigenous peoples or communities.
MINING.COM: So when you see a hundred percent EV? Let’s keep it to cars.
Well, let’s take China, it’s already over 25% of total vehicle sales. I’d say maybe by 2050 we could get there, but definitely earlier in China.
Vale sees 44% increase in global nickel demand by 2030
Originally posted on Mining.com
By Roberto Samora; Editing by Alistair Bell)
Vale’s Voisey’s Bay nickel-cobalt-copper mine in Labrador. Credit: Vale
Brazilian mining company Vale said on Wednesday that global demand for nickel should increase 44% by 2030 compared to that expected for this year, due to high demand for use in batteries that power electric vehicles.
“Demand for nickel is forecast to increase rapidly this decade with the energy transition,” the company said in a statement, adding that the new forecast would be of 6.2 million tonnes in demand.
The company also estimated the company’s own production volumes for the medium term should reach between 230,000 and 245,000 tonnes of nickel per year, compared to a 2022 projection of up to 190,000 tonnes.
Growth in nickel supplies should be driven mainly by Indonesia and Canada, where the company has operations, as well as Australia, it added.
Global demand for copper – also used in vehicle batteries and renewable energy systems – is also expected to rise by about 20% by 2030 to 37 million tonnes, Vale added.
The medium-term forecast for copper is seen at between 390,000 and 420,000 tonnes per year, versus up to 285,000 tonnes forecast for 2022.
The company did not predict that supply would catch up with demand, projecting in the medium and long-term a “structural deficit” of copper.
“Increased demand, coupled with a lack of supply, will attract significant interest across the sector,” it said.
MORE THAN 300 NEW MINES REQUIRED TO MEET BATTERY DEMAND BY 2035
Originally posted on Cbc.ca
More than 300 mines around the world will be needed to meeting growing demand for electric vehicles, according to a new forecast. (Steve Lawrence/CBC)
More than 300 new mines will be needed globally to meet growing demand for electric vehicle (EV) batteries, according to a new forecast from a mining analyst.
Benchmark Mineral Intelligence estimates at least 384 new mines for graphite, lithium, nickel and cobalt will be required to meet electric vehicle demand by 2035. If battery materials can be recycled in large enough quantities, the firm says about 336 new mines would be needed.
Andrew Miller, Benchmark's chief operating officer, said he wasn't surprised when they arrived at the numbers.
"You know this has been something that has been building," he told CBC News.
"The targets, if you talk about EV demand, are increasing. We publish our forecast every quarter and that number has only ticked up."
Miller said the rest of the world is catching up to China with regard to demand for electric vehicles.
Traditional automakers like General Motors, Volkswagen and Hyundai have also started to offer more electric vehicles.
Except for cobalt, Miller said there are enough minerals in the ground to meet growing demand for batteries, but mines can take years to develop. There are types of batteries called lithium iron phosphate batteries that no longer need cobalt, however.
"Canada has some massive potential," Miller said.
"It already has some of these mines that are under development today. A huge number of lithium prospects are being developed across Canada."
U.S tax credits a benefit for Canada
He said new tax credits under the Inflation Reduction Act in the U.S. will benefit Canada, because they apply to vehicles built in North America, that use minerals mined from the U.S. or its free trade partners.
Miller said recycling batteries to recover their metals will become more important as demand grows and the mining industry struggles to keep up.
It will also be important for mining companies to expand their operations in a responsible fashion, he added.
"I think a huge opportunity for the new generation of miners and suppliers into the EV market is to make sure things are done sustainably," Miller said.
"To deploy new methods, new practices, to build out the clean energy credentials on site as well for the energy that's being used to really make sure that the the materials going into feeding this EV revolution are sustainable and are being extracted responsibly."
Battery-mineral shortage likely to impede Canada's goals for electric vehicles, industry expert says
Steve LeVine, the editor of The Electric, a publication that focuses on electric vehicles and the lithium ion batteries that power them, previously told CBC News it's unlikely automakers will be able to meet their projections for electric vehicles as demand continues to rise.
He said current mines can't meet future demand.
"At the end of the decade, the desire is to make between 25 million and 40 million EVs, if you count the Chinese [industry] and Tesla," LeVine said.
"There's enough nickel to make 13 million."
Why BYD Will Surpass Tesla as the New King of Electric Vehicles
Originally posted on Makeuseof.com
By Charles Early
BYD is one of the largest electric car brands in the world. How is it that so few people have heard of it?
This is an exciting time for the electric vehicle market. It’s one of the most rapidly growing industries in technology and design. Tesla has risen to the top of electric vehicle manufacturers in recent years because of its good looks and moderate price, with companies like Mercedes, Toyota, and Lucid trailing behind.
Since changing from a company that only made batteries to manufacturing full-scale electric vehicles, BYD has made a tremendous impact on the EV market. While discussing EV innovations, here’s why BYD is a name you’ll want to remember.
From Battery Expert to Electric Vehicle Maker
Image Credit: そらみみ/Wikimedia Commons
BYD (Build Your Dreams) is a Chinese company based in Shenzhen founded in 1995 by chemist, billionaire, and entrepreneur Wang Chuanfu. Chuanfu's goal was to compete with Japan’s rechargeable battery export market by creating his own company. This led to China taking much of the rechargeable battery market share away from Japan.
As a maker of rechargeable batteries, BYD became the largest supplier of batteries for mobile phones, which accounts for much of its revenue to this day.
Wang Chuanfu saw opportunities in electric vehicles, so he bought out Chinese automaker Tsinchuan Automobile Co Ltd, in 2002. He later bought more struggling automakers using already established factories making BYD the international company it is today.
Since starting out as a trailblazer in battery technology, BYD has created innovations that span multiple industries. According to its website, BYD has designed technologies for battery-electric cars, buses, trucks, forklifts, the SkyRail monorail system, solar power generation, energy storage, and consumer electronics.
Now considered among the largest electric vehicle manufacturer on the market and the fourth-largest battery manufacturer, BYD’s ambitious dreams are being realized. The company is currently valued at 950.77 billion Hong Kong dollars or 121.16 billion U.S. dollars. Internationally, its dominance has expanded beyond the Chinese market.
Billionaire Warren Buffett has been one of its largest investors since 2008, owning 7.73% of the company. Despite being relatively new to selling cars, it plans to sell vehicles in numerous countries in the coming years, notably in Australia, Europe, and North America.
BYD’s Innovations
Image Credit: AdityaPrasetyo/Wikimedia Commons
Besides Tesla, there are many electric vehicle companies breaking new ground. BYD is one of China's top car manufacturers. It sold over 640,000 new energy passenger cars in the first half of the year, an increase of 300% from last year. This surpasses Tesla’s first-half sales by 76,000. A key factor in BYD's success is its patent portfolio. With 9,426 patents, it ranks first among the top 20 Chinese companies in the field of new energy.
With over 21,000 granted patents across four battery business sectors in electronics, automobiles, and rail transportation, BYD is a world leader in battery innovation. For the advancement of battery technology, it is ranked first in the number of R&D personnel compared to other Chinese companies.
Strong scientific research is vital to brand development and the new energy market. BYD has opened the industry doors and become a major contributor with its advanced technology.
A key move for BYD in the supply chain is the separation of its battery business and distribution to more Original Equipment Manufacturers (OEMs), joining forces with the likes of Mercedes, and Toyota. This will allow its technology to reach a global market.
BYD's Big Three Offerings
Image Credit: Jengtingchen/Wikimedia Commons
When BYD introduced the big three in 2021, the EV market took a major leap forward. These are the DM-I super hybrid, its E- platform, and the blade battery.
The DM-I Super hybrid gets 3.8 KPG per 100 kilometers. This is an excellent starting point for the future development of hybrid vehicles. As the DM-I super-hybrid technology is improved, fuel consumption will be reduced and cost performance will be increased.
Its E-platform 3.0 has played an important role in the transition from pure electrification to more intelligence. On its website, BYD states that it will promote intelligence, efficiency, and safety in future electric vehicles.
BYD currently manufactures 80-gigawatt hours of batteries for electric vehicles, about 10% of the world's capacity. It is predicted to reach 185-gigawatt hours by 2025. It's no wonder that its blade battery has had the greatest impact on the EV market.
The Incredible Blade Battery
The Blade Battery is a revolutionary piece of technology in terms of safety. When considering buying an electric vehicle there are things you should know about EV batteries. Longevity and safety are two major factors that really matter. BYD’s blade battery outperforms the competition, being the only one to pass an exhaustive acupuncture test and completely eliminating spontaneous battery combustion in electric vehicles going forward.
Since its development, the cobalt-free battery has greatly increased in energy density, making it a perfect balance between performance and cost efficiency. The Blade’s cells have a lifespan of 1.2 million kilometers or 3,000 charging cycles, making it an excellent choice for long-term use.
Due to ergonomic Blade battery design choices, BYD engineers have managed to decrease the overall cubic volume of the battery installation by 50% providing more space for vehicle storage and other auxiliary design features.
BYD's Big Plans for the Rest of the World
In addition to its electric buses already being sold in Europe, India, and Japan, BYD plans to sell cars in Australia, Latin America, and Southeast Asia. In a recent deal with Louwman, it's currently preparing for its European launch. Tesla's new Model Y will also be equipped with the new Blade battery. BYD has made such strides because of its willingness to give dealers more profits than its competitors.
The Chinese are known for producing products at lower prices. Using the same approach and a well-established reputation in the mainstream EV market, its cheapest car costs only $15,000, compared to $30,000 for the Model 3.
A Name to Remember
Tesla has been on top of the electric vehicle market for some time now with other carmakers trying to catch up. Despite its lack of recognition in comparison to Tesla, Mercedes, Honda, and Toyota, top executives in the EV industry know this will change very soon.
In the coming years, as electric vehicles become even more commonplace, popular brands will find themselves trying to keep up with a new King. With patience and continued miracles from its deep technical reserves, BYD is already in the position to become a major global player in the electric vehicle market.
Canada’s critical minerals strategy: Discussion paper
Originally posted on Canada.ca
READ DISCUSSION PAPER : CANADA’S CRITICAL MINERALS STRATEGY
Foreword by the minister
Let me begin with a simple fact — mining is one of Canada’s most important economic sectors.
Canada currently produces 60 minerals and metals at 200 mines and 6,500 sand, gravel and stone quarries across the country.
This country is home to almost half of the world’s publicly listed mining and mineral exploration companies, with a presence in more than 100 countries. With a combined market capitalization of $520 billion.
Now, our mining industry — indeed our country — is faced with a generational opportunity: critical minerals.
Simply put, there is no energy transition without critical minerals, and this is why critical mineral supply chain resilience is an increasing priority for advanced economies.
And because of this we are seeing projections for significantly increased demand for several of these minerals, overwhelming current supply.
In fact, the World Bank forecasts a 500 percent increase is required — by 2050 — in production of minerals like cobalt just to feed the clean energy transition to batteries.
