Energy markets obsess over critical minerals

One theme dominated the conversations during the Axios Pro’ Climate Offerings release week: Where the hell will the minerals and metals needed to build more batteries, solar panels, and wind turbines come from?

Why it matters: Demand is increasing, but domestic extraction of these materials has been delayed and the Russian invasion of Ukraine has disrupted world markets.

  • mackenzie wood yesterday I warned that the crisis has left an “indelible mark on some commodity markets”, marking the beginning of a “protracted shift in some of Russia’s trade from Europe to China and India, and a lack of Western involvement in the mining and Russian metals.
  • Your new dinner joke: The energy transition will be from liquids to solids, that is, from oil and gas to metals and minerals.

State of the situation: About 80% of the world’s raw lithium last year, the core component of lithium-ion batteries, was mined in Australia, Chile and China. Most of the refining and manufacturing capacity is also located in China.

  • After a recent increase of 230%, nickel prices in the last 24 hours experienced swings of 9% on the London Metal Exchange, causing Bloomberg to declare “nickel chaos”.
  • Woodmac’s Robin Griffin: “The price shocks themselves… will breed potentially lasting change.”
  • USA earlier this year had a lithium mine in operationand a nickel mine will close in 2025, an industry expert tells Axios.

What they are saying: “We are already extremely behind. At a fundamental level, these factors have all the ingredients for a mining renaissance in the US,” John Dowd, CEO of GoGreen Investments, a SPAC focused on the energy transition that announced a $240 million increase last fall. , tells Axios. “However, the main challenge is anti-development policy. If we can’t break the policy logjams, we won’t be able to capitalize on this opportunity, and that may affect our economy in the long run.”Yes, but: The environmental damage of mining is considerable.

  • This New York Times report says that a single nevada lithium mining The effort will consume billions of gallons of groundwater that local ranchers depend on, potentially polluting the water for hundreds of years, and disrupting the range and habitat used by pronghorn antelope, grouse and golden eagles.

In the meantime: The folks at the zinc team, also known as the Zinc Battery Initiative, an effort of the International Zinc Association, say the US already has enough mining and refining capacity for what could be a ready alternative to lithium. .

  • “There is enough refining capacity to meet current demand easily. When demand for battery-grade zinc increases, more battery-specific refining capacity will need to be added, which can be achieved with the availability of additional capital,” he said. ZBI manager Josef Daniel. -ivad tells Axios.
  • Then there is the Canadian-based company, The Metals Company, initially valued at $2 billion at the time of its SPAC last year, which aims to collect critical minerals, particularly nickel, from the seafloor.

Reality check: Whether a battery uses lithium or another critical mineral in its chemistry, it will generally still need nickel in its cathode.

  • To put the change in perspective, an EV uses approximately six times as many critical minerals as a conventional internal combustion vehicle, according to the International Energy Agency.
  • A wind farm requires nine times as many critical minerals in its propellers, tower construction and potential battery as a similar-sized combined-cycle natural gas plant, the IEA says.

💭 Our thought bubble: There will be a lot of thinking and, for investors, uncomfortable conversations about where and how we get the material we will need to avert the climate crisis.

  • Founders and backers, as always, have the option of largely ignoring these questions or actively participating, and not just through their government relations departments.

Get up to speed quickly: The terms “critical minerals” and “metals” tend to be used interchangeably. However, the critical minerals are different from rare earths, the latter of which are used in photovoltaic solar panels.

Alan Neuhauser is co-author of the Axios Pro Climate Deals newsletter. Register now.

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