In a recent Investor.Coffee interview conducted by Tracy Weslosky, Ian Fraser, CEO, VP Exploration, and Director of Fathom Nickel Inc. (CSE: FNI | OTCQB: FNICF) discusses the growing interest from the market in both Fathom and nickel as a critical mineral.

Despite minor delays due to unusual weather conditions, Fathom Nickel is optimistic about their winter exploration program and the commencement of their drilling schedule. The company has initiated geophysical studies to refine their drilling targets, focusing on areas near the historic Rottenstone mine and the potential for discovering mineralization zones.

Ian also discussed the global nickel market, noting the challenges faced by junior nickel explorers in the latter part of 2023. However, he remains positive about the shift towards nickel sourced from safe jurisdictions, emphasizing the environmental issues associated with laterite nickel deposits. Ian mentioned the growing interest in Fathom Nickel’s exploration activities, bolstered by community engagement and investor inquiries. The company aims to continue spreading their story globally, leveraging the momentum from their drilling program to attract further attention. Lastly, Ian confirmed Fathom Nickel’s participation in upcoming industry events, including PDAC, highlighting the team’s proactive approach to sharing their progress and engaging with the broader mining community. To access the complete interview, click here

Don’t miss other InvestorNews interviews. Subscribe to the InvestorNews YouTube channel by clicking here

About Fathom Nickel Inc.

Fathom is an exploration company that is targeting magmatic nickel sulphide discoveries to support the rapidly growing global electric vehicle market.

The Company now has a portfolio of two high-quality exploration projects located in the prolific Trans Hudson Corridor in Saskatchewan: 1) the Albert Lake Project, a 90,000+ hectare project that was host to the historic and past producing Rottenstone deposit (produced high-grade Ni-Cu+PGE, 1965-1969), and 2) the 22,000+ hectare Gochager Lake Project that is host to a historic, NI43-101 non-compliant open pit resource consisting of 4.3M tons at 0.295% Ni and 0.081% Cu².

1 – The Saskatchewan Mineral Deposit Index (SMID#0950) Tremblay-Olson Ni-Cu Deposit or Showing.

2 – The Saskatchewan Mineral Deposit Index (SMID#0880) reports drill indicated reserves at the historic Gochager Lake Deposit of 4,262,400 tons grading 0.295% Ni and 0.081% Cu mineable by open pit. Fathom cannot confirm the resource estimate, nor the parameters and methods used to prepare the reserve estimate. The estimate is not considered NI43-101 compliant and further work is required to verify this historical drill indicated reserve.

To know more about Fathom Nickel Inc., click here

Disclaimer: Fathom Nickel Inc. is an advertorial member of InvestorNews Inc.

This interview, which was produced by InvestorNews Inc. (“InvestorNews”), does not contain, nor does it purport to contain, a summary of all material information concerning the Company, including important disclosure and risk factors associated with the Company, its business and an investment in its securities. InvestorNews offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This interview and any transcriptions or reproductions thereof (collectively, this “presentation”) does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase any securities in the Company. The information in this presentation is provided for informational purposes only and may be subject to updating, completion or revision, and except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any information herein. This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. This presentation should not be considered as the giving of investment advice by the Company or any of its directors, officers, agents, employees or advisors. Each person to whom this presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. Prospective investors are urged to review the Company’s profile on SedarPlus.ca and to carry out independent investigations in order to determine their interest in investing in the Company.

Fathom Nickel Inc. (CSE: FNI | OTCQB: FNICF), targeting magmatic nickel sulphide discoveries pivotal for the growing global electric vehicle market, has furnished an exploration update for its 100% owned Albert Lake Project.

Recent geophysical activities saw the conclusion of a time domain electromagnetic (TDEM) survey within the Tremblay-Olson Claims Area, unveiling a robust multi-element-in-soil anomaly. Notable TDEM highlights include a strong conductor around 1,000 meters south-southwest of the historic Rottenstone Mine, indicating a conductive body spanning approximately 450m x 150m located about 300 meters below the surface. This conductor is associated with significant geochemical and gravitational anomalies, hinting at the presence of high-density rocks beneath.

Drawing upon a previous interview with InvestorIntel’s Tracy Weslosky, Ian Fraser, the CEO and VP Exploration, commented on the ongoing exploration. “Our strategic efforts at Albert Lake continue to reveal crucial drill target areas, notably the newly identified TDEM conductor. This aligns with both the surface geochemistry and previous gravity surveys,” said Fraser. He further emphasized the company’s vision, grounded in the belief of the Albert Lake and Gochager Lake projects evolving into significant nickel camps.

