Critical Minerals: What’s On & What’s Next

 Recent Developments

United States considering funding Ontario’s critical mineral region: The United States Department of Defense is considering funding projects in Canada through the Defense Production Act. The funding would help mining companies complete feasibility studies for promising projects in the region. Approximately 20 mining companies in the Ontario Ring of Fire region have met with U.S. officials about funding opportunities, and the Canadian government has given the U.S. a list of 70 projects that could receive funding. U.S. investment in the region comes as the U.S. and Canada are working to expand domestic critical mineral supply to reduce reliance on China.

• This year, Canada has invested over $1 billion in critical mineral mining development; however, virtually all this funding has been awarded to large mining companies. This led to several smaller companies expressing concern over Canada’s recent decision to require Chinese companies to divest from Canada’s critical minerals industry.

Mexico advocating for United States and Canadian participation in lithium market: Mexican President Andres Manuel Lopez Obrador said on November 14 that his administration will issue a call for American and Canadian companies to work with the government to develop Mexico’s lithium market in Sonora. Mexican President Andres Manuel Lopez Obrador envisions a partnership where foreign companies build infrastructure while state entities maintain majority stakes in the projects. Notably, the lithium mined in Sonora will not be allowed to be transported out of the region. Instead, factories in Sonora will only be able to use the minerals to produce batteries for electric vehicles, for example. There is an estimated $600 billion of lithium reserves in Sonora, according to the country’s finance ministry.

• This development follows the nationalization of Mexico’s lithium deposits in April and the decision to create a state-run lithium company in August.
• The United States welcomed Mexico’s ambition to address climate change and advance its shared vision of making North America a clean energy powerhouse during COP27, noting that the United States is looking forward to further cooperation, including on critical minerals and zero-emission vehicles.

China battery supply chain at top of BloombergNEF ranking: For the third consecutive year, China’s lithium-ion battery supply chain ranked first on both BloombergNEF’s 2022 ranking and 2027 projections released on November 12. Currently, China has 75% of global battery cell manufacturing capacity and 90% of anode and electrolyte production. Additionally, Canada replaced the U.S. as second in the rankings due to the country’s large raw mineral reserves and recent mining activity. BNEF uses 45 metrics across five themes, including availability and supply of key raw materials, manufacturing of battery cells and components, local demand for electric vehicles and energy storage, infrastructure, innovation, and industry, and ESG, to rank 30 leading countries’ lithium-ion battery supply chains.

London Metal Exchange decides not to ban Russian metal: Following an October 6 discussion paper by the London Metal exchange (LME), the LME has decided not to ban the trade of Russian metal on the exchange. The LME published a report on November 11 that found “while there is evidently an ethical dimension as to the global acceptability of Russian metal, we believe the LME should not seek to take or impose any moral judgements on the broader market.” Additionally, it noted that feedback from the metals industry showed that “a material portion of the market is still accepting — even relying on — Russian metal.”

• The LME noted that it will continue to monitor the flow of Russian metal in its warehouses and provide a regular report starting in January 2023 detailing the amount of Russian metal in its warehouses.

U.S. Department of Energy uranium developments funding: The U.S. Department of Energy (DOE) announced on November 10 its first-ever $150 million cost-share agreement to produce a domestic source of high-assay low-enriched uranium (HALEU). Notably, the agreement will help finish the development of 16 advanced centrifuges at an enrichment facility in Ohio. The facility would produce 900 kilograms of HALEU annually beginning in 2024 and be America’s first commercial supply of HALEU, which is required for advanced nuclear reactors. Domestic development of HALEU has become a top priority for the DOE, as Russia is effectively the only current world producer.

• Additionally, the DOE’s Advanced Materials and Manufacturing Technologies Office announced a $12 million funding opportunity to conduct applied research, field demonstrations, and field validation to improve current procedures for lithium extraction from geothermal brines. This is the latest step in the DOE’s work to advance domestic lithium production, as well as diversify the lithium supply chain.