And for minerals such as lithium and graphite, demand could increase by as much as 4,000 percent. With this increased demand comes the risk that, without sufficient supply, critical minerals could become the bottleneck, rather than an enabler, in the energy transition.
At the same time as these projections for increased demand, geopolitical uncertainty has magnified the precariousness of existing sources of minerals and metals.
Governments around the world have begun to assess their vulnerability to supply shocks for commodities they cannot sufficiently source inside their own borders but on which their economies depend.
It is in this context that the Government of Canada views the development of our critical minerals value chain as a generational opportunity for our country.
Every stage of the critical minerals value chain presents an opportunity for Canada: exploration, mining, processing, manufacturing and advanced manufacturing, and recycling. Moreover, these opportunities exist in every region of the country.
That’s why our government has committed to develop a Critical Minerals Strategy, backed by nearly $4 billion in Budget 2022 — a strategy that will address the entire value chain.
To kick off the public consultations on the strategy, we are looking for input on this discussion paper that sets out guiding principles as well as five key outcomes:
Economic growth and competitiveness;
Environmental protection and climate action;
Enhanced security and partnership with allies;
Advancing reconciliation; and,
Advancing diversity and inclusion.
I look forward to working with Indigenous Peoples, provinces, territories, industry and stakeholders to finalize a strategy that will create good jobs for Canadians, grow our economy and further Canada’s standing on the world stage.
Jonathan Wilkinson, Minister of Natural Resources
Overview
Vision
Canada’s Critical Minerals Strategy will boost the supply of critical minerals to grow domestic and global value chains for the green and digital economy.
Critical minerals are essential inputs for renewable energy and clean technology applications, such as advanced batteries, permanent magnets, solar panels, wind turbines, and small modular reactors, as well as advanced manufacturing applications, including defence and security technologies, semiconductors and consumer electronics, and critical infrastructure.
Global demand for critical minerals and the manufactured products they go into is forecast to increase significantly in the coming decades to enable transition to a green and digital economy. Production and processing of many critical minerals are geographically concentrated, making supply vulnerable to economic, geopolitical, environmental, and other risks.
Growing Canada’s supply of critical minerals and the products they make possible presents a generational opportunity. To fully seize this opportunity, we must address the entire supply chain, including exploration, mining, processing, manufacturing, and recycling, and ensure value is added at each stage.
By growing and building our expertise at each point in the critical minerals supply chain, Canada can grow its economy in almost every province and territory; fight climate change at home and around the world; and improve the resilience of our supply chain and those of our allies to future disruptions. Importantly, this must be done in a way that advances the Government of Canada’s commitment to reconciliation with Indigenous peoples.
The Critical Minerals Strategy will empower businesses, workers, and communities across Canada to seize this opportunity.
Objectives
The Strategy will address five core objectives:
support economic growth and competitiveness;
promote climate action and environmental protection;
enhance global security and partnerships with allies;
advance Indigenous reconciliation; and
foster diverse and inclusive workforces and communities
The purpose of this paper is to solicit your views on the Government’s approach to achieving these objectives. The Strategy will complement the pan-Canadian vision, principles, and strategic directions of the Canadian Minerals and Metals Plan (CMMP), developed with provinces and territories, industry, and Indigenous business representatives working to build a stronger, more competitive mining sector.
The consultation period will take place from June 14 to September 15, 2022. The Strategy will be published in Fall 2022.
Critical minerals in Canada
There is no global definition of critical minerals. Critical minerals are country-specific, and their “criticality” can change with time based on supply and demand, technological development, and shifting societal needs. Canada as well as a host of other countries have critical minerals lists that are used to guide investment and prioritize decision-making to support critical minerals projects and supply chains. While these country-specific lists differ in their composition, there is a shared view that critical minerals:
have few or no substitutes,
are strategic and somewhat limited commodities,
are increasingly concentrated in terms of extraction and, even more, in terms of processing location.
Although critical minerals lists may differ among countries, owing to a variety of factors, there is significant overlap between jurisdictions. For example, many critical minerals on Canada’s list mirror the lists developed by the U.S., European Union and Japan.
Building Blocks
Critical minerals are the building blocks for the green and digital economy. They are used in a wide range of essential products, from mobile phones to solar panels, and from electric vehicle batteries to medical and healthcare applications. Without critical minerals, there is no energy transition for Canada and the world. By investing in critical minerals today, we are building a sustainable industrial base throughout the critical minerals supply chain for generations to come.
Growth in these applications is expected to boost world demand for many critical minerals. According to the International Energy Agency, the total market size of the critical minerals needed to transition to clean energy could increase nearly sevenfold between 2020 and 2030. The North American zero-emission vehicle (ZEV) market alone is estimated to reach $174 billion by 2030, creating more than 220,000 jobs in mining, processing, and manufacturing.
Canada’s List of Critical Minerals
Canada has a list of minerals it considers to be “critical.” Developed in consultation with provincial, territorial, and industry experts, the list provides greater certainty and predictability to investors, developers, and trading partners on Canada’s priorities and capabilities to produce critical minerals.
To be deemed a “critical mineral” in Canada, it must be:
essential to Canada’s economic security and its supply is threatened; or,
required for Canada’s transition to a low-carbon economy; or
a sustainable source of highly strategic critical minerals for our partners and allies.
Canada’s list of critical minerals currently consists of 31 minerals. The list is reviewed and, if necessary, revised every three years.
Canada already produces over 60 minerals and metals, is a leading global producer of many critical minerals, including nickel, potash, aluminum, and uranium, and has the potential to supply more to both domestic and international markets.
Early Prioritization
Given the urgent need to develop Canada’s critical minerals supply chains, our research suggests that early efforts should focus on the following six minerals: lithium, graphite, nickel, cobalt, copper, and rare-earth elements.Footnote1
These minerals have been selected because they offer the greatest economic growth and employment opportunities across the country, including for Indigenous peoples, along the entire value chain (exploration, mining, processing, manufacturing, and recycling). In addition, these six minerals support the manufacture of value-added products, including clean technologies, information/communication technology, and advanced manufacturing.
Opportunities also exist to ramp up production and processing of additional minerals for industrial value chains that are strategic to Canada and its partners and that will attract foreign direct investment (FDI), thus helping to create more stable global supply chains. This includes minerals like vanadium, gallium, titanium, scandium, magnesium, tellurium, zinc, niobium, and germanium.
By increasing the supply and processing of these minerals, Canada can work with it allies to manufacture products we need, such as military optics, semi-conductors, prosthetic limbs, ultrasound machines, solar panels and wind turbines.
At the same time, Canada will work to strengthen and consolidate Canada’s existing position as a strong, sustainable producer of potash, uranium, and aluminum, all minerals that are critical to the global economy. Whether it is opportunities in low-carbon energy and electrification, healthcare, green buildings, or food security, these minerals are central to Canada’s trading relationships and strategic global position.
The value chain: From exploration to recycling
Building on the success of Canada’s Mines to Mobility approach—which has attracted major investments in the manufacturing of zero-emission vehicles—the Strategy plans to pursue an Exploration to Recycling approach to critical minerals. This goes beyond the foundation established from Mines to Mobility, to building capacity at each stage of the value chain, from exploration to recycling, and everything in between (Appendix C).
The value chain for critical minerals includes five segments. An illustrative example of a battery manufacturing value chain is included below.
A value chain is the set of activities that adds value (e.g., product or process innovation) at each stage of the production and delivery of a quality product to a customer, and which maximizes a company’s competitive advantage. A supply chain, which is a related concept, is concerned with securing access and the logistics and organizations involved in getting the product to market.
The production and processing of many critical minerals are presently geographically concentrated, making supply chains vulnerable to several risks. Recent global events, such as Russia’s invasion of Ukraine, highlight the geopolitical fragility of critical minerals supply and the need for Canada’s partners and allies to diversify sources and reduce import dependency as demand forecasts outpace mineral supply and investment plans.
Canada can grow and connect domestically mined and processed minerals to Canadian manufacturing with greater opportunities in the areas of:
Clean technologies—energy transmission systems, permanent magnets, wind turbines, panels, advanced batteries, hydrogen fuel cells, and small modular reactors
Semiconductors and information and communication technologies
Advanced manufacturing inputs and materials—ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials
By focusing on the entire value chain, Canada can ensure maximum economic benefits for Canadians, while mitigating supply chain risks.
This focus on the value chain will further advance Canada’s circular economy. The global transition to a green and digital economy is expected to increase the volume of embedded material and end-of-life clean and digital technologies. The Strategy will incorporate circular solutions to close material loops, retain access to post-consumer resources through robust recycling infrastructure and secondary markets, and encourage the recovery of critical minerals from mining and industrial waste streams, which will further cement Canada’s innovative leadership in this area. This will ensure that Canada retains the benefits from the extraction of its critical minerals for decades to come, capitalizing on an increasingly important segment of the critical minerals industry that remains largely untapped.
An important element of the Strategy is to capitalize on and advance Canada’s ESG credentials along the value chain. ESG considerations are becoming increasingly prominent in business and investment decisions, especially for automotive sector firms as they transition away from combustion engines and toward increased production of electric vehicles. It matters that the carbon emissions of the end product are minimized, but markets are also increasingly demanding sustainability along the entire value chain, including extraction, production, and hiring practices. Public awareness can also impact firms’ reputations and, consequently, their path to profitability, based on observances and opinions in social media, NGOs, and academia.
Canada’s opportunity and objectives
The generational opportunity presented by critical minerals is defined by five core objectives, which, if achieved, will indicate that Canada has successfully seized the opportunity before it. These five objectives are
Support economic growth and competitiveness, measured by:
Jobs—Sustained and increased jobs in the critical minerals exploration, mining, processing, manufacturing, and recycling sectors
Trade—Increased exports of processed materials and value-added goods
Value—Developing, expanding, and consolidating Canadian value chains for critical minerals
Growth—Anticipated increase in value-added and GDP growth (e.g., global market share), as well as regional economic development, including in rural, remote, and Indigenous communities
Promote climate action and environmental protection, measured by:
Footprints—nature and biodiversity, such as through limiting the environmental footprint of mines and supporting environmental stewardship
GHGs—Reduction of greenhouse gas emissions through the deployment of clean technologies and low-emission sources of energy and fuel in the mining process, in line with Canada’s Emissions Reduction Plan
Diverted Waste—Reduction of waste from critical minerals production (e.g., reducing mine tailings, recycling wastewater) and associated products (e.g., through enhanced recycling capabilities)
Enhance global security and partnership with allies, measured by:
Cooperation agreements—Protecting critical supply chains among trading partners and like-minded nations, using bilateral agreements and multilateral forums
Investment—Protecting Canadian assets while encouraging foreign direct investment
Best practices—Working with international partners to strengthen best practices in Environmental, Social, and Governance (ESG), protection of human rights, and Indigenous rights
Advance Indigenous reconciliation, demonstrated by:
Economic reconciliation—Economic participation in jobs, businesses, and equity, such as advancing priorities related to the Arctic and Northern Policy Framework and the implementation of the Truth and Reconciliation Commission’s Calls to Action
Rights—Protecting Indigenous rights and implementing UNDRIP
Engagement—Meaningful and early engagement of Indigenous governments and organizations from project conception to development and oversight
Foster diverse and inclusive workforces and communities, measured by:
Diversity and inclusion in the workforce—particularly women, youth, LGBTQ+, Indigenous peoples, recent immigrants, Black and racialized communities, and persons with disabilities
Advancement of human rights abroad through Responsible Business Conduct Abroad: Canada’s Strategy for the Future
Leveraging existing government initiatives, such as the Youth Employment Strategy, the Centre on Diversity and Inclusion, and the Rural Economic Development Strategy
Strategy focus areas and initiatives
The Strategy’s core federal initiative is the Critical Minerals Centre for Excellence at Natural Resources Canada, which leads the development and coordination of Canada’s policies and programs on critical minerals, in collaboration with industry, provincial, territorial, Indigenous, non-governmental, and international partners.
