On the path to net zero, the mining industry has a dual role to play. It needs to step up to help move the decarbonization agenda forward while at the same time, look to decarbonize its own heavy industry as well. At a time when demand for critical minerals and metals is rocketing, customers are also seeking out cleaner purchases and governments are focusing on sustainability and localization with a view to creating a battery value chain.
All of these pressures combined are what one panelist at the inaugural Global Battery Value Chain Conference referred to as “interesting times and polarized forces ahead.”
A growing focus on the carbon footprint
According to Chris Showalter, CEO of Lifezone Metals, the big conundrum in the market right now is how to provide a clean source of battery metals that will be enough to meet demand.
“In terms of the next five years, what we're going to wrestle with is the demand for these ESG standards of clean nickel.”
CHRIS SHOWALTER, CEO, LIFEZONE METALS
“In terms of the next five years, what we're going to wrestle with is the demand for these ESG standards of clean nickel. Because right now, if you look at some of the Philippines and Indonesian HPAL, NPI projects, that's 50 to 70 tons of CO2, and there's no other option right now,” he said.
“If you look at Tesla's impact report, you know, 30% of the CO2 is coming from the nickel in the cathode. So, in terms of the CO2 implications, it's a big factor.”
The conundrum is really a double one, as Tyler Broda, Head of EU Mining and Metals Research at RBC Capital Markets pointed out, because we don’t have enough nickel and the nickel we do have is not the right kind.
“When I look at a nickel project these days, I almost look at the CO2 in the same remit as the cash costs, which is a much different situation to hedge than we had a few years ago,” he said.
How to source cleaner metals
Cleaning up mining operations is not just necessary for the net-zero journey, but also to meet customer demand, particularly in Europe.
“In the past, it was all availability and price, that was what the customers were keen on. Now carbon footprint is playing a bigger and bigger role,” said Joni Lukkaroinen, CEO of Terraframe.
“If you look at where additional capacity of nickel is coming from in the coming years, that’s Indonesia. And perhaps in certain markets, that’s feasible from the carbon footprint point of view. But in Europe, where consumers are keen on carbon footprint, I don’t think it’s a viable solution to have a five to ten times higher carbon footprint than the industry average.”
“In Europe, where consumers are keen on carbon footprint, I don’t think it’s a viable solution to have a five to ten times higher carbon footprint than the industry average.”
JONI LUKKAROINEN, CEO, TERRAFRAME
A possible solution lies in technology advances that can help clean up the process of getting metals out of the ground and through the early stages of refinement.
“Smelting is an archaic, very high-energy-intensive process,” said Showalter, “There’s better, more innovative processes.”
Diversification of battery metals will also help, as different chemistries are used in different battery applications.
Partnerships and alignment
Miners increasingly need to look to partnerships and alignment with auto manufacturers and governments to address supply issues and create a battery value chain. For Trevor Walker, CEO of Frontier Lithium, what’s apparent today is how many mining firms are turning to non-traditional sources of capital.
“For example, OEMs really looking for key partners and for suppliers to provide project finance support, in line with governments. In Ontario, it's been close to $30 billion of attraction for OEMs from PCAM, CAM, cell and EV manufacturing. Those capital expenditures are roughly 30% provided by government, both at the provincial and federal level, through grants. So that's a really interesting dynamic, at such an early stage in the industry, to develop. It’s clear that public-private partnerships are really quite strong,” he said.
Governments aren’t just involved with grant-making and subsidies, but are also actively involved in sourcing new materials. In Europe, the Critical Minerals Act and in the US, the Inflation Reduction Act are helping to ramp up attractive environments for mining, but there’s a lot of activity in diplomatic channels.
“I think the Inflation Reduction Act is a bit of a work in progress,” said Showalter. “The next extension of the act is how can you start including additional strategic countries that have sources of critical metals to be unlocked? There’s no reason that Africa can’t participate in the entire energy transition and I think Tanzania is going to be a phenomenal story going forward.”
“China has been subsidizing these industries for the last 10 years, and they've done an amazing job of creating national champions and a national industry. And if the West doesn't pick up the speed, then then they're gonna get left behind.”
BRYCE CROCKER, CEO, JERVOIS GLOBAL
However, there’s much more that governments can be doing to financially support mining as well.
“Both the United States and now Europe are moving to understand that it's really not about creating a dislevel playing field. China has been subsidizing these industries for the last 10 years, and they've done an amazing job of creating national champions and a national industry. And if the West doesn't pick up the speed, then then they're gonna get left behind,” said Bryce Crocker, CEO of Jervois Global.
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