International Energy Agency releases Critical Mineral Policy Tracker: The International Energy Agency (IEA) released its Critical Minerals Policy Tracker, which highlights “prominent policies and regulations already in place around the world to enhance security of supply, incentivize new resource development and ensure sustainable and responsible production.” The tracker compiles close to 200 policies and regulations from 25 countries and regions currently in place around the globe to enhance the security of supply, incentivize resource development, and ensure sustainable and responsible production.

• While regions have different goals and various approaches to regulation tailored to their national circumstances, the adoption and implementation of sustainable and responsible practices in critical minerals supply chains emerges as a common theme.

S&P Global releases its 2023 metals and minerals outlook report: S&P Global released its The Big Picture: 2023 Metals and Mining Industry Outlook on November 10, which provides a look ahead of the key challenges, opportunities, and trends for the metals and mining industry through the end of 2023 and beyond. This year’s report discusses how deteriorating macroeconomic conditions will likely persist at the start of 2023, how producers will be impacted by narrowing margins, how the exploration sector will restrain activity due to tighter financing conditions, and how these conditions will reinforce the metals and mining industry’s critical role in the global energy transition. Notably, the report shows that critical mineral consumption will outpace supply, resulting in a commodity deficit, by 2024.

• Additionally, according to S&P Global Market Intelligence’s latest Lithium and Cobalt September 2022 Commodity Briefing Service forecast, over half of the 53 lithium-producing projects in the post-preliminary economic stages are in the U.S. (9), Argentina (14), and Canada (7) and will produce 42.4 million tonnes of lithium carbonate equivalent (LCE). However, even if all 53 projects are completed, the LCE industry is projected to experience a 605,000 tonnes shortage by 2030. The forecast notes that while “lithium carbonate and hydroxide projects are five times more capital-intensive than concentrate projects,” they “still remain attractive due to the higher cash margins achieved when in production.” Lastly, the report’s market forecasts show that due to medium-term supply constraints, the metals and minerals industry will experience above-average prices through 2025 and that overall, the industry will continue to experience a period of sustained growth, mainly in regions that had increased development throughout the pandemic.

European Union remains hopeful negotiations with the United States will change Inflation Reduction Act Electric Vehicle tax credits: On November 10, EU Ambassador Stavros Lambrinidis said he remains hopeful the United States and European Union special task force negotiations will result in changes to the IRA’s current exclusion of foreign electric vehicles from tax credits. Several countries and foreign automakers have expressed concerns surrounding the domestic requirements for EV tax credits, and the EU believes it would be “a guarantee of failure” for both economies since they are so connected.

Argentina trade groups says shortage of key imports threatens industry: The Argentine Chamber of Mining Entrepreneurs released a statement on November 9 saying that a limitation of key imports, increased costs, and falling prices have threatened Argentina’s mining industry. Specifically, the statement notes that the instability of imports to produce and continue the construction of new and expanding projects is threatening its ability to maintain its rate of production and could stop the industry. It also discusses how the continuing delays in the approval processes of the System of Imports of the Argentine Republic and of the System of Imports of the Argentine Republic and Services Payments Abroad is a serious concern and has been dragging on since the government began tightly controlling the official exchange rate to protect the central bank’s dwindling supply of U.S. dollars.

• The statement also notes that the mining industry “was one of the only 3 sectors that in 2021 produced a net income of foreign currency for the country,” and therefore, it is important for the industry to continue to produce and grow.

World Bank releases report on the economics of electric passenger vehicles: The World Bank released a report titled “The Economics of Electric Vehicles for Passenger Transportation” on October 31, discussing electric mobility in Organization for Economic Cooperation countries and Development countries (OECD) and low- and middle-income countries (LMIC). Despite the increasing transition to electric vehicles in OECD countries, the use of electric vehicles in developing countries is relatively low. For example, the report found that 90% of the world’s electric fleet existed in China, Europe, and the United States. However, electric mobility is increasing in LMIC countries due to electric buses and cheaper two- and three-wheeled electric vehicles.