To achieve its objectives, the Strategy is being built on six focus areas for federal initiatives and investment.
Drive research, innovation, and exploration
Locating critical minerals in Canada’s vast landmass is a complex endeavour. It requires advanced geoscience capabilities, including geological mapping, geophysical surveying, and scientific assessments and data. To extract and process critical minerals sustainably, we need innovative technologies and industrial practices that optimize efficiency, cost competitiveness, and environmental stewardship.
Through a robust network of research and development (R&D) labs, Canada has the science, technologies, and tools to be a leader in the sustainable development of critical minerals. The federal government will build upon private sector investment to advance technological innovation and environmental performance in Canada’s critical minerals sector and associated industries. Budget commitments from 2021 and 2022 cover different aspects of the value chain, from exploration to processing and refining, through to more advanced products:
$79.2 million for public geoscience and exploration to better assess and identify mineral deposits
A 30% Critical Mineral Exploration Tax Credit for targeted critical minerals (i.e., nickel, lithium, cobalt, graphite, copper, rare-earth elements, vanadium, tellurium, gallium, scandium, titanium, magnesium, zinc, platinum group metals, and uranium)
$47.7 million for targeted critical mineral R&D through Canada’s research labs
$144.4 million for critical mineral research and development, and the deployment of technologies and materials to support critical mineral value chains
Discussion Questions
What are priority areas for research programs (academia, industry, governments)?
What more should be done to drive critical mineral exploration and innovation?
Accelerate project development
Most mining and industrial development projects require large investments with high risk and slow return. For example, it can take 5 to 25 years for a mining project to become operational, with no revenue until production starts. Domestic projects are also subject to rigorous regulatory assessments to meet Canada’s reputable ESG standards.
To advance our transition to a net-zero economy, the federal government is providing financial and administrative support to accelerate the development of strategic projects in critical mineral mining, processing, manufacturing, and recycling. This includes leveraging the resources and expertise of our trade and national business development organizations such as the Business Development Bank of Canada, Export Development Canada, and the Canadian Commercial Corporation. It also means capitalizing on existing programs such as the Strategic Innovation Fund, which is already making significant investments in the electric vehicle market. We will also ensure alignment with provincial and territorial partners, while respecting the environment and Indigenous rights, which will allow these projects to develop in a more robust manner.
These core endowments in critical minerals value chains will reinforce and strengthen existing programs that seek to create new job opportunities and attract foreign direct investment in Canada’s critical minerals sector and associated industries. Furthermore, the meaningful participation of Indigenous groups and organizations in regulatory processes is integral to ensuring that projects advance and that rights are upheld. Federal support for regulatory processes will reinforce partnerships and strive to ensure that meaningful participation and engagement occur throughout all phases of project approvals. Budget 2021 and 2022 proposed the following initiatives:
$1.5 billion ($1 billion in new funding, $500 million from existing funds) over six years, starting in 2024–25, for the Strategic Innovation Fund to support critical minerals projects, with prioritization given to manufacturing, processing, and recycling applications.
$40 million to support northern regulatory processes in reviewing and permitting critical minerals projects; and
$21.5 million to support the Critical Minerals Centre of Excellence (CMCE) to develop federal policies and programs on critical minerals and to assist project developers in navigating regulatory processes and federal support measures.Footnote2
Discussion Question
How can we streamline the regulatory processes to better facilitate project development?
Build sustainable infrastructure
Canada has a strong base of critical minerals that are in high demand globally. Advancing strategic infrastructure investments to enable development of critical mineral resources will help foster sustained growth and the establishment of supply chains, while securing Canada’s place in the growing global critical minerals industry. Although Canada’s critical minerals sector has tremendous opportunities and potential, it is underexplored and critical mineral deposits are often located in areas with challenging terrain and limited access to enabling infrastructure such as roads, clean energy, or grid connectivity. This infrastructure deficit has been an obstacle to attracting investment while posing challenges to local communities. It increases development costs and potential project risks, particularly with rising inflationary pressures and increased challenges facing global supply chains.
The federal government is supporting the development of Canada’s critical minerals sector through investments in sustainable energy and transportation infrastructure to support the supply chains that are needed to get critical mineral products to market. These investments will support Canadian trade and economic development by addressing gaps in enabling infrastructure to unlock priority mineral deposits, while considering potential multi-user benefits and Canada’s goals related to environmental protection, climate adaptation, and Indigenous reconciliation.
Up to $1.5 billion for infrastructure development for critical mineral supply chains, with a focus on priority deposits, was proposed in Budget 2022.
The ability to partner with the Canada Infrastructure Bank for revenue-generating infrastructure projects, particularly by drawing on their $5 billion clean power priority investment area and $5 billion trade and transportation priority investment area.
Discussion Question
What regional infrastructure gaps must be addressed (e.g., transportation and clean energy) to enable the sustainable development of Canada’s critical mineral resources?
Advance Indigenous reconciliation
Indigenous peoples are the stewards, rights holders, and in many cases, title-holders to the land upon which natural resources are located. The success of Canadian critical mineral development must be based on respect for Indigenous and treaty rights, and meaningful engagement, partnership, collaboration and inclusion of First Nations, the Métis Nation, and Inuit.
Engagement in the CMMP highlighted that Indigenous peoples experience significant systemic barriers that limit their meaningful participation in the mining sector and the natural resource sectors more broadly. Barriers commonly cited by Indigenous peoples include economic, business, and community skills capacity gaps; varying levels of industry commitment to provide meaningful economic opportunities to Indigenous communities; access to competitive capital for equity participation; and the need to equip and upskill Indigenous workers for participation in the resource sectors of the future.
The Final Report of the National Inquiry into Missing and Murdered Indigenous Women and Girls also found that there are higher levels of violence and harassment by transient workers toward Indigenous peoples and women, and that Indigenous women face significant barriers to participating in the extractive economy. To reduce gaps and advance community participation in natural resource sectors, engagement and partnership-building must be early and ongoing and must respect and reflect diverse Indigenous interests.
The federal government is striving to advance economic reconciliation by advocating for and supporting the meaningful participation of Indigenous peoples and businesses in critical mineral projects, including regulatory processes and value chains. The implementation of the Strategy will be informed by the United Nations Declaration on the Rights of Indigenous Peoples and the development of a National Benefits-Sharing Framework.
$103.4 million was provided in Budget 2022 to advance economic reconciliation in the natural resource sector, including at least $25 million to support Indigenous participation in the Critical Minerals Strategy through early engagement and community capacity building
Discussion Question
How can Indigenous governments and organizations, communities, and individuals partner and participate in critical mineral value chains (including regulatory processes)? How can government and non-Indigenous industry proponents support this effort?
Grow a diverse workforce and prosperous communities
Developing Canada’s critical minerals and associated value chains will create new economic opportunities in regions and communities across the country. Moreover, as lower-emission industries come online, workers from other extractive sectors, like oil and gas, will be able to use their transferable skills to secure high-quality jobs in critical mineral exploration, extraction, processing, manufacturing, and recycling.
NRCan will leverage other federal skills and training initiatives to help institutions and employers train and reskill people, and help the workforce grow and meet demand driven by critical minerals. This includes collaborating with other federal partners on key Budget initiatives such as the Community Workforce Development Program and the Sectoral Workforce Solutions Program, as well as long-standing Indigenous labour market programs such as the Skills and Partnership Fund and the Indigenous Skills and Employment Training Program. To ensure a regional approach for communities, the federal government will leverage the expertise of Regional Development Agencies and initiatives related to rural economic development. In addition, developing the skills needed to fully realize the opportunities available in the critical minerals sector will require partnerships with several other stakeholders including provinces and territories, universities, colleges, and specialized training institutions.
The Mining Industry Human Resources Council forecasts over 25%+ of the current mining workforce will retire by 2029 and between 79,680 and 113,130 new workers will need to be hired before 2030. Skills requirements in mining will continue to change as a result of new technologies in the workplace.
Canada is committed to a just transition to and creating sustainable jobs for a net-zero emissions future. We want to help workers and communities thrive in the new economy, while fostering a diverse industrial sector that includes Indigenous peoples, women, Black Canadians, people with disabilities, LGBTQ2+ individuals, and other racialized Canadians.
Discussion Question
How do we leverage critical minerals investment into more diverse skills training, employment, and regional outcomes, including for local, rural, and Indigenous communities?
Strengthen global leadership and security
The geographic concentration of critical mineral production in few countries overseas raises the risk of supply chain disruption. As a trusted supplier of responsibly sourced mineral and metal products, Canada is well positioned to be a leader in the responsible, inclusive, and sustainable production of critical minerals and resilient value chains. We have a role to play in powering the green and digital economy, both at home and around the world.
Since January 2020, Canada has formalized bilateral cooperation with the U.S., the EU, and Japan, and is actively engaging with additional allies like Australia, the UK, and Korea. Canada needs to deliver on its growing number of bilateral commitments and engagements without compromising its ability to deliver on domestically focused programs and priorities.
The Strategy will work to ensure that international engagement activities related to critical minerals align with the Government of Canada’s strategic objectives. This includes strategic consideration of broader geopolitical and industrial priorities for Canada’s international engagements to advance secure critical minerals supply chains, including the consideration of any potential gaps and regional priorities.
There is growing interest to pursue collective action to secure critical mineral value chains across the globe. Canada is engaged in bilateral and multilateral cooperation on critical minerals with several international partners, including the United States, the European Union, and Japan. We are leveraging our international partnerships to align policies and regulatory approaches, improve global ESG standards, address technical challenges through joint R&D, and encourage new investment opportunities in Canada.
$70 million for global partnerships to promote Canadian mining leadership, such as promoting ESG standards and supporting bilateral and multilateral critical minerals commitments, was proposed in Budget 2022.
