Friday 18th September 2020

Resource Clips


Posts tagged ‘cobalt’

European Union looks to Canada and others for critical minerals supply

September 4th, 2020

by Greg Klein | September 4, 2020

The EU’s newly released 10-point critical raw materials action plan calls for development of European supplies and supply chains, as well as further re-use and recycling. But for those materials not found on the continent, the European Commission says, “pilot partnerships with Canada, interested countries in Africa and the EU’s neighbourhood will start as of 2021. In these and other fora of international co-operation, the commission will promote sustainable and responsible mining practices and transparency.”

European Union looks to Canada and others for critical minerals supply

The commission made the proclamation September 3 as part of its Green Deal, a program to achieve a climate-neutral, digital economy and “stronger Europe.” As has been the case in the U.S. over the last four years, the continent has been expressing increasing concern about security of supply for necessary resources. The EU also released an updated list of critical raw materials, the first since 2017.

Using the same methodology that emphasizes economic importance and supply challenges, the new list numbers 30, compared with 27 in 2017. Added for the first time are lithium, bauxite, titanium and strontium. Helium was dropped due to a decline in economic importance.

Heavy rare earths, light rare earths and scandium rate three separate categories. Also included are critical standbys like niobium, tantalum, fluorspar, cobalt and platinum group metals. Not exclusive to minerals, the list includes natural rubber.

Coking coal, phosphorus and silicon metal ranked among EU choices that didn’t make the most recent (from 2018) U.S. list of 35 critical minerals. Some other American exclusives not listed by the EU are helium, manganese, potash and chromium.

The commission referenced World Bank data showing “demand for metals and minerals increases rapidly with climate ambition. The most significant example of this is electric storage batteries, where the rise in demand for relevant metals aluminium, cobalt, iron, lead, lithium, manganese and nickel would grow by more than 1,000% by 2050 under a 2°C scenario, compared to a business-as-usual scenario.”

The commission’s Maroš Šefčovič added, “For e-car batteries and energy storage alone, Europe will for instance need up to 18 times more lithium by 2030 and up to 60 times more by 2050.”

Supply security can be jeopardized by reliance on a single country or company, the commission warned. “China provides 98% of the EU’s supply of rare earth elements, Turkey provides 98% of the EU’s supply of borate, and South Africa provides 71% of the EU’s needs for platinum and an even higher share of the platinum group metals iridium, rhodium and ruthenium. The EU relies on single EU companies for its supply of hafnium and strontium.”

The commission’s specific mention of Canada as a preferred supply source follows the Joint Action Plan on Critical Minerals Collaboration that the U.S. and Canada announced in January and reaffirmed last June.

Energy storage

July 29th, 2020

It’s key to carbon-neutrality. But how to overcome raw material cost and supply security challenges?

by Ron MacDonald | July 29, 2020

The development of new, clean energy sources is of vital importance for a sustainable society. As the world, collectively, is increasingly pushing aside non-renewable sources such as natural gas, oil and coal, we look to clean energy sources such as hydro, wind and solar generation. However, in order to support the economics of renewables, energy storage allows for the capture of energy produced at one time for use at a later time and is the key to ensuring a carbon-neutral world.

It’s key to carbon-neutrality. But how to overcome raw material costs and supply security?

The total energy storage market is expected to grow to $546 billion in annual revenue by 2035, according to a report released by Lux Research. In the United States, the market value is forecast to increase from $720 million today to $5.1 billion in 2024 according to market research firm Wood Mackenzie Power & Renewables, with the U.S. already seeing a 93% increase in the energy storage systems deployed in the third quarter of 2019.

Decreasing costs in accessible technologies have driven interest in energy storage forward like never before. For example, the price of lithium batteries has fallen by nearly 80% over the past five years, allowing for more integration of energy storage into solar power systems. Even more affordable than lithium is zinc. Zinc-air batteries empower the lowest cost of energy storage in the market for long-duration applications, resolving the intermittent and unpredictable nature of renewable energy sources such as wind and solar at an economic price.

Lithium-ion cells lose their charge over time, whereas zinc-air batteries maintain their full charging capacity for the up to 20-year lifecycle of the battery. Zinc-air energy storage systems are capable of economically storing energy from eight hours to 100-plus hours. This is considerably longer than the four-to-six-hour upper economic limit for lithium-ion. The lithium-ion battery costs flatten out at six hours, while zinc-air battery costs per kWh installed become even more cost-effective over longer durations.

A look at energy storage during and beyond COVID-19

Ron MacDonald: “Zinc is abundant in North
America and its price has been very stable
over the past 20 years. All of the other major
components of the zinc-air battery are also
available in North America.”

