Let’s start with a broad look at the impacts of regional regulations, such as the Inflation Reduction Act (IRA). What impacts have you seen on the mining and investment industry so far?
Since the IRA came into effect, we’re seeing a lot more activity on the down and midstream added value projects in the US, and many more companies are now taking investment and submitting applications for permits, incentives, and project finance. Section 45X, that requires substantial domestic added value, is encouraging the reshoring of production and industrial activities, albeit on the upstream side. Mining might be more reliant on “friend shoring” with free trade or equivalent status nations in future.
The rub in the US remains the slow permitting and the many obstacles to implementation, especially for mining and, to a lesser extent, the midstream conversion chemical plants. Energy transition projects do not have a fast track or priority route to permitting, so in theory, a lithium mine, a nickel sulphate plant, or a natural graphite purification plant will not have a different licencing track than a new petrochemical plant or fossil fuel venture.
The demand side stimulus of section 30D and the US$7,500 tax credit for the purchase of qualifying electric vehicles (EVs), is helping bring EVs into the mainstream and providing a buffer solution until more basic and affordable Western models come to market. We still don’t really have the Model-T equivalents to truly open the floodgates on this side of the globe, while China has affordable models from BYD, Geely, and others dominating sales.
In other countries, we are seeing positive signs of increased upstream activities stimulated by the increased demand and expectation for rapid demand growth from the down and mid-stream in the region. Brazil recently declared the state of Minas-Gerais as the Lithium Valley, and more companies are going to Sigma Lithium. Brazil is also blessed with nickel, graphite, niobium, and other critical minerals.
In Canada, where incentives and support mechanisms are very advanced and effective on both provincial and national levels, we are seeing the emergence of battery materials hubs, such as Becancour in Quebec, enjoying the benefits of available in-country lithium and graphite resources and hydropower. Argentina seems to be unlocking its vast lithium brine resources following Chile and Peru, along with other neighbours, providing answers to the demand growth that electrification creates for copper. Exploration is ongoing in other countries in South America, which can also provide regional feedstock to the North American downstream. It will be interesting to see if countries like Guatemala and the Dominican Republic, with vast high-grade nickel laterite resources, will evolve with regional HPAL solutions like Indonesia has for APAC, but with more strict environmental standards and controls.
Do you see these types of regulations focused on de-globalization changing the landscape moving forward? Where do you see changes happening with regards to regional supply chains, etc.?
The emergence of regional supply chains is more of a logical and practical consequence of the regulations, rather than their primary goal. Once you add technology and mid-stream processing capacity, regional upstream (permitting issues aside) will open and feed into this supply chain. Overtime, proximity and being part of the same supply chain can also support consolidation and vertical integration. Once links in the supply chain are integrated, it is easier to take decisions of parceling the various processing stages in a more efficient manner, moving less low-concentration or hydrated materials around, and saving on volume, weight, and distance.
We’re also seeing a growing focus on the mid and downstream getting involved at the metals and mining level. Do you see these as a benefit to the industry?
We are seeing OEMs and cell manufacturers making investment commitments into the upstream and making contractual arrangements to secure future offtake rights feeding into their value chains. For example, GM with Lithium Americas, Ford with Ioneer, Tesla with Talon, and Panasonic with Nouveau Monde Graphite. We are also seeing cell and electrode manufacturers going to previous links in the chain, i.e., a cathode maker investing in or contracting with a future pCAM supplier or battery recycler. These are positive developments that either secure funding to projects directly, or enable third-party funding by proving the revenue streams.
Having said that, I do think that OEMs and battery manufacturers could also help stimulate the upstream supply side by acting as funds of funds to private equity mining funds that are focused on battery materials. This will help provide a broader basket of solutions besides betting on the success of a specific project or company.
On the battery recycling side, regional supply chains are almost inherent because of laws and regulations around the world that limit the export, import, and transportation of these materials. In this context, Li-Cycle (NYSE: LICY) is the pioneer of the localized spokes and regional hub approach.