With plans underway for the Gochager Lake drill program post the impressive results from February 2023, Fathom is gearing up for a detailed announcement set for the week of August 21. Drilling is expected to kickstart by the week of August 28.

Saskatchewan remains an exploration hotspot, consistently ranked among the top global jurisdictions. The region remains largely untapped for nickel, copper, and PGEs, presenting Fathom with immense exploration potential. The company’s methodology, combining surface geochemistry, TDEM surveys, and other techniques, has successfully identified structural traps, as evidenced by the Bay-Island Trend discovery.

While no additional drilling is slated for Albert Lake in 2023, the company is gearing up for its winter drill program in Q1-2024.

Fathom Nickel Inc., with its two promising exploration projects in Saskatchewan’s Trans Hudson Corridor, continues to underscore the potential of nickel in bolstering the electric vehicle market. The company’s determination in leveraging Saskatchewan’s unexplored reserves, coupled with its innovative exploration approach, underscores its vision for a sustainable future driven by electric vehicles.

Lynas Rare Earths Limited (ASX: LYC) (“Lynas”) recently announced some positive news that the Malaysian authorities have advised that their license to import and process lanthanide concentrate is now valid until 1 January 2024, effectively a 6-month extension to get their Malaysian rare earths unit in line with environmental requirements.

Meanwhile, Lynas continues to oppose the Malaysian government’s ‘new’ rules and is working on alternate facilities in Western Australia. Should the Malaysian situation not be resolved then Lynas has a backup plan. The announcement stated:

“The licence variation allows the Lynas Malaysia cracking and leaching plant to continue to operate until 1 January 2024 and will remove the requirement for a shutdown at the Lynas Malaysia plant prior to 1 January 2024.”

At the heart of the issue is that the Malaysian authorities say the cracking and leaching plant generates radioactive waste. Lynas argues that they are meeting the conditions as per their original agreement with the Malaysian government. Lynas stated:

“Lynas had applied to the MOSTI Minister for the removal of the conditions which limit operations at the Lynas Malaysia facility as they represent a significant variation from the conditions under which Lynas made the initial decision to invest in Malaysia.“

We will have to wait until January 1, 2024, to see what happens next regarding Lynas operating its cracking and leaching plant in Malaysia.

Lynas’ Kalgoorlie Rare Earths Processing Facility is in the final stages of construction, feed to start this quarter (Q4/FY23 – Ending June 30)

Lynas has been rapidly building a backup rare earths processing facility in Kalgoorlie, Western Australia. Lynas stated that the facility “has now entered the final phase of major construction activities, dry commissioning activities have commenced in certain parts of the plant, target feed on date for the Facility in Q4 FY23.”

Lynas plans to use rare earths carbonate feed from their Mt Weld Mine to feed the new Kalgoorlie rare earths processing facility once complete (noting a ramp-up period applies). The product would then be shipped to Malaysia for final processing.

FIGURE 1: Lynas’ under construction rare earths processing facility in Kalgoorlie Western Australia

Lynas achieved record NdPr production in Q3/FY23 (Ending March 31)

In Q3/FY23 Lynas produced 4,348 tonnes of total rare earths oxide and a record 1,725 tonnes of Neodymium-Praseodymium (“NdPr”). This resulted in A$237.1 million of revenue for the quarter. The chart below shows Lynas’ revenue trending slightly higher over the past 2 years on the back of solid production and prices.

FIGURE 2: Lynas’ last 2 years Total Rare Earth Oxides (“TREO”) production volumes and sales revenues

USA LRE and HRE facilities update

The USA Light Rare Earth (“LRE”) and Heavy Rare Earth (“HRE”) facilities plan to be able to process both light and heavy rare earths.

Lynas has secured a greenfield site in an existing industrial zone in Texas, further progressed the detailed engineering design, and engaged a preferred U.S. Engineering, Procurement, Construction, and Management (“EPCM’) contractor.