The growth of the energy storage market is driven by the growing demand for high-capacity, safe, cost-effective and eco-friendly energy storage solutions. The global metal-air battery market size is estimated to grow from US$438 million in 2020 to US$842 million by 2025, growing at a CAGR of 14%, reports ResearchAndMarkets.com, which segments the market into zinc-air, lithium-air, aluminum-air and iron-air.

Dependency on a supply chain of hardware components, metals and chemicals, many of which come from outside North America, is a challenge for the growing energy storage industry. Metals such as lithium, vanadium, rare earths and cobalt used today in many energy storage batteries are impacted by price volatility, geopolitical concerns, security of supply, as well as coronavirus-related supply chain disruptions. Those same risks do not apply to zinc energy flow batteries.

Countries that are major producers of raw materials required for battery production have been subject to strict restrictions to control the spread of the virus. For example, Australian lithium production companies have set up strict guidelines for businesses in the industry in terms of long-distance travel restrictions. In contrast, zinc is abundant in North America and its price has been very stable over the past 20 years. All of the other major components of the zinc-air battery are also available in North America, providing a low-cost, robust and safe energy storage solution that has not been impacted by the pandemic. Zinc-air batteries offer a homegrown solution supporting the transition to a cleaner, greener post Covid-19 world.

 

Ron MacDonald is president/CEO of Zinc8 Energy Solutions CSE:ZAIR, the leader in zinc-air battery technology. The Zinc-Air Flow Battery from Zinc8 is an energy storage unit designed to serve a wide range of long-duration applications for microgrids and utilities. He can be reached at ron@zinc8energy.com and on LinkedIn.

Read Keeping the Lights On by Ron MacDonald.

Watch an online presentation from Zinc8 Energy Solutions.

Stan Sudol to Elon Musk:

July 26th, 2020

Stop fretting over potential nickel shortages and back some potential nickel mines

by Stan Sudol | posted with permission of Republic of Mining

Stop fretting over potential nickel shortages and back some potential mines

As its Gigafactory continues to ramp up production, Tesla already
produces more kWh of batteries than all other automakers combined.
(Photo: Tesla Inc.)

 

Elon Musk is practically begging nickel miners to boost production as potential future shortages would severely impact his ability to manufacture electric vehicles, as the metal is a key component for the batteries Tesla Inc. depends on.

Historically, nickel has always been a boom/bust metal due to the fact the world only produces about 2.1 million tonnes of the material a year, as opposed to a more commonly used metal like copper at 20 million tonnes. And roughly only half of nickel production is of the Class-1 type that is used in batteries that run electric vehicles.

Currently the cost of nickel is nearing a cyclical bottom, hence the reluctance of nickel miners to invest the possible near-billion it takes to bring on a new mine.

Musk is a multi-billionaire and his company stock is at an all-time high. Instead of whining to the mineral industry to invest “their shareholder money” in new nickel production at a time of low returns, here are some suggestions to calm his fear of future shortages:

 

Stop fretting over potential nickel shortages and back some potential mines

“At the heart of these products are batteries,” says Tesla.
But Elon Musk worries about the nickel needed to make them.
(Photo: Joni Hanebutt/Shutterstock.com)

1. Why can’t Tesla start stockpiling Class-1 nickel now during a time of low prices? The American military stockpiled nickel during the 1950s and 1960s as it was in constant short supply due to a booming economy and its use as a critical metal for military production—the Korean conflict, Vietnam War and the Cold War between the U.S.A. and U.S.S.R. What is to prevent the company from stockpiling two or three years’ worth of nickel needed for its car batteries? This would help firm up prices and encourage more exploration or expanded production.

During the 1950s, the U.S. government gave Falconbridge/Glencore a $40-million subsidy—roughly an astonishing $390 million in 2020 dollars—to help develop one of their Sudbury nickel mines and ensure diversity of supply. At the time, INCO supplied almost 80% to 90% of the West’s supply of nickel and the military were terrified of being so dependent on one key supplier. Perhaps subsidizing a few companies that are near production might be the route to go.

 

2. Polish miner KGHM has a terrific nickel deposit—the Victoria in the Sudbury Basin. They don’t seem to be that interested in developing the project that some analysts feel would need roughly a billion to put into production.

For much of the last century, the Sudbury Basin was basically the Saudi Arabia of nickel mining for the Western world.

Just a quick tangent for any Americans or Canadians who are not “mine literate.” For much of the last century, the Sudbury Basin was basically the Saudi Arabia of nickel mining for the Western world. The communist East had the astonishingly rich nickel mines of Norilsk, located in the isolated wilderness of Siberia. There are still enormous nickel reserves in the Sudbury Basin. Why we are not producing more would practically take an entire book to explain!