An interesting technological development stimulated by DOE-ARPA grants, which will enjoy the IRA tax benefits, is the development of a third approach to recycling, namely direct recycling, adding to the two existing routes of pyro-tech and hydro-tech. This new approach aims to rejuvenate and repair the battery materials, bringing them back to their original potency in a nondestructive manner. For example, Princeton NuEnergy and its low temperature plasma assisted treatment.
The rhetoric over critical materials has been growing over the past few years. How are these new discussions changing the way the public feels about the mining industry? What conversations do we need to be having on the importance of mining?
The risks of global warming and severe climate changes are existential and the challenges of avoiding them are so great that we need to adopt the approach of doing “Everything, Everywhere, All at Once!” We need more mining as soon as possible, intentional recycling technological advances and efficiencies, chemistry and configuration upgrades, decarbonizing steel and cement supply chains with green versions, rolling out as many renewable energy generation projects as possible, and changing our habits as consumers of energy and mobility.
Everyone in this industry needs to help spread the word and change the image of mining if we want to win the battle against global warming and climate change
Unfortunately, there are still trust issues between the mining industry and the public, for historical reasons (contamination of land and waterways, safety issues, social injustice), that don’t really reflect the modern mining industry, which is safe, clean, and tech savvy. Everyone in this industry needs to help spread the word and change the image of mining if we want to win the battle against global warming and climate change. Perhaps one way of doing this is by incentivizing reprocessing projects to create a visual clean up and redemption process, side by side with making sure that all new projects are safe, efficient, maximize yields of primary extraction, and rehabilitate in parallel to the mining.
Though they mean well, some supporters of energy transition and decarbonization are slowing things down by insisting on perfect solutions and making us miss out on some of the very good ones. For example, there is strong resistance to mandating the addition of carbon capture equipment to fossil fuel power generation plants and petrochemical facilities because of a fear that this will create an excuse for delaying their decommissioning.
As the focus on the energy transition continues to grow, how can mining place itself within this dialogue?
The reality is, we need mining if we want to stop global warming and save the planet. We will not have EVs – their batteries or motors, ESS, solar panels, wind farms, charging infrastructure, computers and communication chips, and many more essential components and technologies without it. Recycling, as well as efficiencies and technological advances, will play a role of ever-growing importance, but for decades to come we will still need to bring fresh virgin metals and minerals into circulation by mining them.
There is nothing greener in the broad and purpose-based sense than a critical minerals mining project done properly and equitably. Humans, the air we breathe, and the water we drink, are glued to the crust of the earth by gravity, and our survival and livelihood is and will remain fully dependent on harvesting and mining the crust of the planet.
The beauty of 21st century responsible mining is that the primary conversion projects can be combined with renewable energy generation, whether by attaching a solar or wind project, placing them near a hydroelectric or geothermal source, or by cogeneration. Moreover, mines can become co-projects with carbon capture systems and carbon sequestration solutions, and the DOE in the USA has an active incentive plan to support technologies and mines that wish to implement this approach. Oftentimes, the mine itself (as it backfills and continuously rehabilitates) or the geological layers on, below, or around the mineralized zones, may prove suitable for carbon sequestration. New mines use electric yellow haulage fleets and mining equipment, are usually autonomous, and they are a saucer full of technology.
Mines are discovered by various methods which reduce the risk of false negatives. Activities at the surface are monitored, tracked, and measured accurately to single cubic metre levels by drones transmitting data to control rooms, making sure waste can be backfilled or stacked quickly without going beyond initial crushing. Conversion and extraction are continuously improving with technologies that enable switching from pyro-met to hydro-met, enabling on site mine-to-metal production, and utilizing lower grades of materials as higher grades become depleted and rare. A “Kaizen” approach of continuous evolution and improvements on chemistry and materials science is making extraction, concentration, and conversion of metals less energy intense, pollutive, and more close looped than in the past.