Tesla plans to use non-rare earths motors in their next generation vehicle

Lynas CEO, Amanda Lacaze, stated in the Q3, FY 2023 earnings call:

“The neodymium iron boron [NbFe] magnet technology is the most energy efficient, because it is the lightest motor, and over the life time of the vehicle it gives you the best efficiency… …and it has the lowest CO2 emissions… …more are choosing NbFe technology than the alternative… …today we find that demand still is ahead of our ability to service everyone who would like to buy Lynas NdPr… …the current (price) softness is very much about internal China dynamics… …but we at Lynas remain very confident of the long term trend and we know that the Chinese rare earth firms share that confidence. We remain committed to growing to meet the market and that’s one of the reasons why our ambitious capital investment plan continues.”

Closing remarks

Lynas is very well positioned in 2023 with A$1.12 billion in cash (as of March 31, 2023) and is on target with its expansion plans.

The 6-month Malaysian extension also means that Lynas’ rare earths production can continue uninterrupted, at least until January 1, 2024. At that point, the Kalgoorlie facility should hopefully be operating smoothly and ramping up production and offer an alternative should the Malaysia cracking and leaching plant need to be shut down on January 1, 2024.

Lynas Rare Earths trades at a market cap of A$6.82 billion and a PE ratio (TTM) of 12.39.

In late February, I opined that perhaps we had seen a near-term top for the price of lithium. Hindsight suggests that was a pretty good call. However, that was more of a short-term trading view on lithium as opposed to an overall investing view.

Generally speaking, I still believe that the overall lithium market is reasonably bullish over the next several years barring some sort of technological breakthrough that obsoletes the lithium battery.

In fact, if you believe what the IEA published on lithium (along with other critical minerals), you’d be very bullish based on the IEA view that the lithium market will see a 33% compound annual growth rate (“CAGR”) for the next decade.

Another stat that puts future lithium demand into perspective is the fact that Tesla is targeting the manufacture of 20 million electric vehicles (“EVs”) per year by 2030 and in order to produce that many vehicles in a year, Tesla would need more lithium than was produced in the world in 2021.

Assuming lithium prices have now stabilized or perhaps even bottomed before another move higher, the question becomes how best to play lithium going forward.

Lithium Royalty Corp. overview

One option to get more broad-based exposure to the market is the newly listed Lithium Royalty Corp. (TSX: LIRC).

Lithium Royalty is a lithium-focused royalty company with a globally diversified portfolio of 30 high-grade revenue royalties on mineral properties around the world that supply, or are expected to supply, raw materials to support the electrification of transportation and decarbonization of the global economy.

The Company’s portfolio is focused on high-grade and low-cost mineral projects that are primarily located in Australia, Canada, South America, and the United States. Lithium Royalty is a signatory to the United Nations Principles for Responsible Investment.

There are two key takeaways from that corporate description.

• First off, they have focused on “friendly”, stable jurisdictions with 46% (based on acquisition costs) of their projects in North America, 62% comprise OECD nations, and no Russian, Chinese, or African asset exposure. Their non-OECD assets are primarily in Brazil and Argentina, which are both stable enough at present.
• Secondly, the integration of ESG factors and sustainable mining are important considerations in Lithium Royalty’s investment analysis and royalty acquisitions. This includes a focus on the use of renewable power in extraction and processing; infrastructure benefits to remote communities; environmental and economic impact on local communities; water use; surface disruption and remediation plans as well as tailings management.

I’ve noted as recently as last week that I strongly believe a premium will start to be placed on sustainable miners with responsibly sourced materials and a low-carbon footprint. Lithium Royalty definitely ticks that box.

Royalty portfolio and upside potential

But ultimately it comes down to whether you can also make money while being responsible. The royalty that excites me the most at present in the Company’s portfolio is one that has just transitioned from construction to production.

In all Lithium Royalty now has 3 producing royalties but their 90% interest in a 1.0% Net Smelter Royalty (NSR) in SIGMA Lithium Corporation’s (NASDAQ: SGML | TSXV: SGML) Grota do Cirilo project is about to start generating returns with its inaugural shipment of approximately 15,000 tonnes of spodumene concentrate in May 2023. Sigma is now focused on ramping up to full production capacity for Phase 1 of the project, which is expected by July 2023.

Other assets currently generating income for the company are both in Australia, including Allkem Limited’s (ASX: AKE | TSX: AKE) Mt. Cattlin project with a royalty of A$1.50 per tonne of ore mined and Core Lithium Limited‘s (ASX: CXO) Finniss mine where the Company expects to receive its first royalty payment for its 2.5% Gross Overriding Royalty (GOR) as a result of Q1/2023 sales.