Why doesn’t Musk try to buy the deposit from KGHM and hire contractors to build and run his own mine? He would get nickel, copper and some cobalt for his car batteries. In addition, the mine would also provide him with platinum group metals and some gold and silver. If KGHM refuses to sell at a reasonable price, Ontario/Canada might enact some sort of “build/sell it or lose it” legislation!

 

3. Sudbury junior miner Wallbridge Mining has some very promising nickel properties in the Parkin Offset Dyke in the northeastern corner of the Sudbury Basin. According to the Wallbridge website, “The quality of the mineralization found in the Parkin Offset is high. The average nickel tenor for the mineralization found within the Parkin Offset is approximately 4%, which is comparable to the tenors of some deposits found in the Copper Cliff Offset Dyke.” Some of the Sudbury Basin’s biggest nickel mines, past and present, are on the Copper Cliff Offset Dyke, hence the importance of that statement!

Unfortunately, Wallbridge is not doing any exploration on this property during 2020 as the company is focused on its Quebec gold properties. Who can blame it with the precious metal hitting $1,900 an ounce? Why doesn’t Musk buy an equity position in the junior and fund it to the tune of $20 million or $40 million worth of exploration on the Parkin Offset Dyke?

 

4. Another junior nickel explorer that might be worth looking at is Canada Nickel and its promising nickel-cobalt sulphide project near Timmins, Ontario. A maiden resource estimate last February showed 600 million tonnes (measured and indicated) at 0.25% nickel and 310 million tonnes (inferred) at 0.23% nickel. As with all junior explorers, financing is always a challenge. Perhaps a significant equity position by Musk in exchange for future nickel and cobalt would ensure Tesla has no problems accessing these critical metals.

 

For crying out loud, it’s a skinny 300-kilometre gravel road and a couple of bridges. We are not building the Panama Canal or the Pyramids of Giza!

5. And finally there is the enormous mineral potential of the Ring of Fire with a 43-101 nickel deposit owned by junior miner Noront Resources. More nickel deposits may be discovered. Perhaps Musk could chat with Premier Ford and impress on him the importance of shortening environmental assessments and building that road into the Ring of Fire. For crying out loud, it’s a skinny 300-kilometre gravel road and a couple of bridges. We are not building the Panama Canal or the Pyramids of Giza! In the 1940s, the Canadian-Alaskan highway—roughly 2,700 kilometres—was built in eight months. No typographical error folks, less than one year!

The proposed road is on the traditional territories of Webequie and Marten Falls first nations, who both want it built. Hell, Musk should even consider putting a few hundred million in financing that road—I say this only half in jest as both the provincial and federal levels of government might be broke before construction starts.

And Premier Ford might even share the seat on that bulldozer with Musk to start building that vital road which was promised during the 2018 Ontario election campaign.

The Ring of Fire not only has nickel but potentially significant deposits of copper, zinc and various other critical metals along with chromite. And Premier Ford might even share the seat on that bulldozer with Musk to start building that vital road which was promised during the 2018 Ontario election campaign. It’s been a little over two years since the Conservatives have come to power and the patience of the entire sector is wearing thin! Road construction would be a terrific infrastructure investment to help alleviate the pending COVID recession/depression!

 

6. Sorry about the Ring of Fire road digression. I have not even mentioned the Thompson, Manitoba Nickel Belt, Newfoundland’s Voisey Bay nickel mine and Quebec’s Raglan nickel deposits, all of which probably have some juniors that could use some seed funding to drill near these world-class deposits—as the old saying goes, the best place to find a new mine is in the shadow of a headframe.

 

So I wish Elon Musk all the best, but please stop complaining about possible Class-1 nickel shortages and perhaps start strategically investing in the Canadian nickel sector yourself, if you really want to ensure that you have access to this vital metal.

 

For a brief history of the extraordinary Sudbury nickel deposits and their geo-political significance, click here.

Stan Sudol is a Toronto-based communications consultant, freelance mining columnist and owner-editor of Republic of Mining.

Posted with permission of Republic of Mining.

Mining Association of Canada CEO Pierre Gratton sees additional opportunities for this country’s resources

July 21st, 2020

…Read more

Belmont Resources adds gold-copper prospect to its Greenwood holdings

May 28th, 2020

by Greg Klein | May 28, 2020

Another property acquisition shows continued interest in this region dotted with former mines and early-stage projects. Expanding its presence in southern British Columbia’s Greenwood camp, Belmont Resources TSXV:BEA has optioned the Come By Chance claims, a 527-hectare block about eight kilometres from Grand Forks and 500 highway kilometres east of Vancouver.

Belmont Resources adds gold-copper prospect to its Greenwood holdings

Although unused pits and adits attest to previous activity, CBC has yet to be explored systematically, the company stated. So far work has largely focused on the property’s copper skarn-type mineralization that’s similar to the historic Phoenix deposit three kilometres northwest.

