Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Car manufacturers acquiring mining companies to secure raw materials needed for electric vehicle batteries will end badly if history is any guide, according to Goldman Sachs Group Inc.’s head of commodities.
History is littered with examples of consumers trying to move upstream in commodities markets, Goldman’s Jeff Currie said in an interview Wednesday with Bloomberg Radio.
“It always ends in tears,” he said. “Going in and being involved in mining projects in places like Southern Africa, it requires an expertise that is very different than producing cars.”
Currie was commenting in response to a question about the prospect of Tesla Inc. acquiring Sigma Lithium Corp. The electric-car maker has been mulling a takeover of the miner amid rampant demand for the material crucial to powering EVs, Bloomberg News reported last month, citing people with knowledge of the matter.
Automakers have been pushing into mining more aggressively to lock in supply for batteries that increasingly are replacing internal combustion engines. Stellantis NV took a 14% stake in a McEwen Mining Inc. copper subsidiary, and General Motors Co. is said to be vying for a stake in Vale SA’s base metals unit. In January, GM struck a $650 million pact with Lithium Americas Corp. to develop the top US lithium deposit.
Car companies will be better off sticking to their core competencies and reducing their exposure to commodity price swings through hedging, said Currie, who declined to comment on Tesla specifically.
(By James Attwood, with assistance from Caroline Hepker and Tom Mackenzie)
Related Article: Tesla, GM among carmakers flocking to mining events amid battery metals scramble
2 Comments
JChristensen
Investing in and having a stake and agreements with mining companies is different than trying to become a mining company in the same way an investor can own rental properties but outsource property management. Goldman is thinking carmakers are going to dig pits, erect crushers and separate minerals? More likely the “Vampire Squid” is investing in mining on the cheap behind the scenes while trying to manipulate the market with trash talk like this.
PKAYE
I had to shake my head for a second and look up Sigma’s primary properties. Goldman Sachs would have more credibility if they knew the difference between Southern Africa and South America. Sigma has properties in South America. Quote ““Going in and being involved in mining projects in places like Southern Africa, it requires an expertise that is very different than producing cars.”. Manipulation….yes, and apparently plain ignorance also. SMH