In total, Lithium Royalty has 30 royalties in its portfolio, of which 29 are summarized in the slide below. Additionally, the acquisition pipeline currently has 10 additional royalty targets with the opportunity to deploy over US$130 million of new capital.

FIGURE 1: Lithium Royalty’s Current Portfolio of Royalities

Final thoughts

Given the Company just reorganized into the publicly traded entity we have today, my numbers could be a little off. My math suggests the Company finished 2022 with US$35 million in cash, raised a net amount of C$100 million as part of the go-public transaction, and acquired its 30^th royalty position (not included in the above table) for US$1.8 million. Using today’s exchange rate that puts cash available to pursue additional royalties at roughly US$108 million.

There are currently just over 55 million shares outstanding which puts Lithium Royalty’s market cap at C$818 million (US$604 million).

In this InvestorIntel interview during PDAC 2023, Tracy Weslosky talks with Russell Fryer, Executive Director of Critical Metals PLC (LSE: CRTM) about the critical mineral sector, specifically in the Democratic Republic of Congo (“DRC”) and Africa.

Russell addresses some misconceptions about operating mines in the DRC and how the DRC government is openly trying to attract Western capital to come in and compete with Asian investors.

He also talks about the investment opportunities in sub-Saharan Africa, including South Africa, Rwanda, Tanzania, and Zimbabwe. Russell also discusses the positive change in the UK government in attracting critical mineral supplies from African countries.

To access the full InvestorIntel interview, click here.

Subscribe to the InvestorIntel YouTube channel by clicking here.

About Critical Metals Plc

Critical Metals Plc has acquired a controlling 100% stake in Madini Occidental Limited, which holds an indirect 70% interest in the Molulu copper/cobalt project, an ex-producing, medium-scale asset in the Katangan Copperbelt in the Democratic Republic of Congo. In line with its investment strategy of focusing primarily on known deposits, targeting projects with low entry costs and the potential to generate short-term cash flow; the Company brought the Molulu Project into production in January. 

The Company will continue to identify future assets that are in line with its stated acquisition objective of low CAPEX and OPEX projects with near-term production, concentrating on minerals that are perceived to have strategic importance to future economic growth and generate significant value for shareholders.

To know more about Critical Metals Plc, click here.

Disclaimer: Critical Metals Plc is an advertorial member of InvestorIntel Corp.

This interview, which was produced by InvestorIntel Corp. (IIC) does not contain, nor does it purport to contain, a summary of all the material information concerning the “Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This presentation may contain“forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken,  as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please contact us at +1 416 792 8228 and/or email us direct at [email protected].

Cobalt is a key component of the lithium-ion (“Li-ion”) battery used in electronics and many types of electric vehicles (“EVs”). The EV boom is causing cobalt demand to surge higher.

In 2021, the International Energy Agency forecasted that cobalt demand could grow between 6x to 21x from 2020 to 2040 depending upon various scenarios. The main driver is the forecast surge in sales of EVs. Our Trend Investing forecast is for a 5.7x increase from 2020 to 2037. The reason it is lower than the IEA is due to the emergence of lithium-iron-phosphate (“LFP”) batteries which do not use cobalt. Nonetheless, a 5.7x increase is still very significant, especially when we consider that cobalt has the most difficult supply chain of all EV metals.

The cobalt market is currently quite balanced with a mild surplus as demand from electronics remains weak; however, Trend Investing forecasts that by 2027 onwards this will become a growing deficit, assuming EVs sales continue to grow strongly.

As a result of the above, the cobalt price (US$15.20/lb) and many of the cobalt miner’s stock prices are depressed allowing a more attractive entry point for long-term investors into the sector.

Trend Investing vs IEA demand forecast for EV metals

^{Sources: IEA and Trend Investing}

The leading cobalt miners in 2023

Glencore PLC (LSE: GLEN | OTC: GLCNF | HK: 805) is the leading global producer of cobalt with production of 43,800t in 2022. Most of this production came from the Democratic Republic of the Congo (“DRC”). In 2023, Glencore’s guidance is for the production of 38,000t of cobalt plus or minus 5,000t. On the plus end, this would lead to the production of 43,000t in 2023 or slightly lower than the production in 2022.