• Additionally, the report found that the potential benefits of electric mobility for LMIC go well beyond only decarbonization and can contribute to several other development agendas, including inclusive mobility, local air quality, energy security, and industrial policy.

 Looking Ahead

• The Northern Miner is hosting Canadian Mining Symposium in London, United Kingdom, on November 28: This event will outline discover junior and mid-tier companies’ plans for future growth, as well as provide a broader understanding of some of the macro issues affecting the mining and metals markets
• Beacon Events is hosting Mines and Money London in London, United Kingdom, on November 29 – December 1: The event will look at the energy transition, ESG, sustainability, and the circular economy.
• The American Exploration & Mining Association is hosting its 128th Annual Meeting: Secure Supply Chains Start with Us in Sparks, Nevada, on December 4-9: The event is the second largest and longest-running annual mining convention in the U.S. and will feature over 100 speakers and 250 exhibitors.
• Deutsche Bank Securities is hosting the 7th Annual Lithium and Battery Supply Chain Conference in New York City, New York, on December 7: The event will include presentations and one-on-one/group meetings with senior executives from the leading lithium producers, battery manufacturers, diversified lithium recycling, consultants, and rare earth producing companies.
• Saudi Arabia’s Ministry of Industry and Mineral Resources is hosting the 2023 Future Minerals Forum in Riyadh, Saudi Arabia, on January 10-12: The event will focus on the global outlook and future of mining, regionally and worldwide, the sector’s critical role in the energy transition, contributions of mining to the development of societies, as well as mining opportunities in the Kingdom and the wider region that stretches from Africa to Western and Central Asia.
• Beacon Events is hosting Mines and Money Online Connect virtually on January 24-26: The event will focus on bringing together miners, investors, financiers, and industry professionals to network, hear market analysis, compare investment opportunities, share knowledge, discuss, debate, and conduct business virtually.
• Australia’s Mining Monthly and Mining Magazine are hosting the Future of Mining Sydney in Sydney, Australia, on February 20-21: The event will deliver an in-depth and engaging agenda focused on accelerating towards the zero entry, zero harm, and zero emission mine.

 In Case you Missed It

• World Economic Forum: What the world thinks about the new US electric vehicle tax plan 
• E&E News: Defense negotiators resist adding permitting to NDAA 
• Financial Times: Carmakers switch to direct deals with miners to power electric vehicles 
• Reuters: Electric vehicle makers burning cash, slammed by sky-high costs 
• South China Morning Post: Why Africa is critical to China’s electric vehicle race with the West 
• Bloomberg: China Has Links to Dozens of Canadian Miners Tied to Critical Minerals 
• World Economic Forum: 8 realities shaping the global future of energy 
• Mining Technology: Pilbara Minerals secures $165m to support critical minerals production 
• Reuters: Australia considering gas price cap but rules out mining tax 
• BBC: How Australia became the world’s greatest lithium supplier 
• High North News: Norwegian-Swedish Cooperation on Rare Earth Metals: Marks the Beginning of Something New in Europe 
• The Diplomat: China’s Dominance Over Critical Minerals Faces New Challengers 
• United States Geological Survey: Scientists Discover Significant Critical Minerals Potential in Northern Maine 
• Mining.com: Li-ion battery market to reach $430bn by 2033
• The Hill: California voters reject tax on wealthy that would have promoted electric vehicles 
• Bloomberg: Trudeau Envoy Labels China ‘Increasingly Disruptive’ Force 
• E&E News: S.D. county votes to declare uranium mining a ‘nuisance’ 
• Australian Financial Review: Lithium prices prove ‘immune’ to recession anxiety
• CBS: Shift to electric cars happening too slowly to avoid “climate catastrophe,” report finds

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