Continue to enhance Canada’s reputation abroad, through Canada’s new Responsible Business Conduct (RBC) Strategy which was launched in April 2022, by strengthening the global RBC ecosystem. This includes contributing to a rules-based international system that advances Canada’s values, integrating RBC in bilateral and multilateral agreements and engagements, as well as fostering an enabling environment for RBC.
Discussion Question
How might the Government work with its partners and stakeholders so that greater value is placed on high ESG standards throughout the value chain?
Conclusion and next steps
Our approach to critical minerals builds on extensive public and Indigenous consultations for the CMMP, as well as multi-stakeholder evidence and recommendations from the February 2022 report of the House of Commons Standing Committee on Natural Resources, From Mineral Exploration to Advanced Manufacturing: Developing Value Chains for Critical Minerals in Canada and the March 2022 report of the House of Commons Standing Committee on Industry and Technology, The Neo Lithium Acquisition: Canada’s National Security Review Process in Action.
The Strategy is intended to be forward-looking, long-term, and iterative. As such, engagement with PTs, Indigenous organizations, and key industry stakeholders will continue on an ongoing basis with opportunities to adjust the Strategy moving forward.
In addition to this document, several of our strategic partnerships and engagement forums will inform the implementation of the Canadian strategy over the long term:
Federal-Provincial-Territorial (FPT) Task Team on Critical Minerals and Battery Value Chains
Critical Minerals Indigenous Engagement Strategy
Northern Regulatory Process Engagement
Regional Energy and Resource Tables
Industry Critical Minerals Roundtables
Canada-U.S. Joint Action Plan on Critical Minerals Collaboration
Critical Minerals Working Group under the Canada-Japan Energy Policy Dialogue
Canada-EU Strategic Partnership on Raw Materials
The current consultation period will take place from June 14 to September 15, 2022. You may email submissions to NRCan’s Critical Minerals Centre of Excellence at cmce-cemc@nrcan-rncan.gc.ca. The final Strategy will be published in Fall 2022.
Appendix A: Compilation of discussion questions
Prioritization and Areas of Focus
Do you concur that the value chains identified and their associated minerals offer Canada the greatest opportunities for economic growth?
Are the six areas of focus and their associated objectives the right ones to help Canada achieve its vision on critical minerals for domestic and global value chains?
Drive Research, Innovation, and Exploration
What are priority areas for research programs (academia, industry, governments)?
What more should be done to drive critical mineral exploration and innovation?
Accelerate Project Development
How can we streamline the regulatory processes to better facilitate project development?
Build Sustainable Infrastructure
What regional infrastructure gaps must be addressed (e.g., transportation and clean energy) to enable the sustainable development of Canada’s critical mineral resources?
Advance Indigenous Reconciliation
How can Indigenous governments and organizations, communities, and individuals partner and participate in critical mineral value chains (including regulatory processes)? How can government and non-Indigenous industry proponents support this effort?
Grow a Diverse Workforce and Prosperous Communities
How do we leverage critical minerals investment into more diverse skills training, employment, and regional outcomes, including for local, rural and Indigenous communities?
Strengthen Global Leadership and Security
How might the Government work with its partners and stakeholders so that greater value is placed on high ESG standards throughout the value chain?
Appendix B: Canadian critical minerals and sample uses
Appendix C: Building Canadian value chains
An Exploration to Recycling approach to critical minerals refers to building capacity at each stage of the value chain, from exploration to recycling, and everything in between. A value chain is the set of activities that adds value (e.g., product or process innovation) at each stage of the production and delivery of a quality product to a customer, and which maximizes a company’s competitive advantage. A supply chain, which is a related concept, is concerned with the logistics and organizations involved in getting the product to market.
Due to factors like geopolitical risks, ESG and cost considerations, many companies are increasingly prioritizing vertical integration, and having as much of the value chain located in close geographic proximity to their primary operations. An EV manufacturer, for example, will benefit if all stages of battery production occur relatively close to its plant, with transparent and trusted suppliers, operating in a stable economic and political climate.
The value chain for critical minerals includes five segments:
Among the critical minerals essential for these priority supply chains, six hold significant potential for Canadian economic growth. These include:
While these minerals represent the greatest opportunity to fuel Canadian domestic manufacturing and will be the focus of most investment, many other minerals also present significant prospects for the future. Where critical minerals are not used solely for domestic manufacturing, there is value to be captured by increasing exports for allies and expanding domestic refining and processing and components manufacturing over the medium to long term. Examples of these minerals include:
t is also important that Canada maintain its global market leadership where it is already a world leader in minerals like potash, uranium, and aluminum.
Appendix D: Map of Canadian critical minerals
Identifying and Developing Canada’s Critical Mineral Rich Regions
Canada is endowed with enormous resource wealth and is home to a host of critical-mineral-rich regions. Preliminary analysis has identified eight prospective critical-mineral-rich regions based on their critical mineral potential and opportunities for projects development (APPENDIX C). Recognizing that these regions are at different stages of development and have differing needs, additional work and engagement with internal and external experts, provinces, and territories will be conducted to finalize a list of priority regions and further evaluate resource potential, current and potential projects, project needs/barriers, and economic potential in an effort to target finite resources under the Strategy.
Appendix E: Provincial and territorial strategies and policies
Critical minerals development is an area of interest for provincial and territorial partners. The Strategy advances the sector by ensuring shared benefits from complementary investment and addressing gaps not covered by regional initiatives. Several provinces have developed critical mineral strategies while others are in the process of developing policies or are actively promoting this sector.
Appendix F: Canada’s global cooperation on critical minerals
Canada is seeking to build more resilient critical mineral global supply chains by working with international partners to align policies, raise global economic, social, and governance (ESG) standards, advance joint research and development, and encourage new investment opportunities, among other priorities.
The Canada-U.S. Joint Action Plan on Critical Minerals was announced on 9 January 2020 to advance bilateral interest in securing supply chains for the critical minerals needed for strategic manufacturing sectors, including communication technology, aerospace and defence, and clean technology. The Action Plan is guiding cooperation between officials in areas such as industry engagement, innovation, defence supply chains, improving information sharing on mineral resources and potential, and cooperation in multilateral forums. Canada already supplies many of the minerals deemed critical by the United States. In 2020, bilateral mineral trade was valued at $95.6 billion, with 298 Canadian mining companies and a combined $40 billion in Canadian mining assets south of the border.
The Canada-EU Strategic Partnership on Raw Materials is the primary mechanism for engaging the European Commission and European Union Member States on Canada’s critical mineral and battery value chains. The overarching objective of the partnership is to advance the value, security, and sustainability of trade and investment into the critical minerals and metals needed for the transition to a green and digital economy. Agreed areas of collaboration include the integration of raw materials value chains; science, technology, and innovation collaboration; and, collaboration in international forums to advance world-class ESG criteria and standards.
The Canada-Japan Sectoral Working Group on Critical Minerals aims to facilitate commercial engagement between Canadian and Japanese businesses across the critical mineral value chain; strengthen government-to-government information sharing; and encourage cooperation on international standard setting for critical minerals. It is part of the Canada-Japan Energy Policy Dialogue, where Japan is working to secure the critical mineral supply chains needed for its industrial base and broader green energy transition.
Through other multilateral engagements, Canada is pursuing collective action on critical minerals to support the global transition to green energy and more resilient supply chains. Notable multilateral organizations and initiatives include the G7/G20, the International Energy Agency (IEA), the World Bank, the International Renewable Energy Agency (IRENA), the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF), and the Energy Resource and Governance Initiative (ERGI).
The International Energy Agency (IEA) projects the market for critical minerals needed for clean technologies alone, like copper, cobalt, manganese, and rare earth elements (REEs), will grow almost sevenfold from 2020 to 2030 to attain a projected global market of USD 400 billion for these energy minerals by 2040.
This amount represents $10.9 million from Budget 2021 and $10.6 million from Budget 2022.
Tesla Battery Metals Bill Balloons to $100 Billion
Originally posted on Mining.com
Elon Musk congratulates Tesla’s Shanghai gigafactory workers after producing one million vehicles. Image: Tesla via Twitter
Elon Musk had plenty of advice for the mining and metals industry at the company’s Battery Day event in September 2020, where the road map to a $25,000 Tesla was laid out.
A couple of days after the event Musk confirmed in a tweet that Tesla will reach production of 20 million vehicles per year “probably before 2030.”
Tesla has been ramping up output at an impressive pace despite lockdowns and power problems in China and a late start in Germany, but the scale of the task is put into perspective by Musk’s proud announcement earlier this month that the Texas-based company has now reached the 3 million vehicle-mark – since its first production model launched in 2008. Tesla is expected to deliver 1.4–1.5 million vehicles in 2022.
Not only did Tesla stop working on a cheap and cheerful Model 2, crucial to achieving those lofty goals, now new data compiled by MINING.COM show the run up in metal prices would make a mass market Tesla at that price point almost impossible to build and the bill of materials for 20 million vehicles a year hard to swallow even for a company that is showered with cheap capital.
Combining data from Benchmark Mineral Intelligence, a London-headquartered price reporting agency, and battery supply chain consulting firm, Toronto-based Adamas Intelligence, which tracks demand for EV batteries by chemistry, cell supplier and capacity in over 100 countries, shows just how much has changed since that September 2020 tweet.
Extrapolating the current numbers for Tesla’s sales-weighted end-use of metals from the Adamas database and accounting for trends in the carmaker’s battery deployment, including greater use of lithium iron phosphate batteries and future model releases, Adamas calculated the raw materials needed to produce 20m cars and trucks (fingers crossed for the cybertruck before 2030 everyone!) per year.
At today’s price Tesla is on the hook for a bit over $100 billion for the 11.1 million tonnes of raw materials it needs to build 20m cars.*
That’s up from $44.8 billion for the metals entering the battery and electric motor supply chain at the time the production goal was announced.
The jump is mostly on the back of an astonishing 8-fold rise in the price of lithium over the period, which in July averaged more than $60,000 per tonne. In July, lithium made up 46% of the total cost while in September 2020 it was only 11.6%. The persistent high price of lithium is also playing havoc with the economics of LFP batteries – which most EV-makers want for entry-level runabouts.
Nickel made up 25% of the overall bill of materials two years ago, now that portion is 15.7% despite a 40% increase in the price of the metal since then.
In March-April when battery metals were hitting multi-year and all-time highs that total was $131 billion.
Bar lithium, prices have pulled back sharply since March (cobalt is down from a peak of $92,000 to under $50,000) but through to the end of the decade most, if not all these commodities will likely become more expensive as supply struggles to keep up with demand.
As automakers (and the renewable energy sector) scramble for lithium, nickel, cobalt, graphite, rare earths, aluminium, manganese and copper securing supply may ultimately be a bigger issue than costs.
To produce 20m vehicles Tesla alone needs more than the total volume of lithium and natural graphite produced last year, almost a third of the magnet rare earths, 36% of the cobalt, and so on.
