There have been two main themes emerging in the battery metals markets for a post-coronavirus world: the first is a focus on securing domestic supply chains, and the second, broader focus, is on the need for investment and development of renewable energies to help curb climate change.
Covid-19 and the resulting global shutdown have highlighted for many jurisdictions the need for local supply chains for key materials. We’re seeing a drive, especially throughout North America and Europe, to become self-sufficient in securing battery materials and sourcing local supply chains. Local governments have been accelerating their financial commitments into battery metals projects: Germany, France, and Poland, among others, have announced major financial stimuli into their battery industries, and the EU has already dropped around $US550m (of a total budgeted $US88bn) into various battery metals projects.
Covid-19 has disrupted the flow of goods around the world, and we’re now seeing original equipment manufacturers (OEMs) for battery packs and other auto parts with no access to the materials they need. OEMs are now looking to invest upstream in mining operations or establish more offtake contracts with companies, a strategic move to secure their supply chains, to make sure they get the products they need, when they need it.
We’re also seeing a distinct shift in conversation in the batteries space, which up to this point has been largely dominated by electric vehicles. As more governments back their national utilities’ shifts away from coal and towards renewables, the importance of energy storage has come to the fore.
A recent World Bank report, Minerals for Climate Action, from May 2020 finds that the production of battery materials (such as graphite, lithium, cobalt, etc.) would need to increase by 500% by 2050 to meet growing demand for clean energy technologies. In an effort to keep global temperature rise to under 2 degrees Celsius, an approximate 3 billion tonnes of minerals and metals are needed to build the wind, solar, geothermal, and energy storage facilities. And while recycling and reuse are increasingly becoming part of the discussion, the World Bank Group has shown that even a 100% increase in recycling rates would not be enough to meet the growing demand for metals used in renewable energy technologies and storage.
Covid-19 has caused major disruptions to the mining industry globally, affecting both supply and demand, but has also highlighted for the mining and manufacturing industry, ways to focus on securing their supply chains for key metals and implementing strategies to meet energy demand in a changing world.