Battery minerals catch miner interest
Many diversified mining company executives are keen on battery minerals such as lithium and cobalt as electric vehicles loom as 'disruptive to the world'
The biggest topics in international mining in 2017 included battery minerals such as lithium and cobalt, with key players of the size of Glencore talking about the upside to profits in battery-related minerals.
Glencore, an enormous resources trader and miner, has a large chunk of the world’s cobalt production, a key component in rechargeable batteries that use lithium, and its CEO Ivan Glasenberg, a tough-talking South African, sees electric vehicles as "disruptive to the world".
While his sentiments are not new given the growing move away from fossil fuels as a source of electricity because of pollution, his sentiments echo those of many diversified mining company executives that are keeping close tabs on battery technology and what it means for their businesses.
Obvious beneficiaries would include those that produce copper to transmit electricity. Others will have exposure to lithium, and there is a veritable explosion in companies with "lithium" in their names that are raising capital to explore, develop or operate lithium mines. It is one of the minerals where SA barely features, with its platinum sector scrambling to back hydrogen fuel cell technology, which uses platinum and is seen as an alternative to battery-powered vehicles.
In Zimbabwe, however, a lithium miner is in the world’s top 10 of global producers with another project rushing into production, while in Namibia exploration is in full swing.
Lithium consumption was forecast to increase threefold in just a decade, with demand coming from applications in renewable energy and electric vehicles, including bikes, says London brokerage SP Angel.
"However, the number of new projects seeking finance for development could easily place the market in oversupply, with large, established producers able to manipulate output," the brokerage said in a recent note.
Lithium comes from either extraction from brine, or in the crystal form called spodumene, with the latter being of higher quality and having fewer impurities. The brine miners are dominating the supply side of the market at the moment.
In 2017, the US Geological Survey noted in its mineral commodities report that global lithium production had risen 12% to 35,000 tonnes in 2016, driven mainly by demand from battery makers.
Global lithium production capacity of 49,400 tonnes was only utilised at 64% in 2015, rising to 71% in 2016. Producers in Chile and Argentina, the second-and third-largest producing countries behind Australia, have sharply stepped up production. Consumption was estimated to be 37,800 tonnes in 2016 compared with 33,300 tonnes in 2015, the survey said.
"Lithium supply security has become a top priority for technology companies in the US and Asia.
"Strategic alliances and joint ventures between technology companies and exploration firms continue to be established to ensure a reliable, diversified supply of lithium for battery suppliers and vehicle makers," the survey noted. Macquarie recently updated its forecast of the share of the world’s electric vehicles market, including plug-in hybrid electric vehicles using fossil fuel-powered engines, to 5% of global sales by 2022. This was 5.5-million vehicles compared with just 1.26-million a year ago.
It raised its long-term forecast for lithium to $9,000/ tonne from $7,000/tonne.