No single enterprise consumes 1.8m tonnes of copper per year, not even China’s state grid, and laying your hands on a quarter of the world’s nickel may prove impossible, no matter how many times you meet with the Indonesian president.
$100 billion is a nice round number for mining companies hoping to supply the raw materials for the world’s number one electric carmaker.
So is $1 trillion when every automaker is an electric one.
*To better reflect the market opportunity for the mining industry, the chart represents upstream prices where relevant. For instance, synthetic graphite costs much more than mined flake and downstream value added products like CSPG (coated spherical purified graphite) used in battery manufacture are many times more expensive still.
Also keep in mind the kilograms that end up in every newly sold Tesla are fractions of what would have been procured upstream — a factor that is sometimes omitted from estimates of metal requirements is low yields in the conversion and manufacturing process, with a not insignificant portion ending up on battery factory floors as so-called black mass.
Volkswagen, Mercedes-Benz team up with Canada in battery materials push
Originally Posted on Mining.com
Image from Volkswagen.
German carmakers Volkswagen and Mercedes-Benz on Tuesday intensified efforts to secure access to key battery materials lithium, nickel and cobalt by striking cooperation agreements with mineral-rich Canada.
The move comes as automakers roll out their electric-vehicle expansion strategies globally in a bid to challenge sector leader Tesla. These strategies depend on sufficient supplies of vital battery materials.
No financial details were disclosed for the memorandum of understanding (MoU) agreements, which were signed in Canada during a visit by German Chancellor Olaf Scholz and a delegation of German corporate representatives.
“The supply of battery raw materials and the production of precursor and cathode materials with a low carbon footprint will allow for a fast and sustainable ramp-up of battery capacity – a key lever for our growth strategy in North America,” outgoing Volkswagen Chief Executive Herbert Diess said.
Volkswagen aims to build, with partners, six large battery cell factories in Europe by 2030 with a capacity of around 240 gigawatt-hours, as well as a dedicated factory in North America for which it is currently examining potential sites.
VW is targeting initial capacity of 20 gigawatt-hours at the North American plant, said Thomas Schmall, Volkswagen AG board member and head of the automaker’s Power Co battery unit.
At a media briefing Tuesday, Schmall said the company aims to announce the North American plant location and potential mining and refining partners by the end of the year.
“Everything in our planned rollout of electric vehicles depends on the supply of batteries,” Schmall said.
Pablo Di Si, incoming president and CEO of VW Group of America, said the automaker’s US plant in Chattanooga, Tennessee, aims to build 90,000 electric vehicles next year, adding that they will “most likely” qualify for the full $7,500 tax credit under the new Inflation Reduction Act.
Mercedes-Benz, meantime, is preparing to go fully electric by the end of the decade wherever market conditions allow, and has recently struck a deal with China’s CATL to ensure battery cell supply in Europe.
As part of the MoU, Mercedes-Benz will explore a strategic partnership with Rock Tech Lithium under which the Canadian firm would supply the German carmaker and its battery partners with up to 10,000 tonnes of lithium hydroxide a year from 2026.
Volkswagen has said it could become a shareholder in local mining firms to make sure it is first in line when it comes to supply.
Building more mines? The devil is in the details
Originally posted on Mining.com
Years of neglecting its critical metal supplies is finally catching up with the United States, whose government now realizes it must invest heavily in mining and manufacturing, as demand for the raw materials needed to build a new green economy that rejects fossil fuels gears up.
The problem is, this epiphany comes 20 years too late, and there are few details as to how the country will actually go about re-building its mining sector after decades of mal-investment and relying on other countries for doing the “dirty job” of mining and mineral processing.
More clean energy means more solar panels, wind turbines, electric vehicles, and lithium-ion batteries, both for EVs and grid-scale storage. For some materials, like silicon, supply is plentiful, but for others, such as the rare earth neodymium for wind turbines, lithium, cobalt, graphite and nickel for batteries, and copper for just about everything involved in wiring, the supply chains will need to shift.
That’s because for most of the metals used in clean energy and electrification, the United States relies on imports.
Since Donald Trump’s presidency, the US has been planning to reverse its dependence on foreign rivals especially China, which has the largest EV market and dominates the global battery supply chain.
We weren’t paying attention when China cornered the rare earths market back in 2010 and were also blind to the Chinese locking up global supplies & processing capabilities for nickel, cobalt, graphite and lithium. About 85% of the world’s neodymium is concentrated in a few Chinese mines, and most of the world’s cobalt production comes from the politically unstable Democratic Republic of Congo. The lion’s share of palladium, used in catalytic converters, and nickel, a crucial ingredient of electric-vehicle batteries and stainless steel — is mined in Russia, which is subject to Western sanctions after invading Ukraine.
These are just a few ways to illustrate the United States’ near-total subservience to foreign critical metal suppliers.
It’s hard to imagine the US being able to fulfill the Biden administration’s new clean energy agenda without either a significant increase in critical metal imports that frankly may not be possible in current market conditions, i.e., the hostility between the United States and Russia and China, or executing a home-grown strategy to explore for and mine them in North America.
Infrastructure promises
Right now, governments are using interest rate hikes to curb inflation, which is chipping away at consumers’ purchasing power and making the cost of everything — groceries, gasoline, housing etc. — more expensive. We understand the “demand destruction” strategy — reduce spending by making the cost of borrowing higher — but it’s only addressing the consumer demand side of the equation. The formula for aggregate demand is AD = C + I + G + (X-M) where X is exports and M is imports, and AD is another term for GDP.
For the Fed’s strategy of lessening consumer demand to work, i.e., for prices to fall, any decrease in demand from C, consumer spending, cannot be offset by an increase in demand from G, government spending. Otherwise, one just cancels out the other.
Yet this is precisely what governments across the globe are planning.
Many countries need to reduce their so-called “infrastructure deficits”. Basic infrastructure such as roads, bridges, water & sewer systems, has been poorly maintained, and requires hefty investments, measured in trillions of dollars, to repair or replace.
China, the world’s biggest commodities consumer, has committed to spending at least US$2.3 trillion this year alone, on thousands of major projects, according to Bloomberg.
“Made in China 2025” was initiated in 2015 to reduce China’s dependence on foreign technology, promote Chinese manufacturers, and to change its perception as a low-end manufacturer.
China’s $900 billion “Belt and Road Initiative” is designed to open channels between China and its neighbors, mostly through infrastructure investments. Over 130 nations have signed up to BRI, including countries well beyond its borders. They include Russia, Italy, Greece, Portugal, Hungary, Poland, Romania, Ukraine, Chile, Bolivia, Peru, Venezuela, Saudi Arabia, Iran, most of Africa, Indonesia, Thailand, Vietnam, Cambodia, Myanmar, Laos, South Korea and New Zealand.
Countries in China’s Belt and Road Initiative. Source: Council on Foreign Relations
The G7 just unveiled $600 billion to counter China’s Belt and Road. The United States has committed $200 billion in grants, federal funds and private investment over five years, with Europe pledging $316 billion and Japan promising $65 billion.
The United States is also pursuing its own $1.2 trillion infrastructure package, to be spent on roads, bridges, power & water systems, transit, rail, electric vehicles, and upgrades to broadband, airports, ports and waterways, among many other items.
Extensive minerals required
For such plans to work, extensive minerals are needed to build the required infrastructure, and will have to compete with one another (plus every other country) to do so, driving commodity prices higher.
The Infrastructure Investment and Jobs Act is the largest expenditure on US infrastructure since the Federal Highways Act of 1956. Rolled out over 10 years, it includes $550B in new spending. According to S&P Global, Among the metals-intensive funding in the legislation is $110 billion for roads, bridges, and major projects, $66 billion for passenger and freight rail, $39 billion for public transit, and $7.5 billion for electric vehicles.
In particular the spending package, signed into law on Nov. 15, 2021, is expected to be a boon to domestic steel and aluminum production. The American Iron and Steel Institute (AISI) estimates that every $100 billion invested in infrastructure, could increase demand for US steel by up to 5 million tons.
The infrastructure bill should also significantly boost domestic aluminum consumption that is already accelerating due to the “light-weighting” and electrification industrial trends, states S&P Global. For example, aluminum is widely used in the electrical grid, which will receive $65B as part of the legislation.
An extension of the infrastructure buildout is the global transition towards a “green economy”, which can only be accomplished with renewable power, electric vehicles and energy storage technologies.
All of these require lots of minerals. The amount of raw materials we’ll need to extract from the Earth to feed this transition is staggering.
EVs require, on average, six times the amount of minerals such as nickel, copper, cobalt and lithium, as traditional gas-powered cars. According to the International Energy Agency (IEA), an offshore wind farm uses nine times as many resources as a natural gas plant, with 8,000 kg of copper needed to produce just one megawatt of power (1GW = 1,000MW)
All in all, Bloomberg New Energy Finance estimates that the global transition will require about $173 trillion in investments over the next three decades; every commodity under the sun will be gobbled up.
Source: McKinsey & Company
The Fed and governments working at cross-purposes
The US Federal Reserve’s objective of raising interest rates is to cool demand, in an economy where, for several months now, demand for goods and services has outpaced supply, causing the highest inflation in 40 years.
However, the Fed can raise rates as high as they want, the problem is they are not going to magically increase the supply of a number of commodities and manufactured goods we are running short of.
A big part of the current inflationary cycle, the worst since the early 1980s, is “supply-side” inflation. This has nothing to do with killing demand, and everything to do with increasingly supply.
In fact the Fed’s mandate of raising interest rates to “destroy” demand, is running up against the policy of several governments around the world who are committed to upgrading their aging infrastructure and fulfilling a massive shift to electrification and decarbonization, so-called “green infrastructure” investments. (read more here)
And the demands on governments keep increasing. Decarbonization & electrification, rectifying countries’ “infrastructure deficits”, and attempting to address the widening gap between rich and poor, are just three demand drivers likely to push government spending and therefore inflation higher.
In sum, when you think about all that is happening to pressure prices — climate change; resource nationalism; NIMBYism regarding new mines in North America & Europe, lower ore grades and poor metallurgy; decarbonization & electrification, hundreds of new mines required to meet battery metals’ demand; malinvestment in mining and oil and gas; money-printing “out the wazoo” to cover annual deficits and government bond purchases (QE), all the pandemic-related stimulus payments to Americans; and the trillions in promised new spending, that hasn’t yet been factored into inflation — there is no way that the Fed is going to have an impact on inflation. How can it?
The Federal Reserve does not seem to understand, or care, that constantly raising interest rates will do very little to stop inflation if measures aren’t also taken on the supply side.
I’m talking about more mining to address metals shortages, more manufacturing to create real, high-paying jobs, and figuring out where to farm to get decent yields crop without destroying the environment — an issue of increasing importance as the global food crisis continues.