From the Mutanda and Katanga mines in the DRC, Glencore has the potential to increase cobalt supply to approximately 57,000 tonnes-per-annum (“tpa”) if market conditions suit. They also produce about 3,000tpa from their Murrin Murrin operation in Australia. Given total global cobalt supply was approximately 200,000t in 2022 it means that Glencore is a critical player in the market and can influence pricing by altering its supply. Glencore has agreed to supply General Motors Co. (NYSE: GM) with cobalt from its Murrin Murrin operation in Australia.

CMOC Group Limited (HKSE: 3993 | SHE: 603993 | OTC: CMCLF) (formerly China Molybdenum) is the second largest global producer of cobalt producing 18,501t in 2021 from their Tenke Fungurume mine in the DRC. For the first 3 quarters of 2022, CMOC’s cobalt production stood at 15,300t. However, 2022 has seen a dispute with the DRC’s Gecamines which has resulted in exports being suspended since July 2022. On a more positive note, CMOC announced in January 2023 that mining from their other DRC mine (KFM copper-cobalt mine) had begun.

Zhejiang Huayou Cobalt (SHA: 603799) is the third largest global cobalt producer at around 20,000tpa. They also rely on mines in the DRC. Huayou Cobalt agreed to supply cobalt to Tesla, Inc. (NASDAQ: TSLA) from July 1, 2022 until 2025.

Other cobalt producers

Other global cobalt producers include Eurasian Natural Resources Corp. (private), GEM Co Ltd. (SHE: 002340), Jinchuan Group International Resources (HK: 2362), Shalina Resources subsidiary Chemaf, and several other smaller cobalt producers such as Vale SA (NYSE: VALE), Norilsk Nickel, Sumitomo Metal Mining Co. (TYO: 5713), Sherritt International Corporation (TSX: S | OTC: SHERF), Korea Resources Corporation, Umicore SA (Brussels: UMI | OTC: UMICY), and Nickel 28 Capital Corp. (TSXV: NKL).

Junior cobalt miners

The most advanced junior cobalt miners are Jervois Global Limited (ASX: JRV | TSXV: JRV | OTCQX: JRVMF) and Electra Battery Materials Corporation (NASDAQ: ELBM | TSXV: ELBM). Jervois aims to commence commercial concentrate production by the end of Q1/2023 from their Idaho Cobalt Operations in the USA. Jervois also now owns the Kokkola producing refinery in Finland and plans to have a second refinery in Brazil up and running by the end of Q1/2024.

Electra targets to have their Ontario cobalt refinery (North America’s first cobalt sulphate refinery) operational with ore feed from Glencore by the Spring of 2023. They are also working on battery recycling and own the Iron Creek Cobalt-Copper Project in Idaho, USA.

Closing remarks

The cobalt market is quite small and is dominated by supply from the DRC, making it a rather risky market from a supply chain point of view. The current slowdown in electronics (smartphones, PCs) sales has temporarily hurt cobalt demand. Looking ahead this should recover and as electric car sales grow the demand for cobalt rises dramatically. It is looking like a fairly tight market from now to 2027, but from 2027 onwards the world will need multiple new junior cobalt miners to meet supply.

In this InvestorIntel interview, Tracy Weslosky talks to Critical Minerals Institute’s Chairman Jack Lifton about “an existential crisis for the North American automotive industry.” Speaking about the upcoming Critical Minerals Summit (#CMS2023) to be held from June 14 to 15 at the National Club in Toronto, Canada, Jack says that the summit will focus on the current supply and demand situation of critical minerals for the electric vehicle industry. He adds, “This is one not to miss.”

Jack also discusses Energy Fuels Inc.‘s (NYSE American: UUUU | TSX: EFR) recent acquisition of a rare earth and heavy mineral project in Brazil and he provides an update on Lynas Rare Earths Ltd.’s (ASX: LYC) rare earths processing plant in Malaysia.

He goes on to provide an update on the current lithium market and how automakers like General Motors are investing in lithium companies to support their electric vehicle production and Piedmont Lithium (NASDAQ: PLL | ASX: PLL) just signed a purchase order and $75 million equity deal with LG Chem, Ltd. (KOSE: A051910).

To access the full episode, click here

Don’t miss other InvestorIntel videos. Subscribe to the InvestorIntel YouTube channel by clicking here.

