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Lead’s Vital Role in the Growing Electric Vehicle Industry
Despite disruptions from supply issues, COVID-19 and mine closures, prospects could be high for lead in the upcoming years.
If recent data are any indication, the electric vehicle (EV) market has shown no signs of slowing down.
In 2022 alone, global EV sales exceeded 10 million units, and sales in 2023 are on track to potentially reach 13 million units by the end of the year. As EV demand continues to grow, the commodities needed to enable the electrification of modern society should remain in high demand.
When people think of electric vehicles, lithium-ion battery components such as lithium, cobalt and graphite often come to mind. However, many metals are necessary for the manufacturing of electric vehicles, including lead. Simply put, current EV technology requires 12 volt lead-acid batteries to run essential components like safety auxiliary systems, lithium-ion battery management computers and autonomous and communication systems.
When you combine outside factors like pro-EV government policies, the general public’s growing awareness for this technology, and the shift to green technologies in many established industries, it becomes clear why projected demand for lead is expected to grow over the next few years.
What’s driving the lead economy: An overview
Market analysts report the automotive lead-acid battery market could grow from US$45.3 billion in 2023 to US$56.18 billion by 2028, with an estimated compounded annual growth rate (CAGR) of 4.4 percent from 2023 to 2028.
While lithium-ion batteries are the primary battery in most current consumer EVs, the cars are also equipped with lead-acid batteries. The lead-acid batteries in EVs serve a similar function to those in internal combustion engine vehicles — powering electrical systems such as lights, windows, navigation, air-conditioning and airbag sensors.
Lead as a commodity in the green revolution is also driving global movements towards the overall electrification of the world. The IEA projected going into 2022 that low-emissions sources of electricity will overtake fossil fuels by 2030 and renewable energy will dominate global capacity, accounting for 75 to 80 percent of all new capacity to 2050. This increase in new capacity will create more demand for energy storage systems (ESS).
With the increased popularity of electric alternatives to power, transportation and energy, companies and international powerhouses are seeing the substantial economic necessity of investing in mining and base metals commodity players. Companies need to act fast in finding sources of metals like lead to fuel the demand of a rapidly growing sustainability-focused world.
Lead’s market outlook over the next decade
Since demand is high, lead is experiencing similar challenges to other base metals, including diminishing supply. Most large mines are coming to the end of their life, and smaller mines are also producing less pure lead.
However, world leaders like China and Australia are held up as the primary sources for viable lead resources in the world. For example, major Australian player Galena Mining (ASX:G1A) operates its own Abra base metals mine, located in the Gascoyne region of Western Australia, which is home to one of the largest lead and silver deposits in the world.
The Abra mine is a 60:40 joint venture between Galena Mining and Toho Zinc, a leading producer of lead in Japan (TSE:5707). The latest mineral resource estimate for Abra is 33.4 million tonnes containing 7.1 percent lead and 17 grams per tonne silver.
Players like Galena see the economic upside of the lead industry, which is currently experiencing a higher rate of technical development in lead batteries than ever before. Wood Mackenzie's Farid Ahmed projected, "These developments have the potential to narrow the performance gap with lithium-ion — its principal rival for the burgeoning ESS sector."
Unlike other commodities, lead can be recycled infinitely while maintaining its quality. The growing demand for lead in lead-acid batteries for EVs and for use in ESS, as well as its ability to be reused, make it a potentially important part of the green future.
Looking into the future of lead mining
The lead market is currently estimated at 10.32 million tonnes and is expected to reach 12.21 million tonnes between 2023 and 2028 with a CAGR of over 3 percent, according to Mordor Intelligence.
At the same time, these production projections could still see issues with increased demand and undersupply. With limited economic lead mines and recent mine closures — such as the 2019 closure of Glencore's (LSE:GLEN,OTC Pink:GLNCY) 120,000 tonne per year smelter in New Brunswick, Canada — major players need to pivot to advance their hold in the lead market.
Notably, Galena has also made significant strides in its lead player positioning as its major partnerships include IXM, a Swiss base metals trading company; Toho Zinc, Japan's largest zinc and lead smelter; and GR Engineering Services (ASX:GNG). Even with mine closures and major disruptions, companies like Galena are putting in the work to meet the push for a greener world and the demand for vehicle battery, ESS and recyclable applications.
Lead may be making a comeback. As an important component in lead-acid batteries for EVs, ESS applications and the overall green revolution, companies and investors alike are looking to this commodity. This could mean that, despite disruptions from supply issues and mine closures, prospects may be high for lead in the upcoming years.
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