Positive developments
In fairness, the US and Canadian governments have recently shown an interest in addressing the lack of domestic mining in North America, and what can be done to limit dependence on foreign suppliers of critical minerals.
For years neglected by governments, critical minerals like graphite and lithium are finally getting the attention they deserve. In June, the Canadian government unveiled its low-carbon industrial strategy, that will see Ottawa partnering with each province to “identify, prioritize and pursue opportunities”. This means battery manufacturing in Quebec and electric vehicle production in Ontario.
Natural Resources Minister Jonathan Wilkinson pointed to CAD$3.8 billion earmarked for critical minerals in the April budget. On top of that, “we have a billion and a half dollars in the Clean Fuels Fund, we have eight billion dollars in the Net Zero Accelerator, we’re setting up the Clean Growth Fund, we have the Canada Infrastructure Bank,” Bloomberg quoted him saying. He added:
“The average mine takes 15 years to bring into production. In the context of the energy transition, we don’t have 15 years if we’re actually going to provide enough of the minerals to be able to support just the battery development. So it behooves us to bring everybody into the room to figure out how to do it.”
At AOTH, we couldn’t agree more. Canada’s new industrial strategy dovetails with what is happening south of the border.
The US, which has long sought to improve its battery supply chain, recently invoked its Cold War powers by including lithium, nickel, cobalt, graphite and manganese on the list of items covered by the 1950 Defense Production Act, previously used by President Harry Truman to make steel for the Korean War.
To bolster domestic production of these minerals, US miners can now access $750 million under the act’s Title III fund, to be used for current operations, productivity and safety upgrades, and feasibility studies. The DPA could also cover the recycling of these materials.
Later this year, the Department of Energy will begin doling out over $7 billion in grants for battery production, nearly half of which are earmarked for domestic supplies of materials and battery recycling. The DOE has also committed $45 million in funding for battery development called the Electric Vehicles for American Low-Carbon Living program. It’s all part of the Biden administration’s goal of making half of all new vehicles sold in the United States electric by 2030.
The administration has also allocated $6 billion as part of a huge infrastructure bill aimed at developing a US battery supply chain and weaning the auto industry off its reliance on China. In a July 2021 report, the White House said the number of mineral commodities for which the US is reliant on imports for more than a quarter of demand, has jumped to 58 from 21 in 1954.
In summary, there have been some positive developments by officials at the highest levels of government in Canada and the United States, to facilitate the building of battery cells, electric vehicles and charging infrastructure, and to incentivize EV purchases with generous subsidies.
What’s missing is any concerted effort to support the mining of minerals deemed necessary for the electrification and decarbonization agendas being vigorously pursued by both countries.
Obstacles to mining
$750 million is a good start, but it’s not nearly enough to accomplish the domestic mine-building of the scale needed to reduce our dependence on foreign suppliers, and to lessen the coming deficits of key battery/ energy metals such as graphite, lithium, nickel and copper. Three quarters of a billion might pay for one or two mines; we need dozens of mines.
The National Mining Association followed up the Defense Production Act news by stating that changes to the act will do nothing to ease mining permit bottlenecks.
“Unless we continue to build on this action, and get serious about re-shoring these supply chains and bringing new mines and mineral processing online, we risk feeding the minerals dominance of geopolitical rivals,” association President Rich Nolan wrote in an email to Bloomberg. “We have abundant mineral resources here. What we need is policy to ensure we can produce them and build the secure, reliable supply chains we know we must have.”
The mining association said the country should take steps to streamline the process and put it on par with Canada, including reducing duplication between state and federal governments for approvals and setting specific deadlines.
In fact, the Biden administration has come out against domestic mining through a number of anti-extractive industry decisions, while it supports cleaner EV manufacturing and auto-assembly.
The Democratic Party’s aversion to mining is, at least partially, a reflection of the American public’s reluctance to accept mining as part of the country’s future.
So, instead of building a “mine to EV” supply chain, Biden and his Democrats want to skip the mining and go straight to the cleaner, manufacturing-intensive electric vehicle-building, that will supposedly bring plenty of jobs.
A Reuters story claims the United States has enough reserves of lithium, copper and other metals to build millions of its own vehicles, but opposition to new mines may force the country to rely on imports that could delay efforts to electrify its roughly 275 million cars and trucks.
Arguably, if electrification is delayed due to metals supply problems, Biden’s administration have only themselves to blame.
The United States has plenty of EV metals but the White House and Congress have chosen not to tap them.
“If we don’t start getting some mining projects under construction this coming year, then we will not have the raw materials domestically to support EV manufacturing,” said Reuters quoting an executive at a company developing a US lithium-boron deposit.
Among the mining projects facing opposition from indigenous groups, ranchers or environmentalists, are:
The Thacker Pass lithium project in Nevada. A judge last September denied a request by native Americans to halt excavation at the mine site over concerns it may host ancestral bones and artifacts. This year, federal judges will rule in separate cases whether mine approvals granted by former President Trump should be reversed.
Another lithium project, in North Carolina, is facing pushback from local landowners that could cost Piedmont Lithium necessary local zoning approvals.
State regulators in Minnesota are weighing whether permits issued to Polymet Mining, controlled by Glencore, should be revoked or re-issued. The North-Met project would be Minnesota’s first copper-nickel mine.
Biden himself took steps to block Antofagasta’s Twin Metals copper and nickel project in Minnesota, with the US Forest Service last October proposing a 20-year ban on mining in the Boundary Waters region. The Chile-based company appealed the decision which it called politically motivated, since Biden aimed to shore up support with environmentalists and counter his earlier commitments to allow more domestic mining. Earlier this year the Biden administration effectively canceled two long-standing mineral leases at the Twin Metals mine.
The massive Pebble deposit of Northern Dynasty has been halted because of environmental concerns.
Along with siding with, or not going against, mining opponents, the Biden administration is also practising resource nationalism by trying to exact a larger piece of the metals pie.
Last September a congressional committee added language that would set an 8% gross royalty on existing mines and 4% on new ones.
There would also be a 7-cent fee on every ton of rock moved. According to a Reuters story the proposal would mark one of the most-substantial changes to the law that has governed U.S. mining since 1872 and could raise about $2 billion over 10 years for federal coffers…
Executives say Biden’s goal to have 35% of U.S. electricity generated by solar panels – up from 3% today – would be all but impossible without new mines.
Note: the United States already has very strong environmental protections through the National Environmental Policy Act (NEPA).
Infamously, the act can require seven to 10 years to secure a US mine permit, compared to two years in countries with similar regulations like Australia. Thus it is no surprise that mining companies with a choice to mine domestically or abroad, would choose the latter.
In Canada, Bill C-69 is an example of legislation passed by a government that has the ear of special interests. Bill C-69 broadens the scope of the assessment process and adds more consultation with the public and particularly indigenous groups.
Such anti-mining legislation can present a significant obstacle to companies trying to move a project forward to production, and in the worst of cases, drags the process out so many years that the economics no longer work and the mine is shelved.
This often happens in North America, where it can take up to 20 years to move a project from discovery to commercial production. A preliminary economic assessment done in year 3 is of little use if the minerals aren’t produced until year 20.
A Fraser Institute report found that Canadian mining jurisdictions lagged their international competitors for increases in the time for permit approval, transparency and confidence that permits will be granted.
Special interest groups tend to treat all mining as having the same destructive effect on the environment. They don’t differentiate between mining for metals that are on the way out (like coal) and say, copper and nickel, metals that are highly in demand, where the benefits of extraction could, depending on location, outweigh the effects of some ground disturbance.
In response to anti-mining sentiment among some sectors of the population, resource companies are trying harder to make their operations less carbon-intensive and are ensuring that they adhere to more stringent environmental, social and governance (ESG) criteria.
Miners are finding that institutional investors are pressuring them to show they are investing in solutions, not problems.
Companies that proactively address the issues that investors want them to look at may see a lower cost of capital, but this must be weighed against the implementation of ESG solutions which add to a miner’s cost per tonne or ounce.
Reality check
Notwithstanding efforts by the Canadian and US governments to promote mining, especially the extraction of critical minerals needed for the new green economy, there remains a deep divide between what it will take, and reality.
In a recent column, Michael Goehring, the president and CEO of the Mining Association of British Columbia, wrote that without mining and minerals, decarbonizing the global economy and achieving net zero is impossible. Full stop.
That may seem self-evident after all that we’ve discussed, but it’s interesting to read that despite nearly 200 countries signing the 2015 Paris Accord to reduce their emissions, policy makers are only beginning to focus their attention on whether we will have enough minerals and metals to meet net zero by 2050.
Goehring quotes the International Energy Agency’s (IEA) eye-opening study last year warning that the world needs to significantly increase the supply of metals that are essential to clean technologies. We’re talking about up to six times more than what we’re producing today.
“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realizing those ambitions. The challenges are not insurmountable, but governments must give clear signals about how they plan to turn their climate pledges into action,” the IEA’s executive director Fatih Birol pointed out.
In another recent report, specific to copper, S&P Global predicts a global supply deficit of approximately 10 million tonnes of copper by 2035. This shortfall is equivalent to the production of 76 Highland Valley Copper mines, Canada’s largest copper mine.
“Simply put,” Goehring concludes, “we are not bringing enough new mines or expansions into production fast enough to produce the minerals and metals required to meet our climate commitments by 2050.” To accelerate mining in British Columbia, he advocates timelier permitting process for mines, addressing the shortcomings of our carbon pricing system and more investment in geoscience.
(The problem of taking a very long time for mines to be built is particularly acute in BC. The first two mines to open after the BC Liberal government took power in 2001 on a promise to reinvigorate the province’s mining industry, were Mount Milligan (2013) and Red Chris (2015). Now-defunct Placer Dome tried to develop Mount Milligan in the 1990s when an NDP government was in power, while Red Chris was nearly 60 years in the making.)
But it’s not much better state-side.
Reuters recently reported that mining companies in the United States will struggle to meet a deadline for sourcing key minerals, as set out in a bill signed into law on Tuesday.
The Inflation Reduction Act provides $369 billion to fund energy and climate projects aimed at reducing carbon emissions by 40% in 2030. The bill, states Reuters, includes a $7,500 tax credit for new electric vehicles, but to win the full credit, EV makers have to source in 2023 at least two-fifths of battery materials from the United States or free trade agreement (FTA) partners such as Canada, Chile and Australia or recycle it in North America.
The guidelines… increase the material sourcing target to 80% by 2026.
Note what is being implied here. The United States wants to increase domestic manufacturing of electric vehicles but it doesn’t wish to mine the raw materials. The White House said last year it would rely on allies like Canada and Australia to secure the minerals needed for EV batteries, noting that the country “cannot and does not need to mine and process all critical battery inputs at home.”
Canada, eh? We just showed it can take up to 60 years to build a new mine here, given the ridiculous amount of red tape a mine developer must wade through, such as duplication of federal and provincial permitting. Few mines take under 20 years to reach production.
