Chris Berry of House Mountain Partners spoke to INN about the battery metals space, building out supply chains in North America and more.
Battery metals prices are rising as demand from the electric vehicle (EV) sector gathers pace.
The last high price environment was seen back in 2017 and 2018, and prices for key metals such as lithium and cobalt stayed low for a few years after that.
Some of the trends that were in process back then have only gotten stronger, Chris Berry of House Mountain Partners told the Investing News Network.
“I’ve been pounding the table for years about this idea of cost deflation, where batteries continue to get cheaper, and that trend has continued and has accelerated,” he said.
Another catalyst for battery metals prices and investor interest has been the awakening of supply chain dependence from China.
“In the west, we’re never going to be able to compete with China by playing their game … we have to innovate,” Berry explained in the interview. “I think the role that governments play really revolves around funding research and development.”
Last week, the International Energy Agency (IEA) said meeting climate goals will turbocharge demand for critical minerals. “I just don’t know how we’re going to be able to mine and refine and produce enough raw material, whether or not it’s lithium, or copper or nickel, in time to hit some of these goals where we want to manage global temperatures,” Berry said.
For the expert, decarbonizing and making economies green is a real paradox.
“It’s the paradox of green growth, as I call it,” he said. “We’re not going to need less raw material, we’re going to need more, and recycling and thrifting aren’t really going to be able to bridge this enormous gap that could emerge if we really do start to electrify the economy.”
The IEA report also calls for governments to consider stockpiling raw materials to help countries weather short-term supply disruptions.
Stockpiling is a way to secure supply, but it’s also a way to drive up prices, because it creates artificial scarcity in the markets, Berry said.
“So if you want to negatively impact battery economics, go ahead and stockpile away,” he said. “I don’t think it’s a particularly great idea just from what I think it would do to pricing.”
Commenting on investments, Berry said he is encouraged about the amount of investment coming into the battery metals space.
“When you look at the CAPEX of a new brine operation or new hard-rock operation, yes, you’re going to need many more hundreds of millions, if not billions, of dollars just to get to pretty conservative EV penetration rates of say, 10 percent, by the middle of this decade,” he said. “So we’re on the right path — but there’s a lot more that needs to be done.”
Berry also shared his insights on environmental, social and governance issues, what lessons the US can learn from Europe and Asia and how investors should approach the battery metals market in 2021. Watch the video above to learn more of his thoughts.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.