Lithium

Mining Key to Reaching 2050 Net-Zero Goals, but Big Shifts in Thinking Needed

Lithium Investing
person pointing at a hexagon that says "CO2"

The cathodes portion of this year's Benchmark Week event featured discussions around battery metals supply, the need for increased funding and the importance of ESG.

If the world is to meet its ambitious goals for reducing carbon emissions, mining and recycling will need to be scaled up.

This year’s Benchmark Week, which ran from November 14 to 18, was a busy event that included a two day conference around the cathodes space, with discussions about supply of raw materials taking center stage.

Here’s a look at some key themes discussed during the Los Angeles-based conference.


1. Mining is needed to meet 2050 net-zero goals

To reach the net-zero goals set by governments around the world, there’s no way around it — mining will be essential. From copper to lithium, raw materials will be needed to make the green energy transition possible.

Giving a keynote speech at this year’s event, Simon Moores of Benchmark Mineral Intelligence said that to reach net-zero targets, installed lithium-ion battery capacity needs to reach 300 terawatt hours by 2050.

That means worldwide lithium-ion battery output will need to increase by four times the pace of today, rising at an annual rate of 20 terawatt hours. Sourcing will have to come from a boost in mining activity, which could meet about 50 percent of demand, but recycling and new elements to feed the tonnage challenge will also be required.

“What does it mean in terms of raw materials? Well, the impact is, quite frankly, huge,” the CEO of Benchmark Mineral Intelligence said. “Critical minerals mining and refining needs to shift today’s thinking from 50,000 tonne (units) to 500,000 tonne units.”

2. Collaboration and partnerships are essential

When it comes to scaling up lithium-ion battery supply, another major theme discussed during Benchmark Week was the need for different parts of the supply chain to collaborate.

While huge capacity has been built out in China, these operations don't have the ability to sustain the needs of North America or Europe, Andrew Miller of Benchmark Mineral Intelligence told the audience in Los Angeles.

“In the short to medium term, we can't change the realities of the market overnight. International collaboration is going to be essential to the build out of the lithium-ion battery supply chain around the world,” he said.

Also speaking at this year’s conference, Dan Nicholson, vice president of strategic technology initiatives at car manufacturer General Motors (NYSE:GM), echoed Miller’s comments.

“Even with all these efforts and investments across the vertically integrated supply chains and the research and development of innovative battery chemistries, collaboration between industry and government is critical to achieve the necessary scale and competitiveness of electric vehicle value chains,” he said.

BASF’s (OTCQX:BFFAF,ETR:BASF) Nijaruna Niranjan said partnerships are what the industry really needs. “This is not a market that just one of us can solve … we need to come together as a group to set up supply chains that are secure and sustainable,” she said.

3. Cathode diversity to remain

Following a resurgence in lithium-iron-phosphate (LFP) cathodes, particularly in China, many investors continue to wonder if the market share for LFP cathodes will grow in the coming years at a global level. This type of cathode doesn't contain any nickel or cobalt, and has often been used in entry-level electric vehicle models.

“What we're seeing now is that there is a shift, especially in North American markets, in those segments that are growing the fastest, because the overall bill of materials, and the stability of that bill of materials, is what dictates (OEMs') technology roadmap decision making,” Vivas Kumar of Mitra Chem told the audience in Los Angeles.

“Nickel-rich cathodes or iron-phosphate, these are different solutions for different segments.”

For Benchmark Mineral Intelligence, on a global basis, the market will see LFP cathodes start to make their way into more models, which hasn't been the case so far. “Certainly the cathode technology pathway is not set,” Caspar Rawles, chief data officer at Benchmark Mineral Intelligence, explained to the Investing News Network (INN).

“We will see more use of LFP outside of China, but the largest piece of market share will be down to nickel base chemistries, but still some sort of changing ratios of the raw materials in there, which has still yet to be finalized.”

When it comes to breakthroughs in battery technology, Kumar said the supply chain is ultimately going to dictate the technology choices that are made.

“The two factors that we use to make decisions about final specifications and material level performance are, 'Can you build it using supply chains that have already scaled?' and, 'Can you use process equipment with minimal customization?'” Kumar said when asked about the amount of manganese that could be used in lithium-manganese-iron-phosphate cathodes.

4. Legislation and money needed, permitting currently a hurdle

Commenting on how increasing supply and bringing new production online impacts miners, Benchmark Mineral Intelligence's Moores told INN that money remains a challenge, as do permitting processes.

“Funding has happened, but it's not happening still at a rate that anyone needs. Institutional money is still not as aggressive as it should be,” he said. “And then if they get the money to take it to the permitting stage, then permitting is a massive hurdle. It can add 50 percent of the time onto building your mine.”

5. ESG is becoming a competitive advantage

ESG also had a place in this year’s event, with many discussions centered around sustainability.

ESG issues are now being brought up by all key customers and stakeholders, Stefan Debruyne of top lithium producer SQM (NYSE:SQM) said during a presentation in Los Angeles. “This will not necessarily give you a price premium, but I think this should definitely be a contributor to defending market share, and selling higher volumes,” he commented.

Also giving a keynote address at this year’s conference, Juan Merlini, base metals head of sales and marketing at Vale (NYSE:VALE), one of the largest nickel producers in the world, said ESG is becoming a competitive advantage.

“(ESG) is moving from being a footnote (in companies' presentations) to becoming a driver, a product differentiator for their strategy,” he said. “I think this train has left the station and, more than that, the industry will require that in order to maximize the value and the results.”

Don't forget to follow us @INN_Resource for real-time updates!

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.

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