“Given the regional importance of epithermal gold mineralization and the favourable structural setting, a thorough exploration program to assess the property for this style of mineralization is planned,” Belmont added.

“The acquisition of the Come By Chance property is another exciting milestone for the company and further enhances Belmont’s strategy of consolidating properties with known historic gold-copper mines in the prolific Greenwood mining district,” commented George Sookochoff. The president/CEO comes from a Greenwood mining family.

Belmont’s 100% option calls for $7,500 on approval plus 500,000 shares issued over two years. The vendor retains a 1.5% NSR, two-thirds of which the company may buy for $1 million.

In anther Greenwood acquisition earlier this month, Belmont signed a definitive agreement to pick up the Athelstan-Jackpot claims, covering a site of historic gold-silver production. Looking just across the border, the company signed an LOI in February to acquire the Lone Star copper-gold past-producer in Washington state’s Republic area. Previous Greenwood acquisition announcements from Belmont concern the Glenora, Pride of the West and Great Bear claims.

Assays released in November from the company’s Greenwood-region Pathfinder project reached up to 4.999 ppm gold, 35.86 ppm silver, 20,700 ppm copper and 45.1 ppm cobalt.

Earlier this month Belmont closed the final tranche of an oversubscribed private placement totalling $199,665.

Read more about Belmont Resources.

Poll shows Canadians back sustainable production of critical minerals

May 13th, 2020

by Greg Klein | May 13, 2020

A Mining Week announcement from the Mining Association of Canada expresses public opinion on an issue of increasing prominence. A survey by Abacus Data shows almost 90% of respondents “like the idea of Canada being a preferred source for critical minerals and would like to see government take a number of steps to support this approach,” MAC reported.

Poll shows Canadians back sustainable production of critical minerals

Increasing demand, supply chain weaknesses, and rivalries in trade and geopolitics have heightened concern for raw materials necessary for the aerospace industry, defence, communications, computing, medicine and clean energy.

“China has been a major supplier of these minerals but Canada has an opportunity to play a larger role in this marketplace as customers look for products made to high environmental standards,” MAC stated, pointing to its Towards Sustainable Mining program.

Among the survey’s findings:

  • 88% of respondents want Canada to increase its role in producing critical minerals for world markets

  • 86% want to encourage international investment in Canadian critical minerals and metals companies that are sustainability leaders

  • 83% want to encourage Canadian production of critical minerals to compete with China

  • 81% want to promote interest in Canadian critical minerals by drawing attention to Canada’s high standards of sustainability

MAC commissioned the online nationwide poll. Conducted between March 3 and 11, it surveyed 2,600 people weighted according to census data. Abacus gave the results a margin of error of plus or minus 1.92%, 19 times out of 20.

Canada is a top five country in global production of 15 minerals and metals, including several critical minerals essential to new technologies such as cobalt, copper, precious metals, nickel, uranium. We have the potential to expand in lithium, magnesium and rare earths.—Pierre Gratton, president/CEO,
Mining Association of Canada

“More than a decade of Canadian leadership in responsible mining practices is giving us an additional edge, and we see more investors and customers examining how their suppliers approach environmental responsibility,” said MAC president/CEO Pierre Gratton. “The market is growing and Canada’s opportunity is clear.”

In January Canada and the U.S. announced their Joint Action Plan on Critical Minerals Collaboration, which the Canadian industry expects will attract investment and encourage further development of supply chains. The plan follows a number of American initiatives to reduce its dependence on rival countries, especially China.

MAC also pointed to the Canadian Minerals and Metals Plan, a federal-provincial effort intended to enhance competitiveness, innovation and native participation in mining.

“Canadians may not all have a detailed knowledge about the mining sector,” added Gratton, “but they can clearly spot the chance to leverage our advantages in terms of abundant resources and the high standards of responsibility that our industry is known for. They know that winning a bigger share of this growing market means more well-paying jobs and stronger communities.”

According to figures supplied by MAC, mining contributes $97 billion to national GDP and 19% of total domestic exports. Employing 626,000 people directly and indirectly, the industry is proportionally Canada’s largest private sector employer of natives and a major customer of native-owned businesses.

Update: Belmont Resources plans to expand portfolio in B.C.’s Greenwood camp, add nearby claims in Washington

May 11th, 2020

Update: On May 11, 2020, Belmont Resources announced a definitive agreement to acquire the Athelstan-Jackpot claims from Forty Ninth Ventures under terms reported in February. Earlier in May Belmont closed the final tranche of an oversubscribed private placement that totalled $199,665.