About The Critical Minerals Institute

The Critical Mineral Institute (CMI) is an international organization for companies and professionals focused on battery materials, technology metals, defense metals, ESG technologies and practices, the general EV market, and the use of critical minerals for energy and alternative energy production. Offering an online site that features job opportunities that range from consulting roles to Advisory Board positions, the CMI offers a wide range of B2B service solutions. Also offering online and in-person events, the CMI is designed for education, collaboration, and to provide professional opportunities to meet the critical minerals supply chain challenges.

Last week, Bloomberg news reported that Tesla, Inc. (NASDAQ: TSLA) was in talks to buy Sigma Lithium Corporation (TSXV: SGML | NASDAQ: SGML), a company that is focused its 100%-owned Grota do Cirilo project, a large hard-rock lithium deposit in Brazil with lithium production aiming for 2024.

The stock price of Sigma Lithium was up 16% after the news was released and is up almost 250% over the past year in lockstep with other lithium miners. Electric vehicle (“EV”) manufacturers want to lock up lithium supplies as the metal increases since it is a key component in EV batteries and there are worries that demand will soon outstrip supply.

Neither Telsa nor Sigma Lithium released any news release on the subject nor provided any comment to the media. Tesla, led by Elon Musk, is looking at various options to secure its lithium sources, including potentially its own mining and refining.

Previously to fund its exploration and development, Sigma Lithium had signed a funding and 6-year offtake agreement with Mitsui & Co., Ltd. (TSE: 8031) of Japan and also signed a six-year lithium offtake agreement with Korean-based LG Energy Solution (KOSE: A373220).

In the past, Tesla signed contracts for lithium with Ganfeng Lithium Group Co. (SZSE: 002460), one of the largest lithium suppliers in the world, and more recently, Liontown Resources Limited (ASX: LTR), an Australian miner.

Is Elon Musk the New Henry Ford?

The reappearance of Henry Ford-style vertical integration in car manufacturing marks a big 180-degree turn from the late 1990s when outsourcing to sub-contractors began.

In the early 1900s (over 100 years ago!), Henry Ford had a keen interest in acquiring and controlling the sources of raw materials for his company to achieve manufacturing self-sufficiency for his automobile operations. By achieving vertical integration, a business strategy in which a company controls all aspects of production, from raw materials to finished products, Henry Ford believed he would ensure a reliable supply chain and potentially reduce costs.

To achieve this desire, Henry Ford bought vast tracts of timberland and built sawmills in Michigan to control the wood required in his vehicles but also used to create shipping containers and for heating his factories. Henry Ford had a strong interest in controlling other sources of raw materials for his company, such as iron ore for steel production, a key component of automobiles, and also coal for his factories.

But Henry Ford also went further afield as he sought to secure a reliable source of rubber for his company. In the mid-1920s, he purchased a large tract of land in the Brazilian Amazon rainforest and established a rubber plantation and community called Fordlandia. Unfortunately, it was abandoned in the late 1930s due to challenges with the workers and the physical environment.

The New Vertical Integration Trend Continues…

Not to be outdone by Tesla, earlier this month, General Motors Co. (NYSE: GM) announced the closing of the initial tranche, a $320 million investment, of a previously announced $650 million investment and offtake agreement with Lithium Americas Corp. (TSX: LAC | NYSE: LAC). Lithium Americas is advancing the Caucharí-Olaroz lithium project in Argentina towards first production and is also developing the Thacker Pass lithium project in Nevada which is advancing towards construction.

Last year, Rio Tinto Group (NYSE: RIO | LSE: RIO) and the Ford Motor Company (NYSE: F)  signed an agreement whereby Rio Tinto would supply Ford with materials including lithium, low-carbon aluminum, and copper and Ford would become the initial customer for Rio Tinto’s Rincon lithium project in Argentina.

It’s also happening with the smaller technology components in EV batteries. In June 2022, Nano One Materials Corp. (TSX: NANO), a company with patented processes for the low-cost, low-environmental footprint production of high-performance cathode materials used in lithium-ion batteries, announced a strategic US$10 million equity investment and collaboration agreement with Rio Tinto. The two companies entered into an agreement under which they would work together to support the acceleration of the commercialization of Nano One’s patented cathode technology.

Also in June of last year, NEO Battery Materials Ltd. (TSXV: NBM | OTCQB: NBMFF) announced a C$3 million strategic investment from Automobile & PCB Inc. (KOSE: A015260) into its Korean subsidiary for the first phase of its commercial plant project. NEO focuses on producing silicon anode materials for lithium-ion batteries through its proprietary single-step nanocoating process.