Australia is an option but it’s a long way from the nearest US port. In most cases the transportation costs of bringing in raw or processed ore would be prohibitively expensive to end users.
The United States under the Democrats are anti-mining and like in Canada, there is duplication between state and federal governments when it comes to mining approvals.
Even those in the mining industry under-estimate how long it takes. A recent Reuters story quotes Simon Moores, the CEO of Benchmark Mineral Intelligence, stating that “Considering it takes seven years to build a mine and refining plant but only 24 months to build a battery plant, the best part of this decade is needed to establish an entirely new industry in the United States.”
In what universe does Moores think it takes seven years to build a mine in the US? Like in Canada, it’s 10 to 20, probably more, by the time all the i’s are dotted and t’s are crossed, and all the interested parties have their say for and (mostly) against.
As for constructing new critical mineral mines, the US government is seemingly all talk and no action. On Aug. 10 Metal Tech News reported the Department of Energy is asking for public input into a $675 million program “to address vulnerabilities in the domestic critical minerals supply chain.”
So let me get this straight. The US is 20 years behind China in sourcing not just critical minerals but important industrial minerals like copper, iron ore, aluminum, and the like, yet it will waste nearly three quarters of a billion dollars to find out what we at AOTH already know: that China is “eating our lunch” when it comes to critical minerals.
The article goes on to say that the DOE “has a comprehensive strategy to increase domestic raw materials production and manufacturing capacity.” If it already has a strategy, why does it need to spend $675 million for public input?
It was also amusing to read that “the $675 million Critical Materials Research Program will expand on the department’s decade-long history of investment in critical materials supply chains.”
May we remind our readers that, far from investing in critical materials supply chains, the US government has let other countries do the work. The obvious example is when, in the 1980s, the US ceded its control of rare earths mining to China. As for how America lost the plot on rare earths, we previously wrote that, within two decades, the Chinese filled the void left by US rare earth mining with gusto – establishing the world’s largest rare earth research facility; filing the first rare earth patent in 1983 and over the next 14 years filing more patents than the US which had been working on them since 1950; and acquiring US technology in metals, alloys, magnets and rare earth components.
China wouldn’t have been able to develop its REE industry if it wasn’t for the dubious acquisition of Magnequench, a division of General Motors established in 1986.
For the fascinating story of how Magnequench and its technology was ceded to the Chinese, read a 2006 article by Jeffrey St. Clair.
Since then, rare earth metals, alloys and magnets needed by US defense contractors come either directly or indirectly from mostly China. According to the US Geological Survey, the United States relies on Chinese imports for at least 20 minerals, including rare earths.
Unintended consequences
There are currently about 12 million electric vehicles on global roads compared to 1.4 billion vehicles run on internal combustion engines (ICEs).
The world’s brightest minds not only have to come up with a plan to transition from ICEs to EVs, but how to fill all those new batteries with energy that is green, i.e., non fossil-fueled. Otherwise, the shift to electrification will have no net reduction of greenhouse gases.
Unfortunately, the events of the past few months have shown that it only takes a regional war in Europe to completely de-rail plans for decarbonization, as EU countries scramble to replace natural gas imports from Russia, and the prices of oil, natural gas and coal soar.
Many countries will continue to require huge amounts of coal, oil and natural gas. Europe, supposedly on the leading edge of “green”, relies heavily on Russian gas for electricity, heating and cooling. Japan, which has no natural resources of its own, in 2020 imported the majority of its oil from Saudi Arabia. And Australia, despite being a mining powerhouse (coal, iron ore), will by 2030 be 100% reliant on imported petroleum, due to the ongoing closure of its refineries.
Our addiction to oil means that hybrid vehicles, obviously requiring gasoline, are expected to continue outpacing electrics for years. The focus of government policies on electrification and renewables, at the expense of investment in traditional oil and gas, will keep the latter’s prices elevated, and the balance sheets of oil and gas companies fat.
Even coal, the red-headed stepchild of the fossil fuel family, is making a comeback. Bloomberg recently reported that despite the world being in the grips of a climate crisis as temperatures soar and rivers run dry, it’s never been a better time to make money by digging up coal.
The energy market shockwaves from Russia’s invasion of Ukraine mean the world is only getting more dependent on the most-polluting fuel. And as demand expands and prices surge to all-time highs, that means blockbuster profits for the biggest coal producers…
Ironically, those efforts have helped fuel coal producers’ success, as a lack of investment has constrained supply. And demand is higher than ever as Europe tries to wean itself off Russian imports by importing more seaborne coal and liquefied natural gas, leaving less fuel for other nations to fight over. Prices at Australia’s Newcastle port, the Asian benchmark, surged to a record in July.
Source: Investing.com
Source: Investing.com
Source: Investing.com
Dump renewables
Coal use in the United States has dropped considerably over the years but it still burned 546 million tons in 2021, representing a tenth of total energy consumption, according to the US Energy Information Administration (EIA).
In Canada, despite a plan by the federal government to quit burning and exporting thermal coal by 2030, requests have been made by two provinces to keep their coal plants operational for another decade. Global News reported that Nova Scotia is negotiating an agreement in principle with Ottawa to keep its coal-fired electricity plants open until 2040. New Brunswick made a similar request of the feds. Coal is also burned for power in Alberta and Saskatchewan, although Alberta is on track to phase it out by 2023, Global News said.
Coal use, of course, is being driven by a huge increase in natural gas prices, with power plants sourcing coal as a cheaper alternative.
Trouble is, we’ve been so focused on expanding renewable energy, before it can actually replace fossil fuels, that we have virtually guaranteed oil, gas and coal prices will stay high for the foreseeable future.
As for the long-term, we obviously don’t know to what extent renewables will replace fossil fuels and nuclear power (nobody else does either), but we have a hard time believing it will exceed 40% and we don’t think it will ever reach 100%.
In a previous article we crunched the numbers, an edited version of which appears below.
If we get rid of all fossil fuels — oil, NG and coal — in 20 years, we need to generate an additional 134,838,220 GWh of renewable energy.
1 gigawatt hour (GWh) = 1,000.00 megawatt hours (MWh).
A large solar farm would be 500 megawatts (MW), keeping in mind that the biggest solar farm in the US, the Topaz/ Desert Sunlight, is 550MW, the biggest in the world is 1,547MW; most solar farms in the US are much smaller, less than 5MW).
Let’s say it is able to operate half the time, or 182 days. 500MW x 24 = 12,000 MWh x 182 = 2,184,000 MWh. 134,838,220,000 MWh divided by 2,184,000 = 61,739 500MW solar farms.
What does this mean for materials? We know that a 500MW solar conversion plant would cover 65 to 130 square kilometers with 17,500 tons of aluminum, a million tons of concrete, 3,750 tons of copper, 300,000 tons of steel, 37,500 tons of glass, and 750 tons of other metals such as chromium and titanium — 500 times the material needed to construct a nuclear plant of the same capacity.
The amount of aluminum and copper needed to build that many solar farms is off the charts:
17,500 tons aluminum x 61,739 (500MW) solar farms = 1,080,432,500t @ 64 million tonnes (MT) global production (2019 USGS) = 1,080,432,500 tonnes aluminum required or 16x global production
3,750 tons copper x 61,739 (500MW) solar farms = 2,321,521,250t @ 20Mt global production (2019 USGS) = 2,321,521,250 tonnes copper required or 11.5x global production
But it’s not only the amount of materials, but the land, that would have to accommodate the more than 61,000 new solar farms. A study by Denholm and Margolis calculated the per capita solar footprint per person, based on the assumption that electricity needs in each state are met by solar power alone. Using an average of 200 square meters per capita, extrapolated to the population of the whole country, of 328.2 million, gives a figure of 65,640 square kilometers of land required for solar energy — a size roughly equal to the size of Nevada. Not taken into consideration is the amount of land needed to fit renewable energy storage batteries.
Is wind power any more feasible? The 10 largest wind farms in the world range from 630 megawatts to 20 gigawatts. Taking a 500MW wind farm, to facilitate a comparison between solar and wind, the Manhattan Institute estimates that replacing the output from a single 100MW natural gas-fired turbine, would require at least 20 wind turbines, each about the size of the Washington Monument, occupying 25 square kilometers of land. Upsizing that to 500MW would thus require 100 wind turbines, on 125 square km. That’s just for one wind farm equivalent in size to a natural gas or solar plant.
How many wind farms would be required to produce 134,838,220 GWh of electricity, the amount needed to replace fossil fuels? A 2MW wind turbine with a 25% capacity factor (the actual output over a period of time as a proportion of a wind turbine’s capacity), due to intermittency, can produce 4,380 MWh in a year. Upsizing this to 500MW = 1,095,000 MWh. 134,838,220,000 MWh divided by 1,095,000 MWh = 123,139 wind farms @ 500MW each.
To replace about 20% of Canada’s power generation that is still from combustible fuel sources, the country would need four times as many wind farms as today. Finding space for that many, a total of 46,800MW of nameplate capacity, would require 26,676 square kilometers. This is the size of five Prince Edward Islands, or around half of Nova Scotia. Remember this is just to replace 20% of Canada’s electricity still generated from fossil fuels.
Consider that in the United States, around 63% of its power still comes from coal, oil or natural gas. According to the EIA, replacing the 966 TWh generated from coal in 2019, would require 344.6 GW of wind farm capacity, spread over 200,000 square kilometers! (about the size of Nebraska)
How about materials? According to a report from the National Renewable Energy Laboratory, wind turbines are predominantly made of steel, fiberglass, resin or plastic (11-16%), iron or cast iron (5- 17%), copper (1%), and aluminum (0-2%). This isn’t counting the electrical system, which uses copper and rare earths such as dysprosium and neodymium.
A single 2MW wind turbine weighing 1,688 tons, comprises 1,300 tons of concrete, 295 tons of steel, 48 tons iron ore, 24 tons fiberglass, 4 tons each of copper and neodymium, and .065 tons of dysprosium. (Guezuraga 2012; USGS 2011).
The Manhattan Institute estimates that building a 100MW wind farm would require 30,000 tons of iron ore and 50,000 tons of concrete, along with 900 tons of non-recyclable plastics for the large blades. The organization says that for solar hardware, the tonnage in cement, steel and glass is 150% greater than for wind, to get the same energy output.
According to The Institute for Sustainable Futures at the University of Technology Sydney, Australia analyzed 14 metals essential to building clean tech machines, concluding that the supply of elements such as nickel, dysprosium, and tellurium will need to increase 200–600%.
Materials required to build solar PV, hydro, wind, geothermal and natural gas machinery. Source: Manhattan Institute
If BP is correct in its outlook that in two decades, renewables are going to supply the equivalent amount of electricity currently generated by coal and gas combined, we have a problem, Houston. First of all, just replacing the current amount of energy demanded by coal and natural gas, let alone the inevitably higher figure in 2040, with solar and wind would be nothing short of miraculous. Our research shows that it would mean over 60,000 solar farms and more than 120,000 wind farms. In all it’s about a 450% increase in renewables.