 

by Greg Klein | February 27, 2020

An international border runs through this historic mining region, but geology knows no such barriers. Two recently signed letters of intent would build Belmont Resources’ (TSXV:BEA) presence in southern British Columbia’s Greenwood camp and extend into Washington’s adjacent Republic area.

Belmont Resources plans to expand portfolio in B.C. Greenwood camp, add nearby claims in Washington

Greenwood gave up plenty of gold despite using, by today’s standards, primitive techniques. Now Belmont hopes more sophisticated analysis will help rejuvenate regional mining. The company’s proposed Athelstan-Jackpot acquisition sits adjacent to the Republic district, where Kinross Gold TSX:K applied newly developed metallogenic models that led to discovery and mining of several epithermal gold deposits. Although a “similar geologic regime” applies to Greenwood, Belmont stated, previous exploration and development on the B.C. side of the border focused on skarn-type copper-gold deposits with little attention to epithermal-type gold.

Bringing impressive credentials for a more contemporary approach, president/CEO George Sookochoff comes from a mining family in Grand Forks, about eight kilometres east of Athelstan-Jackpot, and has an extensive Greenwood background as well as GIS database expertise. He’s spent years building a digital database storing more than a century of Greenwood geoscientific info. This digital library would allow him to assess the probability of regional epithermal gold deposits by searching for characteristics comparable with those in Washington, the company added.

The review would precede recommendations for a 2020 exploration program on Athelstan-Jackpot. Intermittent mining on the property between 1901 and 1940 produced around 33,200 tonnes averaging about 5.4 g/t gold and 6.3 g/t silver for approximately 6,324 ounces of gold and 7,378 ounces of silver, according to historic records. Trenching and sampling took place in 2003, with historic, non-43-101 trench intervals up to 6.6 g/t gold and 12 g/t silver over 3.7 metres. Other historic 2003 grades reached as high as 28.4 g/t gold and 166 g/t silver over 0.3 metres.

Maybe the cross-border geological interest spanning Greenwood and Republic attracted Belmont to a nearby former mine in Washington. Just two days after reporting the proposed Athelstan-Jackpot acquisition, Belmont announced an LOI to pick up Lone Star, in operation from 1897 to 1918 and 1977 to 1978. Using a 1.5% copper-equivalent cutoff, an historic, non-43-101 report from 2007 estimated:

  • indicated: 63,000 tonnes averaging 1.28 g/t gold and 2.3% copper for 2,600 ounces gold and 3.19 million pounds copper

  • inferred: 682,000 tonnes averaging 1.46 g/t gold and 2% copper for 32,000 ounces gold and 30.07 million pounds copper

Should the deal close, Belmont plans to compile a 43-101 resource and prepare an IP survey prior to infill drilling for a potential deposit upgrade.

A 100% interest in Athelstan-Jackpot would cost Belmont 200,000 shares on signing. After a year Belmont would issue another 200,000 shares, and also pay US$50,000 in cash or US$25,000 in cash and the equivalent of US$25,000 in shares. The vendor would retain a 2% NSR, half of which Belmont could buy back for US$500,000.

A 100% stake in Lone Star would call for C$25,000 on signing and 1.5 million shares issued in three installments over two years. An additional C$100,000 payment would follow a major financing to be completed by Belmont.

Other recent Greenwood forays have already strengthened the company’s regional standing. In November the company picked up the 45-hectare Pride of the West and Great Bear claims, following the October acquisition of the 127-hectare Glenora property.

Pathfinder, another Greenwood-area Belmont holding, underwent two sampling programs last year. Assays reached up to 4.999 ppm gold, 35.86 ppm silver, 2.07% copper and 45.1 ppm cobalt, along with other results as high as 29.2 g/t gold.

Greenwood sits about 500 highway kilometres east of Vancouver.

The company’s portfolio also includes a 75% interest in the Kibby Basin lithium project in Nevada and, in northern Saskatchewan, two uranium properties shared 50/50 with International Montoro Resources TSXV:IMT.

Robust or bust

May 7th, 2020

Will supply chain challenges culminate in a long-overdue crisis?

by Greg Klein | May 7, 2020

It might take premature complacency or enormously good fortune to look back and laugh at the Early 2020 Toilet Paper Panic. But from today’s viewpoint, bumwad might be the least of our worries. There won’t be much need for the stuff without enough food to sustain life. Or water. Medicine, heat and electricity come in handy too.

Sparsely stocked supermarket shelves have been blamed on hoarders who thwart the industry’s just-in-time system, a process credited with “robust” reliability when not challenged by irrational buying sprees. Consumer concern, on the other hand, might be understandable given the credibility of official positions such as Ottawa’s facemask flip-flop and initial arguments that closing borders would actually worsen the pandemic.

Will supply chain challenges culminate in a long-overdue crisis?