Final Thoughts

Ford’s attempts to control raw materials were not always successful, and he faced challenges such as labor disputes, market fluctuations, and supply chain issues.

Nonetheless, his focus on vertical integration and self-sufficiency had an impact on the American manufacturing industry.

Perhaps what is old is new again.

There are some facts that we just know are true. Lewis Carroll wrote Alice in Wonderland. You can see the Great Wall of China from space. The Earth rotates around the sun. And we’re suffering from a critical minerals shortage.

Except none of these ‘facts’ is true. Lewis Carroll wrote Alice’s Adventures in Wonderland and Alice Through the Looking Glass, but never did he pen Alice in Wonderland. As for the visibility of the Great Wall, NASA disproved that ‘fact’ in 2004 with a photo from the International Space Station. The Earth actually rotates around the centre of our solar system’s mass, not the sun. And no, there is currently no critical minerals shortage.

The thesis for the critical minerals shortage is this. The world is facing a climate change disaster (agreed, and part of the cause is anthropomorphic). Humans need to change the things we can change to mitigate that disaster (again, agreed). Migrating away from fossil fuels is part of that mitigation (again, agreed). Migrating to Green Energy is the only rational solution (partly agreed). Green Energy needs lithium, cobalt, our friends 59 and 60 on the periodic table, uranium, zinc, cesium and others. There aren’t enough of those critical minerals to enable the Green Economy, so therefore we are suffering from a shortage of them.

Until recently that seemed like a self-evident truth. Then I listened to Dr. Jon Hykawy. He and I were on a panel together recently at the Critical Minerals Institute Summit in Toronto. Dr. Hykawy’s thinking is that there are no budgets, no hard targets, no actual real-life numbers from mining companies or governments for the production and consumption of items like EVs and other rechargeables. There are thoughts from brokerage firms (and we’ve seen from their predictions for the cannabis industry how accurate those thoughts can be), and there are thoughts / corporate presentations from explorers for critical minerals. There are government vague statements of goodwill and targets twenty years out, but there are no hard numbers. There is no actual data.

Instead, we get prognostications like, “By the year 2035 the world will need…”

If there is no data, how do we know if there is a shortage of critical minerals? Perhaps we’re actually in a surplus situation. Perhaps the supply and needs are balanced.

Pretend I’m building a house. We all know there is a shortage of lumber, right? So how will I build the house without lumber? If I need 800 2×4’s, and there is a shortage at the local DIY shop, what do I do? I search other shops. I drive around. I put in orders at various stores for delivery to the job site. If I have to I’ll make my own 2x4s. There is no shortage of lumber – I just have to work harder to get what I need. The bottleneck is in the supply chain, not in the lack of lumber.

Maybe the critical minerals ‘shortage’ is similar. As Mark Chalmers from Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR often says, “Rare earths aren’t that rare.” There are a multitude of rare earth and other critical mineral deposits around the world. Any geologist with any experience can point to good deposits of critical minerals, begging for further work and exploitation. I’m only a lawyer and I can think of 5 critical mineral deposits in Canada deserving of advanced geologic work. Why doesn’t that work get done?

Because it’s not the deposits that are in shortage. What the world lacks is the processing capabilities to exploit those deposits. The world lacks enough metallurgists to work them all. We lack engineers and chemists who can figure out a way to economically separate the good stuff from the host rock to create saleable product.

The world doesn’t have a critical mineral shortage. The world has a critical mineral processing shortage.

I applaud the North American approach, albeit recent, to defend its mining assets from ‘bad actors’. Those assets are available to be developed domestically, with their output to be consumed by the domestic supply chain. What we need now is investment into mining schools for more and better highly skilled talent. We need investment into new research, knowing full well some research will result in successful new processes and some will not. That’s the nature of science. We need the mining assets working together to create processing facilities to eliminate the bottleneck of a lack of technology, not in competition. We need true leadership on these complex issues, from government and First Nations and mining companies, all working together for the benefit of all.

And with advances in processing technologies, some of what we think today may be in shortage in 20 years will actually be in surplus or not be needed at all. The need for lithium in the electrolyte may be reduced or even replaced by a much more accessible element.

You can’t see the Great Wall of China from space and the world does not have a shortage of critical minerals. The world has a shortage of critical minerals processing capabilities. Let’s not have governments waste money asking the wrong question or even worse believing the wrong fact.