Of course, solar and wind farms can’t be located just anywhere. They need to be in the right locations, where the winds are strong and frequent, areas that get a lot of sunshine, and close enough to power lines to be economical.
We already know that we don’t have enough copper for more than a 30% market penetration by electrical vehicles. Building renewable energy capacity is over and above supplying the ever-growing marketplace for EVs. How are we going to get enough solar and wind to produce a minimum of 134,838,220 GWh (that’s for 2019, it could be double by 2040), if we are to replace fossil fuels in 20 years?
And even if we could, how are we going to find the raw materials? For solar power we are talking about finding 16 times the current annual production of aluminum, and 11 times the current global output of copper. Up to six times the current production levels of nickel, dysprosium and tellurium are expected to be required for building clean-tech machinery. Good luck!
Even if the mining industry could identify and produce this amount of metals to meet the world’s goal of 100% decarbonization, the supply shortages guaranteed to hit the markets for each would make them prohibitively expensive. It’s just supply and demand.
By all means, let’s electrify, but let’s produce the extra energy with nuclear, preferably driven by thorium instead of uranium, and let’s dump the mega-raw-materials-consuming solar and wind.
Not only are solar and wind inappropriate for base-load power, because their energy is intermittent, and must be stored in massive quantities, using battery technology that is still in development, they don’t have anywhere near the energy intensity provided by fossil fuels, or nuclear. (read more)
Conclusion
Driven by the need to decarbonize due to increasingly apparent climate change, governments around the world right now are choosing to de-invest from oil and gas, and instead are plowing funds into renewable energies even though they aren’t yet ready to take the place of standard fossil-fueled baseload power, i.e., coal and natural gas.
We have seen this foolish endeavor playing out in Europe, where natural gas prices hit records due to gas plants being shut down as well as nuclear plants shelved, such as in Germany and France.
The supply chain for batteries, wind turbines, solar panels, electric motors, transmission lines, 5G — everything that is needed for a green economy— starts with metals and mining. Demand for lithium, nickel and graphite on the battery side and copper on the energy side is expected to rise rapidly.
In fact, battery/ energy metals demand is moving at such a break-neck speed, that supply will be extremely challenged to keep up. The demand now, and in the foreseeable future, will continue to rise, as governments around the world execute plans to replace aging infrastructure like roads & bridges, and invest trillions of dollars in renewable energies, electric vehicles and grid-scale energy storage.
If governments decide that they need to spend colossal amounts of money on combating climate change through electrification and decarbonization, to wean themselves off fossil fuels, there will be a direct demand for more minerals.
These expenditures are inflationary and in the short term will clash with the current mandate of central banks to crush consumer demand as a way of bringing down unreasonably high inflation. It’s a battle that I believe will be won by government infrastructure spending.
On the other hand, without a major push by producers and junior miners to find and develop new mineral deposits, glaring supply deficits are going to beset the industry for some time.
Either way, we are looking at elevated prices for critical metals and certain industrial metals that are central to the new green economy, like copper and aluminum, for years if not decades to come.
About 50kg of nickel goes into each Tesla battery but the world isn't producing enough to keep up with demand
Australian nickel is in high demand. (Rachel Pupazzoni, ABC News.)
Mining companies in Australia are racing to find the next big reserve of one of the world's most in-demand metals.
Nickel is a critical metal in batteries, and as the world keeps moving toward renewables, more batteries are needed to store energy.
In fact, there's a strong case that much more of it is needed than lithium — a commodity many people know of, because it is in the name of lithium batteries.
But there are a variety of batteries made with different metal compositions and, as Elon Musk puts it, batteries need a sprinkle of lithium compared to nickel.
"The lithium is actually 2 per cent of the cell mass," he said at a presentation in 2016.
"It's a very small amount of the cell mass and a fairly small amount of the cost, but it sounds like it's big because it's called [a] lithium-ion [battery] , but our batteries should be called nickel-graphite, because it's mostly nickel-graphite."
About 50 kilograms of nickel goes into each Tesla battery.
A report by the CSIRO shows about five times as much nickel (48,006 kilotonnes) will be needed to meet global demand by 2050 as lithium (8,990 kilotonnes).
The problem the world now faces is finding enough nickel to make all the batteries needed.
The search is on to find more nickel to meet the growing demand for the critical battery metal.(Supplied: Panoramic Resources)
Nickel lost its shine
Australia was once a world-leading producer of the shiny metal.
Such was its demand, nickel fetched as much as $US52,000 ($73,700) per tonne in 2007.
But just as prices were rising, the global financial crisis hit, sending the commodity spiralling down, to as low as about $US9,000 ($12,700) in October 2008.
Dozens of mines closed, including a brand new nickel mine opened by BHP in Ravensthorpe, in the south of Western Australia. It went under in January 2009, having operated for less than a year.
For years, BHP tried to sell its Nickel West business, but by the mid-2010s it decided to hold onto it and invest in the commodity.
Now, BHP is ramping up its nickel production and is on the hunt for more mines.
The search for nickel
Last week, BHP announced an unsolicited offer to buy nickel and copper miner Oz Minerals for $8.3 billion.
Oz Minerals advised shareholders to reject the bid, saying it was "highly opportunistic" and significantly undervalued the company.
BHP has deals to sell its nickel to three major car makers.
"I think there's a fantastic opportunity with the Tesla, the Ford and the Toyota agreements," BHP Nickel West asset president Jessica Farrell told The Business.
"I think it is a sign of a direct relationship with the miner and the car manufacturers and we're very well placed to provide sustainable nickel to the battery sector."
BHP Nickel West's Jessica Farrell wants to increase its nickel reserves so it can fulfil orders from car manufacturers.(ABC News: John Gunn)
While Ms Farrell said BHP had enough nickel to fulfil those deals, it clearly wants more.
"We have the second-largest nickel sulphide deposit globally in the Agnew-Wiluna belt, which is an incredible deposit," she said.
The Agnew-Wiluna belt is a geological strip of land rich in nickel and other commodities that stretches south, roughly through the middle of Western Australia, where other miners also operate.
"We're certainly not short of customers … in terms of what we see in the demand trajectory," she said.
"We're actively exploring globally, and we've significantly increased our own exploration spend within the portfolio of the land tenure that we have."
BHP is set to spend billions of dollars because it sees demand only rising.
"If we look out to 2030, we see a 60 per cent increase in electric vehicles and then out to 2040 we see that going up another 30 per cent, to 90 per cent," she said.
"So, we see an incredibly good trajectory for demand — and that's globally.
"We'll also see that transition locally, I think, a lot faster than we expect."
More mines needed
BHP isn't the only company expanding its nickel operations.
In June, the ink dried on a deal that saw Australian company IGO buy nickel miner Western Areas for $1.3 billion.
The deal adds another two nickel mines to IGO's portfolio: the already-in-production Forrestania mine as well as Cosmos, where mining is due to start by the end of this year.
IGO produced 24,000 tonnes of nickel metal concentrate from its Nova mine last financial year.(ABC News: Jon Kerr)
It also extends the life of its existing Nova site, where it has been mining nickel since 2017.
"Since then, it's just been delivering fantastically consistent production levels for IGO and fantastic financial returns," IGO managing director Peter Bradford told The Business.
Peter Bradford runs one of the major nickel and lithium miners in Australia.(ABC News: John Gunn)
But it is not the first time IGO has tried to add to its nickel portfolio.
In 2019 it attempted to buy Panoramic Resources, a company with a nickel mine called Savannah in the Kimberley region, in the far north-east of Western Australia.
While Mr Bradford is remaining tight-lipped on whether it will make another takeover attempt, its purchase of Western Areas does give it a 21.5 per cent stake in Panoramic.
It also has about 10,000 square kilometres of land around Panoramic's mine that it is currently searching for nickel.
"What we're exploring for is a repetition of Nova or a repetition of the Savannah mine that Panoramic have," he said.
"What we may or may not do with the 21.5 per cent interest in Panoramic will depend on the success around that exploration of assets in the Kimberley."
Panoramic's managing director, Victor Rajasooriar, told The Business he was focused on expanding operations, regardless of IGO.
"At the end of the day, they have 21 per cent of the company, they are a supportive shareholder and we can coexist," he said.
Panoramic Resources managing director Victor Rajasooriar says he's focused on delivering for shareholders, not another potential takeover by IGO.(ABC News: John Gunn)
"Our main purposes is to get this project up and running properly, ramp up to nameplate capacity, work safely and increase shareholder wealth, and they will benefit from that.
"That's what we can control, and that's what we will do."
Price play
The vast majority of nickel mined in the world doesn't go into batteries – it's used to make stainless steel.
"But certainly over time, expectations are that [electric vehicles] will become a much larger piece of the demand pie for nickel," resources division director at Macquarie Hayden Bairstow told The Business.
"It is about 15 per cent now of the global nickel demand market, if you like, for electric vehicles.
"That's certainly grown from basically nothing a few years ago, and the expectations are that it will move into the 20s and 30 per cent of the total, and beyond that over time, as the EV market gets larger and larger."
As that demand grows, so too does the price, which swung wildly at the start of 2022.
At the end of 2021, nickel was selling for roughly $US20,000 – a far cry from the pre-GFC peak, but more than double its 2008 low.
It had been increasing fairly steadily for the last few years, along with battery demand.
But as Russia invaded Ukraine the price soared, briefly to as high as $US100,000 a tonne before the London Metals Exchange halted trading and cancelled the day's transactions.
Russia is one of the biggest global suppliers of nickel and there were fears of a massive shortage, just as demand was growing.
The nickel price has once again stabilised to about $US24,000 a tonne.
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The next iron ore of mining
With prices now back rising in a more normal range and car makers pleading with miners to find more nickel, the sector is trying to expand as fast as it can.
"But nickel is very hard to find," explained David Southam, the outgoing managing director of nickel miner Mincor.
"It's a race to secure those critical minerals and the Western world has probably fallen a little bit behind [and] is now playing catch up."
David Southam stepped down as Mincor Resources managing director this month.(Supplied: Mincor Resources)
David Southam stepped down as Mincor Resources managing director this month.(Supplied: Mincor Resources)
While Mr Southam may be leaving the company (Mincor's new managing director, Gabrielle Iwanow, steps into the role later this year), he only sees growth for the sector.
"It's that fundamental shift in the supply-demand, with the demand for electric vehicle batteries, for battery storage, where nickel content gives you the longevity in the battery that means you can travel further, that has fundamentally shifted," he explained.
"It's almost like iron ore, with the Chinese infrastructure boom, that took off, and nickel is very similar."
"The price has gone up, which has enabled projects to get off the ground," he told The Business.
"With this fundamental shift in the market, if you can produce clean, green nickel, because it will be traced right through to the vehicle, you've probably got a pretty good future ahead of you."