A North Vancouver supermarket seen in mid-March. While
stockpiling has abated, supply lines show signs of stress.
(Photo: Steeve Raye/Shutterstock.com)

Meanwhile Canadian farmers worry about the supply of foreign labour needed to harvest crops, dairy farmers dump milk for lack of short-distance transport and deadly coronavirus outbreaks force widespread closures of meat and poultry plants across Canada and the U.S.

Highlighting the latter problem were full-page ads in American newspapers from meat-packing giant Tyson Foods. “The food supply chain is breaking,” the company warned in late April. “Millions of animals—chickens, pigs and cattle—will be depopulated because of the closure of our processing facilities.”

Within days the U.S. invoked the Defense Production Act, ordering meat plants to stay open despite fears of additional outbreaks. 

Just a few other pandemic-related food challenges in Canada include outbreaks at retail grocers, a shortage of packaging for a popular brand of flour and an Ontario supermarket warning customers to throw away bread in case it was tainted by an infected bakery worker.

Infrastructure supplying necessities like energy, fuel, water and communications faces pandemic-related challenges of its own, including availability of labour and expertise.

Supply chain complexity has been scrutinized in The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age. One example from author David S. Abraham was the electric toothbrush, a utensil comprising something like 35 metals that are sourced, refined and used in manufacturing over six continents.

Dissecting a 2017 smartphone, the U.S. Geological Survey found 14 necessary but mostly obscure elements. As a source country, China led the world with nine mineral commodities essential to mobile devices, and that list included rare earths in a single category.

In a recent series of COVID-19 reports on the lithium-ion necessities graphite, cobalt, lithium and nickel, Benchmark Mineral Intelligence stated: “From the raw material foundations of the supply chain in the DRC, Australia, Chile and beyond, through to the battery cell production in China, Japan and Korea, it is likely that the cells used by the Teslas of the world have touched every continent (sometimes multiple times over) before they reach the Model 3 that is driven (or drives itself) off the showroom floor.”

Will supply chain challenges culminate in a long-overdue crisis?

Consumers might not realize the complex
international networks behind staple items.

Or consider something more prosaic—canned tuna.

That favourite of food hoarders might be caught in the mid-Pacific, processed and canned in Thailand following extraction of bauxite (considered a critical mineral in the U.S.) in Australia, China, Guinea or elsewhere, with ore shipped for smelting to places where electricity’s cheap (China accounted for over 56% of global aluminum production last year). Then the aluminum moves on to can manufacturers, and transportation has to be provided between each point and onward to warehouses, retailers and consumers. Additional supply chains provide additional manufactured parts, infrastructure, energy and labour to make each of those processes work.

Still another supply chain produces the can opener.

Daily briefings by Canada’s federal and provincial health czars express hope that this country might “flatten the curve,” a still-unattained goal that would hardly end the pandemic when and if it’s achieved. Meanwhile the virus gains momentum in poorer, more populous and more vulnerable parts of the world and threatens a second, more deadly wave coinciding with flu season.

And if one crisis can trigger another, social order might also be at risk. Canada’s pre-virus blockades demonstrated this country’s powerlessness against a force not of nature but of self-indulgence. Even a cohesive, competent society would have trouble surviving a general infrastructure collapse, a scenario dramatized in William R. Forstchen’s novel One Second After. When transportation, communications, infrastructure and the financial system break down, so do a lot of people. Dangerous enough as individuals, they can form mobs, gangs and cartels.

How seriously Washington considers apocalyptic scenarios isn’t known. But prior to the pandemic, the U.S. had already been taking measures to reduce its dependency on China and other risky sources for critical minerals. Now, Reuters reports, COVID-19 has broadened American concerns to include other supply chains and inspired plans for an Economic Prosperity Network with allied countries. Questions remain about the extent that the West can achieve self-sufficiency and, in the U.S., whether another administration might undo the current president’s efforts.

Certainly globalist confidence persists. The Conference Board of Canada, for example, expects a slow return of supply chain operations to pre-pandemic levels but a renewed international order just the same. “Global co-operation is needed not only to tackle the health crisis, but also to restore trust in global supply chains and maintain the benefits that the growth in global trade has brought over the last two decades.”

Will supply chain challenges culminate in a long-overdue crisis?

New cars leave the manufacturing hub and disease
epicentre of Wuhan prior to the pandemic.
(Photo: humphery/Shutterstock.com)

One early COVID-19 casualty, the multi-continent diamond supply chain, already shows signs of gradual recovery according to Rapaport News. Despite mine suspensions, “there is more than enough rough and polished in the pipeline to satisfy demand as trading centres start to reopen. Belgium and Israel have eased lockdown restrictions, while India has allowed select manufacturing in Surat and special shipments to Hong Kong.”

