Electric cars spark lithium, nickel and cobalt mining boom...

Electric cars spark lithium, nickel and cobalt mining boom
Lithium ion batteries.

• Marcus Leroux
• The Times
• 1:41PM December 28, 2016

The China boom has come and gone but miners say a new scramble for resources looms, triggered by the dawn of the electric car age.
The motor industry is placing huge bets on electric cars becoming mainstream over the next decade. Miners have been busily looking under the bonnets and inside batteries and decided that they will have to dig up a lot more lithium, copper, nickel and cobalt.
Tesla, the electric vehicle manufacturer controlled by Elon Musk, has said that it would require today’s entire worldwide production of lithium ion batteries to meet demand for its target of half a million cars in the second half of the decade.
Tesla Motors CEO Elon Musk.
That means a lot more lithium to feed 14 battery mega-factories that have sprung up around the world, mainly in China. Annual demand for lithium is expected to rise from 16,500 tonnes of lithium carbonate equivalent to between 120,000 tonnes and 240,000 tonnes by 2025, according to analysis from Investec.
Wood Mackenzie estimates that lithium demand will double before 2024, with the vast majority of the growth coming from electric vehicles.
Lithium hydroxide prices almost trebled in this year, according to Benchmark Minerals, which is predicting further strong growth this year.
Nevertheless there may be a sleeping giant in the form of Rio Tinto’s Jadar project in Serbia.
Although Rio (RIO) reckons Jadar could be one of the world’s three largest lithium producers, the commodity comes in a unique form of mineral, called jadarite, and the company is still exploring how to extract the lithium and borate, an industrial mineral.
Melting a sample of jadarite from Rio’s Jadar project.
Some analysts doubt the optimistic bull case who argue that prices of commodities rarely rise in line with demand growth — because the stampede of miners to find new production overwhelms price gains.
The demand extends beyond lithium. Mr Musk has said that lithium ion batteries “should be called nickel-graphite” because the cathode is nickel and the anode is largely graphite.
That was music to the hears of Glencore, which is the fifth largest producer in the world. Ivan Glasenberg said recently that a shift of just 10 per cent of the global car fleet to electric vehicles would create demand for 400,000 tonnes of nickel, in a 2 million tonne market.
Some lithium ion batteries rely on cobalt cathodes instead of nickel — Glencore also happens to be one of the world’s largest cobalt producers.
There should also be a big increase in copper demand. Electric cars have four times as much copper as an internal combustion vehicle and the charging equipment requires more.
Jeremy Wrathall, an analyst at Investec, believes that the Chinese purchase of TFM, a Congolese copper mine, for a valuation that surprised many, was motivated by a desire to lock down cobalt, which is also a key component in smartphones and tablet computers.
Mr Wrathall also pointed to an agreement between Birimian Resources, which has a relatively early-stage lithium project in Mali, and a Chinese battery maker, as evidence that Chinese players were becoming increasingly concerned with the security of supply for the materials used in electric vehicles. “That’s really worrying if you’re Volkswagen or Mercedes, because they may be squeezed out. They’ll be thinking ‘How do I get this lithium if the Chinese are trying to lock it all up?’ ” Mr Wrathall said.
The chances of a supply crunch are raised by the fact that copper mines, for geological reasons, face an uphill struggle to maintain production levels because they mine progressively lower quality grade.
Water shortages in Chile, the world’s largest producer, may also disrupt the supply.
The Times