Dear Readers, let me begin by saying that I lived and worked for almost 8 years in DRC, initially at the US Embassy and later with a major US company developing one of the world’s largest copper-cobalt mines. I actually love the Congo, and I definitely love the US – but in neither case does that love blind me to sad realities.

The December 13, 2022 US-DRC-Zambia Memorandum of Understanding recently published is unfortunately another example of the US desperately trying to solve the looming disaster confronting the electric vehicle, green energy and defense industries caused by a current and growing global shortage of vital inputs such as lithium and rare earths. Caught between dueling national defense and political priorities, the Administration continues thrashing about to find reliable sources of the above-mentioned materials without having to actually permit new mines in the US.

Sadly, DRC does not meet the definition of a reliable source – and neither does Zambia, but I will focus here on the DRC, the much larger and more richly endowed of the two countries, and the one where I can speak from experience.

The MOU says the USG will provide consultation and encouragement for the stated goal of developing within and between DRC and Zambia a battery chain from mine to pre-production. Reference also is made to helping the two countries ensure transparency and enforce anti-corruption measures with the aim of attracting support for the effort from private sector investors.

Let’s talk brass tacks.

Vital infrastructure in the DRC, especially but not only transportation and energy, destroyed during the war which ended in 2003, remains mostly in shambles. Sporadic and poorly coordinated efforts by both the Kabila and Tshikedi presidencies, undercut by pervasive corruption, have not made a dent at the national level, albeit that road transportation has improved in some regions. What this means is that the always expensive and time consuming process of building a new mine is vastly increased. Mining companies frequently have to build new roads or rebuild stretches of the national highway; construct bridges and build or rebuild electrical transmission lines and regional power plants. These efforts require cooperation with the national electrical company, various national and provincial governmental agencies and, of course, navigating the DRC’s often mysterious import regime to get the necessary equipment into the country.

The best infrastructure is in the copper-cobalt provinces in the Southeastern quadrant of Congo. However, much of the disclosed lithium and rare earth deposits (which is what we really are discussing although the document mentions only copper and cobalt) are located in the troublesome East and North of Congo, areas beset by militia groups such as M23 (recently in the news) and others running rampant. Human rights abuses continue at a sadly broad scale, and some alleged para-statal military elements have reportedly staked out some of the most lucrative potential mining sites and, if their demands to be somehow included in commercial deals are not met, could become disruptive saboteurs.

So why does Washington see Congo as a potential silver bullet? Because despite all the above, a large company with deep pockets can still build a mine 3 times more quickly than currently is possible in the US. And because Congo is stuffed with mineral riches.

Once a company has a mine, successfully exporting from these zones is complicated. DRC has one sea access, the port of Matadi in Western Congo – but commercial rail service across DRC is not reliable. A new rail connection between Southeastern Congo and Luanda in Angola could be an option when finally completed, but meanwhile, most mining products go out via Zambia and across to South Africa’s ports via road and rail. The illicit mine production, of course, tends to go out via boat or small airplane through neighboring Rwanda or Uganda.

And far from least, the Congolese government has a history of stopping companies from exporting products when there is a disagreement over monies the government believes it is owed.

Two more important points: presidential elections are coming. Historically a new president changes everything, and the incumbent currently is not favored to be reelected.

And very importantly: the end-users for Congolese minerals face rigorous certification responsibilities which they pass on to the mines operating in country. This means that mining companies need to work with specialized companies who can examine their operations and certify that the mineral production does not involve any human rights violations, especially child labor, has respected tribal rights, including full and fair prior consultation, and that all financial transactions are open and above-board. No easy task in Eastern Congo, as the history of coltan shows.

If the USG actually wants to lay the groundwork for US companies to invest and succeed in DRC, sourcing and producing the rare earths and lithium needed in the United States, then it should consider taking a page out of China’s book and making serious and durable investments in building Congo’s infrastructure. This at least might give US mines and investors a fighting chance of succeeding.

But the MOU specifically notes that none of its aspirations are tied to funding.

Washington should drop the hypocrisy and permit more mines to be built more quickly in the USA. There never will be a shorter or more secure supply chain than minerals extracted and refined in the US for production and use in the USA.

Anything else is just deluding ourselves. The clock is ticking and we need to act – even when doing so requires political courage. Perhaps especially when that is the case.