Also struggling back to its feet is global automotive manufacturing. Writing in Metal Bulletin, Andrea Hotter outlines how the disease epicentre of Wuhan plays a vital role in making cars and supplying components to other factory centres. “If ever there was a masterclass in the need to disaster-proof a supply chain, then the COVID-19 pandemic has provided a harsh reminder to the automotive sector that it’s failing.”

So regardless of whether apocalyptic fears are overblown, there are lessons to be learned. As Benchmark points out, COVID-19 has disrupted “almost every global supply chain to such a profound extent that mechanisms for material sourcing, trade and distribution will likely never be the same again.”

In the meantime, a spare can opener or two might be prudent. Or maybe several, in case they become more valuable than bullion.

Visual Capitalist: The impact of critical minerals on U.S. national security

April 28th, 2020

by Nicholas LePan | posted with permission of Visual Capitalist | April 28, 2020

See Part 1: The United States and the new energy era’s lithium-ion supply chain

In 1954, the United States was fully reliant on foreign sources for only eight mineral commodities.

Fast forward 60-plus years, and the country now depends on foreign sources for 20 such materials, including ones essential for military and battery technologies.

This puts the U.S. in a precarious position, depending largely on China and other foreign nations for the crucial materials such as lithium, cobalt and rare earth metals that can help build and secure a more sustainable future.

America’s energy dependence

This visualization comes from Standard Lithium TSXV:SLL and it outlines China’s dominance of the critical minerals needed for the new energy era.

Which imported minerals create the most risk for U.S. supply chains and national security?

 

The new energy era The impact of critical minerals on U.S. national security

 

Natural resources and development

Gaining access to natural resources can influence a nation’s ability to grow and defend itself. China’s growth strategy took this into account, and the country sourced massive amounts of raw materials to position itself as the number one producer and consumer of commodities.

By the end of the second Sino-Japanese War in 1945, China’s mining industry was largely in ruins. After the war, vast amounts of raw materials were required to rebuild the country.

In the late 1970s, the industry was boosted by China’s reform and opening policies, and since then China’s mining outputs have increased enormously. China’s mining and material industries fueled the rapid growth of China from the 1980s onwards.

Supply chain dominance

A large number of Chinese mining companies also invest in overseas mining projects. China’s going out strategy encourages companies to move into overseas markets.

They have several reasons to mine beyond Chinese shores: to secure mineral resources that are scarce in China, to gain access to global markets and mineral supply chains, and to minimize domestic overproduction of some mineral commodities.

This has led China to become the leading producer of many of the world’s most important metals while also securing a commanding position in key supply chains.

As an example of this, China is the world’s largest producer and consumer of rare earth materials. The country produces approximately 94% of the rare earth oxides and around 100% of the rare earth metals consumed globally, with 50% going to domestic consumption.

U.S.-China trade tensions

The U.S. drafted a list of 35 critical minerals in 2018 that are vital to American national security and, according to the U.S. Geological Survey, the country sources at least 31 of the materials chiefly through imports.

China is the third-largest supplier of natural resources to the U.S., behind Canada and Mexico.

Rank Country U.S. minerals imports by country (US$, 2018)
#1 Canada $1,814,404,440
#2 Mexico $724,542,960
#3 China $678,217,450
#4 Brazil $619,890,570
#5 South Africa $568,183,800

This dependence on China poses a risk. In 2010, a territorial dispute between China and Japan threatened to disrupt the supply of rare earth elements. Today, a similar threat still looms over trade tensions between the U.S. and China.

China’s scale of influence over critical minerals means that it could artificially limit supply and move prices in the global clean energy trade, in the same way that OPEC does with oil. This would leave nations that import their mineral needs in an expensive and potentially limiting spot.

Moon shot: Building domestic supply and production

Every supply chain starts with raw materials. The U.S. had the world’s largest lithium industry until the 1990s—but this is no longer the case, even though the resources are still there.

The U.S. holds 12% of the world’s identified lithium resources, but only produces 2% of global production from a single mine in Nevada.

In the clean energy economy of the future, critical minerals will be just as essential—and geopolitical—as oil is today.—Scientific American

There are a handful of companies looking to develop the U.S. lithium reserves, but there is potential for so much more. Less than 18% of the U.S. land mass is geologically mapped at a scale suited to identifying new mineral deposits.

The U.S. has the resources, it is just a question of motivation. Developing domestic resources can reduce its foreign dependence, and enable it to secure the new energy era.

See Part 1: The United States and the new energy era’s lithium-ion supply chain

Posted with permission of Visual Capitalist.

