Pressure on the supply of critical materials will continue to mount as road transport electrification expands to meet net zero ambitions. Demand for EV batteries will increase from around 340 GWh today, to over 3500 GWh by 2030 in the Announced Pledges Scenario (APS). Cell components and their supply will also have to expand by the same amount. Additional investments are needed in the short term, particularly in mining, where lead times are much longer than for other parts of the supply chain – in some cases requiring more than a decade from initial feasibility studies to production, and then several more years to reach nominal production capacity. Projected mineral supply until the end of the 2020s is in line with the demand for EV batteries in the Stated Policies Scenario (STEPS). But the supply of some minerals such as lithium would need to rise by up to one-third by 2030 to satisfy the pledges and announcements for EV batteries in the APS. For example, demand for lithium – the commodity with the largest projected demand-supply gap – is projected to increase sixfold to 500 kilo tonnes by 2030 in the APS, requiring the equivalent of 50 new average-sized mines.

Eoin Treacy's view

If the quantity of metal required from mining operations needs to increase 10-fold to meet projected demand there is going to have to be a serious reckoning between expectations and reality. Either we are going to have a mining boom larger than anything seen since the days of the California gold rush or expectations for the energy transition and decarbonisation will need to be scaled back/adapted in a very big way.

At a minimum lithium ion batteries will be limited to consumer electronics and transportation. Utility scale batteries are much likelier to focus on cheap materials like iron phosphate chemistries. ESS Tech debuted on the market via SPAC in September. The share currently has base formation characteristics and a sequence of higher reaction lows.

Indonesia is tightening up export regulations for nickel exports so that is helping prices to stabilize after a massive short-term boom and bust cycle. Russia is another major supplier of the metal so geopolitical considerations and sourcing materials from friendly nations is likely to be a major feature of the future of the materials sector.
Lithium Americas expects a court decision today on whether it will get to build the Thacker Pass mine. The share hit a new three month high today.