2nd July 2021
Battery metals are making headlines again this week, with several reports reinforcing the predictions of a spike in demand by 2030. A report from BloombergNEF has increased its forecast demand for lithium ion batteries by 35% over last year’s estimates, with most of it coming from passenger vehicles, expected to skyrocket in uptake in the coming decade. While China of course leads the battery supply chain in terms of processing and refinement, demand for electric cars themselves is predicted to grow fastest in Germany.
One important variable is how much of the new production will be cheaper but lower range lithium iron phosphate (LFP) batteries compared to the more expensive but overall better lithium ion type. If you’re interested in the differences between the two, this is a good overview. And while we’re doing overviews, here’s a quick one of what the BloombergNEF report thinks will happen with some key battery metals over the next few years:
- Lithium: carbonate and hydroxide well-supplied until at least 2025, possible hydroxide shortage by 2021.
- Nickel: Market balanced until perhaps 2024 with the increasing adoption of lower-nickel LFP batteries, then facing a deficit. Possible adoption of two-tier pricing system to distinguish batter-grade metal.
- Cobalt: Prices may drop slightly by the end of the year; note that most cobalt is produced in the DR Congo, where dodgy “artisanal” mining is rife.
- Manganese: South African producers are steaming back to full strength after pandemic disruptions, but continue to experience supply chain problems. Prices are expected to increase in the coming months and likely years.
- Graphite: demand will continue to increase out to 2030.
As always, remember that this is not investment advice, I’m just summarising the BloombergNEF report for you, and that’s not investment advice either.
Other reports predict a shortfall in lithium supply at least by the end of the decade, which is partly being caused by current low prices disincentivising investment, although prices are currently as high as they’ve been since January 2019. Cobalt is a concern here too, since it’s mostly a by-product of copper production and is therefore pretty insensitive to supply and demand pricing. According to these reports, nickel is less of a concern after Tsingshan Holding Group in China announced it would be converting lower-grade nickel pig iron into battery-ready matte, and the market could be oversupplied until the middle of the decade. Indonesian high pressure acid leach production is also taking some heat out of prices.
Major companies are clearly taking the long-term supply of battery metals seriously, with, for example Piedmont (NASDAQ:PLL, ASX:PLL) and Iron Ridge (AIM:IRR) announcing a partnership this week to develop a major lithium mine on the Ewoyaa project in Ghana. And they’re not the only ones banking on the green revolution: the Canadian government has this week decided to ban the sale of new fuel-powered non-commercial vehicles by 2035, bringing forward its previous 2040 goal, in an effort to reach net-zero emissions for the country by 2050. This sort of decision in a wealthy market like Canada will certainly spur investment and potentially drive prices higher.
Around the Traps
A fabulous video from Prospech (ASX:PRS) this week, who are working on projects in Slovakia and announced last month that they had drill results from their Cejkov-Zemplin project grading up to 1,220 g/t silver, which is pretty remarkable. Check out the video below, or on YouTube here.
Enduro Metals (TSXV:ENDR, OTCQB:ENDMF, FSE:SOG-FF) has mobilised crews for a fully-funded 10,000 m drill program at its Newmont Lake project in British Columbia’s Golden Triangle. They’re testing very fresh targets for a multi-element discovery.
Grandada Gold (TSXV:GGM, OTC:GBBFF, FSE:B6D) is working to test the recovery of rubidium from its unexpected discovery of alkali metals and rare earths at its Granada property in Quebec.
That’s all for me this week, have a great weekend everyone!
- Jane Lockwood