Li-ion under the pandemic

April 20th, 2020

COVID-19 cuts energy minerals demand but heightens future shortages: Benchmark

by Greg Klein | April 20, 2020

The pandemic will shrink lithium-ion battery demand by at least 25% this year even prior to further economic setbacks. But electric vehicles hold greater likelihood than many other industries not only for recovery but growth. Current reductions in lithium, cobalt, graphite and nickel supply will only mean greater need later this decade, according to Benchmark Mineral Intelligence.

COVID-19 cuts energy minerals demand but heightens future supply shortages

In an April 16 webinar presented by managing director Simon Moores and head of price assessments Caspar Rawles, the two warned that pandemic conditions and responses will worsen an already critical supply scenario later this decade.

That “lost quarter” of a 25% reduction in demand will likely be just the beginning, Moores said. “If there’s going to be a longer economic impact, which is most likely going to happen, a severe economic impact globally, then of course we lose more than a quarter.”

Yet exponential growth should continue for Li-ion battery megafactories. Five years ago just three such plants were in production or planned, with capacity totalling 57 gigawatt hours. By 2018 the number of plants climbed to 52, for 1,147 GWh. This year the figures jumped to 130 plants totalling 2,300 GWh now in production or slated for completion by 2030. That’s enough for 43 million EVs averaging 55 kWh each.

That future seems distant, compared with the current production limitations brought on by health-related mine suspensions, along with delayed expansions and development of new mines. Transportation challenges also loom large, such as the South Africa lockdown that restricts cobalt transshipment from the Democratic Republic of Congo.

As the pandemic cuts supply, it curtails demand as well. Chinese automakers, the main producers of EVs, have largely shut down.

Lithium faced over-supply well before the pandemic, prompting cutbacks among majors like SQM, Albemarle, Ganfeng and Tianqi. “Also we saw that the majority of Tier 2 or 3 converters in China were already planning on going offline due to the low pricing we’ve seen in the market,” Rawles said.

So what that means down the road is those expansions which really need to be happening now to meet the future demand are not happening.—Caspar Rawles,
Benchmark Mineral Intelligence

“The key thing is that downturn in conversion capacity in China will mean that the backlog of spodumene feedstock material that’s sitting in China will take longer to work through, so we’re looking at a longer-term potential low-price environment,” he explained. “That threatens the economics of new projects of course and an increased risk of price volatility going forward…. So what that means down the road is those expansions which really need to be happening now to meet the future demand are not happening.”

What does a typical (35 GWh) NCM Li-ion battery plant consume in a year? Benchmark estimates 25,000 tonnes of lithium hydroxide or carbonate, 6,000 tonnes of cobalt hydroxide, 19,000 tonnes of nickel sulphate and 33,000 tonnes of graphite.

“The supply chain won’t be able to build quick enough to meet this electric vehicle demand,” emphasized Moores. Even if estimates of EV growth were cut by 25% to 30%, “you’re still not going to have enough mining capacity, chemical capacity in the supply chain to make these. The lithium-ion supply chain has to grow by eight to 10 times in a seven-year period, and now that might be pushed to a 10-year period.”

You’ve got a big lithium problem on the horizon, [supplying] only 19 million EVs, compared to the 34 million we think we’re going to need.—Simon Moores,
Benchmark Mineral Intelligence

Production from current mines and those likely to enter operation suggest about 900,000 tonnes of annual lithium supply by 2030, enough to power about 19 million EVs. That constitutes “a big, big problem,” Moores said. “You’ve got a big lithium problem on the horizon, [supplying] only 19 million EVs, compared to the 34 million we think we’re going to need.”

Showing “a similar trajectory,” cobalt supply estimates come to 228,000 tonnes by 2030, enough for only about 17.9 million EVs.

“The mining companies are being super-cautious or even beyond super-cautious, considering we’re going to need 34 million EVs-worth. And even if that goes down to 25 million, you’re still way off,” he added.

Future demand will continue to be dominated by China, Benchmark maintains. Of the 130 battery plants currently expected by 2030, China would host 93. The country’s capacity would equal about 1,683 GWh, enough for 31 million EVs averaging 55 kWh. A dismal second, Europe follows with 16 plants totalling 413 GWh for 7.4 million EVs. The U.S. would have just seven plants for 205 GWh and 3.7 million EVs.

Currently producing about 73% of Li-ion batteries, China’s forecast to maintain that proportion with about 70% of global production in 2029.

For all that, Moores said European megafactories and Tesla’s U.S.-based Gigafactories set an example for supply chains in other industries.

“What the coronavirus has shown is that truly global supply chains in the 21st century don’t work. They’re too fragile, there’s too many question marks out there. Even pre-coronavirus that was the case…. The battery industry was well ahead of the curve on localizing the supply chain as much as possible…. That will continue, I think it’s a blueprint for other industries to follow. The battery supply chain is ahead of the curve on that.”

But, he cautioned, “the U.S. has to take on the same scale as China.”