Sustt: Are critical mineral markets in critical condition?
During last Monday's global market meltdown which caused panic across financial markets, the minerals and metals crucial to the future of the energy transition were hit hard by rapidly spreading market contagion.
But this price hit wasn't a one-off for critical minerals and metals. Despite our need for these commodities, various mining majors are cutting critical material production as the market-wide price slump continues...
??? In-depth insight
Lithium
Albemarle trims lithium production amid 80% price drop
?? Written by Nicola Watts : "Amidst a slower than expected growth of EVs and a glut in battery supplies, it’s not surprising that lithium prices have tumbled. I expect that we will see more producers look to cut their capacity in the coming months as losses mount up. Although I believe this trend will continue for several years to come, there will be a turnaround as we move closer to the end of the decade due to many countries setting targets for 100% of new car and van sales being fully electric models by 2035."
What's happening? Albemarle, the world’s largest lithium producer, has announced that it will pause the expansion of its Kemerton plant in Australia due to weak lithium prices. The facility produces battery-grade lithium hydroxide for electric vehicles (EVs) and other products. The Tesla supplier will also idle one of its processing lines to focus on a single line, reducing the workforce by 40%. CEO Kent Masters stated that the plant’s production capacity will decrease by half to 25,000 tonnes. Albemarle had previously planned to expand the plant to four lines with a 100,000-tonne capacity. It is now halting construction of the third line, having already dropped plans for the fourth. Albemarle reported a Q2 net loss of $188m, compared to a $650m profit in Q2 last year. (CNBC)?
Why does this matter? Lithium prices, a critical material for electric vehicle (EV) batteries, have slumped by approximately 80% since late 2022, and the current surplus is expected to peak in 2027 before returning to deficit by the end of the decade, according to Benchmark Mineral Intelligence. Private investment bank Berenberg?noted?that lithium prices are currently under $12,000 per tonne, with European demand flat alongside a weak 10% increase in the US. The bank added that prices are unlikely to recover until 2026. The downturn also complicates?plans?by the US and its diplomatic allies to utilise Australian battery minerals to reduce reliance on Chinese companies.?
EV sluggishness – Compounding the issue is the underwhelming uptake of EVs, which is not?moving as fast as projected.?As a result, some automakers, most recently Porsche and General Motors, have trimmed their EV sales targets. Tariffs on Chinese EVs imposed by the EU and US are pushing up prices, further deterring potential customers in addition to challenges related to insufficient public charging infrastructure and perceived range anxiety. Furthermore, there is an oversupply of batteries that will likely outstrip demand until the end of the decade...
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?? Chart of the week – From battery metals to rare earths: a market-wide slump
The International Energy Agency's (IEA) latest Critical Mineral Outlook report includes several interesting charts showing the price trajectories of minerals and metals critical to the energy transition. Despite the market-wide slump in prices, the IEA puts this down to "a strong increase in supply and ample inventories of technologies made with critical minerals." The IEA predicts that the total market value of key transition metals – namely, copper, lithium, nickel, cobalt, graphite and rare earth elements – will more than double to reach $770bn by 2040 under its Net-Zero Emissions Scenario, suggesting prices will eventually recover.
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?? Bite-sized insights?
??? Glencore's gloomy cobalt outlook – Glencore, the world's second-largest cobalt miner, predicts a cobalt oversupply until 2026 as new production outpaces demand. The firm has stopped stockpiling and started selling inventory, and prices have plunged 70% from its peak two years ago. China's CMOC, now the world's largest cobalt producer, has played a key role in the glut by ramping up production faster than expected. Glencore may increase production from its Mutanda asset in the Democratic Republic of Congo when the market returns to balance, but has cut output at Mutanda due to weak prices in the meantime. In separate Glencore news, the commodity giants' shareholders voted against scrapping its coal division in what would have marked a major shift in strategy. Instead, coal will remain firmly in Glencore's plans in the latest corporate shift back towards fossil fuels and away from ESG initiatives. (Bloomberg)
?? Qatar's critical mineral investment – TechMet, an Ireland-based, US-backed critical minerals investment firm, received a $180m investment from the state-backed Qatar Investment Authority (QIA) last week as the firm looks to expand its portfolio of critical mineral projects across lithium, nickel, cobalt and rare earths. The deal helps TechMet reach its $300m fundraising target, which has also seen contributions from S2G Ventures and the US International Development Finance Corporation. QIA's investment is an unusual collaboration between the Gulf States and the West. TechMet, valued at over $1bn, is now one of the largest private investors in the critical mineral sector. (Business Green)?
??? Sustainably purifying rare earths – Researchers have developed a new technique to purify rare earth elements (REEs) at room temperature without using toxic compounds. The method uses a specific chelator, G-macropa, which was found to concentrate dysprosium by a factor of over 800. Current liquid-liquid extraction concentrates it by a factor of less than 10. It could enable domestic REE production in the US, reducing reliance on predominantly Chinese imports and providing a more sustainable source of these critical materials. (Phys.org)