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General Market Commentary
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General Market Commentary
Strengthening fundamentals continue to bolster ‘new age’ metals outlook
VANCOUVER (miningweekly.com) – ‘Big money’ investors are increasingly looking to invest in the relatively small ‘new-age metals’ space, comprising metals such as lithium, graphite and cobalt, as strengthening fundamentals for these minerals and an unprecedented high-impact investment opportunity draw the potential for bonanza profits.
As Lithium Americas CTO Dr David Deak puts it: “We are here for the imminent energy revolution mirroring the industrial revolution of about two centuries ago.”
He was one of the line-up of speakers at London-based Benchmark Mineral Intelligence’s Vancouver leg of its World Tour 2017 series of seminars on Friday, in which Mining Weekly Online participated.
“We are at the convergence of three multi-trillion-dollar industries, comprising the auto, tech and energy spaces. The main drivers are electric vehicles (EVs) with grid storage solutions being another major driver coming down the road,” Benchmark Mineral Intelligence MD Simon Moores told the audience.
Pure EVs are expected to push demand for energy metals significantly higher, with Tesla Motors, Nissan and Chevrolet’s latest EV models being the main impetus, each equipped with large lithium-ion-based batteries in the 60 kWh to 65 kWh range.
“The era of the semi-mass market EV has started,” Moores declared.
According to Deak, the lithium-ion battery industry has reached “the point of no return”, with the market having reached cost parity between EVs and internal combustion-driven vehicles.
New York-based House Mountain Partners founder and co-author of The Disruptive Discoveries Journal Chris Berry likened Tesla’s 2014 announcement of its first ‘gigafactory’ as the ‘Big Bang’ for the industry.
“What a difference three years makes. While there were in 2014 only 16 companies manufacturing lithium-ion batteries, that number has grown to 156 in 2017. This has driven down the battery cost per kilowatt hour by 60% in three years, while EV sales more than doubled in the same time frame,” he said.
So far this year, the industry has raised about $500-million for lithium investment, and Berry believes investors will match the $1-billion raised in 2010 to 2012 “soon”.
EV BOOM
Moores pointed out that the EV industry is gaining critical mass, with the outlook for lithium-ion battery demand by 2025 outstripping current supply. While projections for how much battery manufacturing capacity will be required by then vary between about 300 GWh to nearly 550 GWh, Benchmark places the figure at just over 400 GWh of battery demand.
That is almost a 700% increase over 2016’s estimated battery market size of about 70 GWh, Moores says.
This, in turn, will drive lithium demand by 2025 to between 250 000 t and 425 000 t, up from 2016’s estimated demand of about 80 000 t.
Demand for batteries will also impact graphite, lifting demand to a range of between 350 000 t and 580 000 t, according to various analysts, with Benchmark’s forecast at 450 000 t. In 2016, demand was about 100 000 t.