In Part 1 of this series for The Crucible analysts Andrew Matheson and Patrick Stratton of CPM Group tackle the tension at the heart of Net Zero’s reliance on minor metals.
The energy transition to a low (or no) carbon future rests squarely on the shoulders of the minor metals world.
To be sure, the supply of major metals like copper, nickel, and aluminium will also need to respond if we are to come anywhere close to medium and long-term targets for renewable energy in power, industry, and transportation. Yet it is the minor metals supply, refining, and processing that will face the call for the largest expansion.
If one were to listen to political voices, the future looks bright. Across the EU, many countries have passed laws to ban the sale of internal combustion engines during the 2030s. In the USA, despite its patchwork regulatory quilt, large swathes of the country will likely ban the sale of new internal combustion engine vehicles in the wake of California’s decision to do so starting in 2035. So far, so good.
But scratch a little deeper and the outlook starts to cloud. There are now several dozen lithium-ion battery factories in planning, construction, and operation in the USA and Eu-rope, with capacity set to balloon to well over 1,000 GWh of annual production capacity based on today’s plans and construction pipeline. There is almost no lithium production in either region, however, and mine development pipelines are meagre gruel for feeding such a fast-growing industry from domestic supply.
What ’s more, local opposition, environmental groups, and fossil fuel lobbyists all pose challenges to new mining projects. From Jadar Valley in Serbia to Thacker Pass in Nevada, one can understand local people’s resistance to industrial mining. Nobody is ever going to develop a mine in the middle of London, Shanghai or São Paolo, and it’s easy for urbanites to forget that real people live real lives in more-isolated, less-inhabited spots. Managing and balancing the rights of affected local populations against a wider collective need to decarbonise presents a political and societal challenge, for which we lack any useful publicly debated frameworks. Their development and validation should be an urgent policy priority.
Environmental resistance can also act as a brake on project development. It is the authors’ impression that every mining project, no matter its intended products, is opposed on environmental grounds. Developers inevitably anticipate this, giving environmental pressure groups deterrent power. In many cases, projects are likely slowed by pre-emptive work intended to counter the prospect of environmental opposition over and above the environmental impact assessments and permitting demanded by mining laws.
Then there is the drawn-out nature of the approvals process itself. At the end of January 2023 the Pebble project in Alaska (a copper, molybdenum, gold deposit) was de facto terminated by the U.S. EPA, 20 years after its discovery. The Cape Wind windfarm project came close to a 20-year development life before it, too, died, after protracted litigation. Governments have a critical responsibility here to create a legal framework that on the one hand provides for proper and thorough review of new mining projects and their wider impact, while on the other hand offers promoters (and objectors) clarity around the process and finality, up or down, at the end of the review. Not all projects should be built, but they should all have the chance to be decided upon based on merits.
Politics being politics, entrenched rivals are also playing their part in delaying progress in expanding our supply of critical materials. In the USA, opposition to littoral Atlantic Ocean wind farms is reportedly being funded, in part, by fossil fuel companies (Dead humpback whales latest setback to Biden plan for offshore wind turbines – The Washington Post). Outside of creative interpretations of antitrust law, there is little other than naming and shaming that can be done about this in the USA — a legacy of the 1976 US Supreme Court ruling in Buckley v. Valeo, which in essence equated money with speech. It does not require one to be cynical to surmise that the political paralysis in the USA is fuelled at least in part by parties with vested interests in delaying or blocking change. After all, revision of the 1871 U.S. Mining Code has been stalled since 1872. The EU, however, has greater regulatory power and should rule to prevent fossil fuel interests from undermining new energy industries.
So where does this leave the minor metals industry? Obviously, the industry as a whole, as well as individual members, can pressure legislators and regulators to enact frameworks for thorough, equitable, definitive reviews of mineral projects. At the same time, it is hard for us to fathom a radical change in the ability to execute mining projects within the next decade. The recent Thacker Pass decision may not be the end of the story since there is almost always room for further litigation. In sum, outside of Australia and Canada we see a rocky road ahead for new mining projects and as a consequence tight markets for the minor metals necessary for decarbonization. That is until and unless there is a wholesale change in political acceptance of the need to accelerate new supply of these critical materials.
Opportunities in an environment like this will broaden. Recycling of spent products, and recovery of key materials from secondary and unconventional sources is likely to garner more attention. This also could explain some of the early stage work in areas such as red mud reclamation. Reprocessing of old mine dumps is another area in which we expect to see increased emphasis, since old operations generally targeted richer primary grades and left tailings often richer in comparison with today’s primary grades.
Finally, innovation could limit demand for certain key materials. As a purely illustrative example, development of a rare earth magnet that could operate in EV motors without requiring dysprosium/terbium, would have a major impact on their prices, while a non-rare-earth magnet technology could up-end the entire rare earth market. Firms in the minor metals space exposed to decarbonisation need to watch the technology horizon with attention.
In light of the above dynamics, we forecast that the world will come up short against current renewable energy targets, whether in transportation, power generation, or elsewhere. At heart, our collective inability to organise and meet established targets is not because of a lack of expertise, of investment targets, or skills or of capital. Instead, it is a lack of political urgency that is and will continue to hold us back. Talk, after all, is not merely cheap, it is free.
By Andrew Matheson
and Patrick Stratton (contributing author)
About the authors
CPM Group is an independent commodities research, consulting, and investment banking advisory company headquartered in New York. The company is considered the foremost authority on markets for precious metals, along with manganese and molybdenum. Its entry into tantalum research came through a new collaboration with Andrew Matheson and Patrick Stratton, who are both recognised experts in the tantalum market.
Andrew Matheson, the founder and principal of OnG Commodities LLC, has 25 years of experience in the tantalum industry, leading Cabot Corporation’s tantalum ore procurement and mineral development activities, as general manager of Cabot’s sputtering target business and serving as director of R&D. His experience includes a range of other specialty materials including niobium, scandium and rare earth metals.
Patrick Stratton spent 16 years with Roskill, where he led the tantalum research. His experience also covers niobium, gallium, magnesium metal and titanium. In addition to being the lead author of published research reports on these commodities, he has also undertaken many consulting assignments for producers, project developers, financial institutions and government bodies.
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Correction: CPM Group stated in our article in the January Crucible, that Framatome’s hafnium chloride was reportedly unable to meet semiconductor industry specifications. We understand that we were wrong, and that Framatome is able to meet semiconductor requirements for hafnium chloride supply.
Image: Hard rock mining in Indonesia – by Makmikha, Shuttlestock
