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.
Top automakers including Tesla Inc., General Motors Co. and Ford Motor Co. are heading out on the mining conference circuit as soaring demand for metals used in electric vehicles ignites a scramble to lock in long-term supplies.
Those major US firms, along with Rivian Automotive Inc. and European counterparts Stellantis N.V., Mercedes-Benz Group AG and Jaguar Land Rover Automotive Plc, will be mingling with the crowds of mining industry executives attending a major metals conference in Florida next week, according to multiple attendees who received a list of the event’s guests.
Bank of Montreal, which is organizing the annual gathering, wouldn’t disclose the names of automakers attending the four-day event, which is expected to attract almost 1,500 participants to Hollywood, Florida. Still the firm sees strong interest from several car manufacturers that are seeking to secure supplies of lithium, nickel, graphite and other battery metals.
“There’s an urgency to it now that wasn’t there a few years ago,” Ilan Bahar, co-head of global metals and mining business at BMO Capital Markets, said in an interview. “If three or four years ago we had invited car companies to our conference, they probably wouldn’t have made it a priority.”
It’s unusual for massive end-users of raw commodities, like auto manufacturers, machinery producers or aerospace companies, to attend large mining conferences. But the huge demand for raw materials to support the electrification of those industries is changing that.
Bahar said a number of automakers are attending, including officials in procurement or corporate development, and are focused on securing supply and investing.
“They’re there as investors,” he said. “They want to meet with companies, and the companies want to meet with investors.”
Car companies are making inroads into the mining industry to lock in supplies of much-needed materials, putting them in direct competition with large, deal-hungry metals producers. GM is competing for a stake in Vale SA’s base metals unit and in January struck a $650 million pact with Lithium Americas Corp. to develop the largest US lithium deposit. Meanwhile, Tesla has been weighing a takeover of miner Sigma Lithium Corp.
“We’ve seen investments they’ve made directly in mining companies, primarily to secure offtake,” Bahar said. “The nature and capital structure of how people are investing is evolving.”
Industry specialists warn that miners simply don’t have access to the cash needed to meet demand for battery metals, so automakers will have to pitch in. Battery Metals Review, which tracks investment in the electric vehicle supply chain, estimates that lithium miners raised 20% less capital last year despite prices for the silvery white metal rallying to a record high.
At least one other North American mining conference is reporting interest from automakers. Canadian investment bank Canaccord Genuity Group Inc. said it expects a similarly strong turnout from vehicle builders at its mining conference in Palm Springs, California in May.
(By Jacob Lorinc and Joe Deaux, with assistance from Mark Burton)
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Comments
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I do hope, that all of these newly, keen, BIG-Auto makers, have brushed up on their own, previously ..absolutely, ..appalling, ..lack, of ..understanding, of ..all of the ..realities, of the Lithium Mining and ..PRODUCTION, Industry, ..before, they attend this latest US Gab-Fest…! ?
That way, they might at least know, that ..THE, most important question, that they all, need to ask of all of the Lithium mining ..hopefuls, present, at this Gab-Fest, IS, and ..WHEN, are ..YOU, going to be ABLE, to GUARANTEE, ME, that YOU, can ..ACTUALLY, SUPPLY, ME, with ACTUAL Lithium for my ..planned, Battery Production..??? ??