In the current global landscape, the management and control of critical minerals such as nickel, lithium, and rare earths are undergoing significant transformation. This transformation is driven not only by market forces but also by strategic national policies. Recent developments in the industry reflect a marked shift from traditional Western dominance towards a model where resource-rich countries are asserting greater control over their natural assets.

The Monopoly of Rare Earths and the Rise of Resource Nationalism

For years, we’ve observed China’s strategic maneuvering to solidify its dominance over the rare earth market. The nation holds the largest operational rare earth mines and processing systems globally. This monopoly has often been criticized as resource nationalism, but it reflects a broader strategy where nations leverage their natural resources for greater economic and strategic autonomy. This approach is evident not only in China but also in countries like Chile and Indonesia, which are now following suit in the lithium and nickel sectors, respectively.

The Case of Chile and SQM

Chile’s recent decision to deny a Chinese company’s participation in the restructuring of SQM—a major lithium producer—underscores a significant shift towards nationalizing resource extraction. The government’s move to partner SQM with Codelco, traditionally a copper giant, to form a national critical minerals company, is a bold step towards retaining more value within the country. This development is particularly crucial as Chile is the world’s second-largest lithium producer after Australia and accounts for 24% of the global lithium production as of 2023.

Indonesia and Nickel: A Strategic Pivot

Similarly, Indonesia, the world’s largest nickel producer, has introduced policies that require miners to add downstream value to their operations within the country. This strategy not only enhances the value retained by the local economy but also helps in building a more sustainable and self-sufficient industrial base. Recent production cuts and market dynamics have influenced major players like Glencore PLC (LSE: GLEN) to reconsider their investments. For instance, Glencore’s exit from the Koniambo nickel operation in New Caledonia after a substantial investment highlights the challenges companies face due to high operating costs and fluctuating market prices.

Global Implications and the Future Outlook

These national strategies are reshaping global supply chains and the distribution of economic benefits derived from natural resources. The traditional model where Western countries control resource extraction and processing is being challenged, leading to a more multipolar resource governance landscape.

Looking forward, the demand for these critical minerals is set to soar, driven by the growth in technologies such as electric vehicles and renewable energy systems. For example, Moody’s forecasts a significant jump in lithium demand, potentially increasing by 150% by the end of this decade and nearly quadrupling by 2050. However, the entry into new markets such as lithium by companies like Codelco will require substantial capital investment, which could affect their financial stability.

Concluding Thoughts

The evolution of resource nationalism and the strategic repositioning by resource-rich nations are not merely economic decisions but are pivotal to the geopolitical dynamics of the 21st century. As nations like Chile and Indonesia assert greater control over their resources, the global community must navigate this new reality where resource sovereignty becomes a cornerstone of national policy. This shift represents not just an economic transformation but a fundamental realignment of global power structures in the mineral resource sector.

Welcome to the latest issue of the Technology Metals Report (TMR), brought to you by the Critical Minerals Institute (CMI). In this edition, we compile the most impactful stories shared by our members over the past week, reflecting the dynamic and evolving nature of the critical minerals and technology metals industry. Among the key stories featured in this report are the Australian government’s decision to classify nickel as a ‘critical’ mineral, entitling it to support from a significant stimulus fund, and the emerging competitive landscape in Africa as Western countries endeavor to reduce China’s dominance in the critical minerals sector, particularly in cobalt production.

This week’s report also highlights various strategic collaborations and developments, including Hastings Technology Metals Ltd.’s (ASX: HAS) offtake agreement with Baotou Sky Rock for the Yangibana Project, and the U.S. Department of Energy’s funding allocation for projects aimed at extracting rare earth elements and critical minerals from coal-based resources. Furthermore, we cover the notable surge in uranium prices to a 17-year high and the strategic expansion plans by Energy Fuels Inc., alongside LG Energy Solution’s efforts to secure lithium supply through a second agreement with WesCEF. Lastly, we touch on the advancements in battery technology, such as the pilot production of battery-grade purified phosphoric acid by First Phosphate Corp. and the formation of the China All-Solid-State Battery Collaborative Innovation Platform (CASIP) by leading Chinese battery and automobile manufacturers, including CATL and BYD, aiming to propel the development of all-solid-state batteries.

Australia classifies nickel as a ‘critical’ mineral to protect ailing industry (February 16, 2024, Source) — The Australian government has recognized nickel as a critical mineral, making it eligible for support from a A$6 billion stimulus fund due to concerns over the nickel industry’s decline, exacerbated by a supply glut from Indonesia and falling EV demand. This move aims to protect thousands of jobs and key producers like IGO Limited (ASX: IGO) and BHP Group (ASX: BHP | NYSE: BHP) from the impacts of falling nickel prices, which have dropped 43% in the past year. BHP has announced a significant impairment charge on its Nickel West division, highlighting the industry’s dire situation. The government’s intervention, including potential low-interest loans and grants, is a response to the challenges posed by cheaper Indonesian nickel, driven by Chinese investment and a ban on nickel ore exports from Indonesia. This situation has led to reduced investment and operational suspensions in Australia’s nickel sector, threatening its survival and the country’s ambition to develop alternative supply chains to China.

West challenges China’s critical minerals hold on Africa (February 16, 2024, Source) — In a significant development in the global minerals market, China’s CMOC Group has surpassed Glencore PLC (LSE: GLEN) to become the leading producer of cobalt, primarily through its operations at the Kisanfu mine in the Democratic Republic of Congo. This surge in production has created one of the largest cobalt surpluses in recent years, despite a drastic fall in cobalt prices. Western countries, recognizing the strategic importance of cobalt and other critical minerals for clean energy and military applications, are challenging China’s dominance in Africa. They are particularly focused on the rich copper and cobalt reserves in the Copperbelt region, which spans Zambia and the Congo. Western entities, including companies backed by prominent investors like Bill Gates and Jeff Bezos, are venturing into this region, despite political and infrastructural challenges. The U.S. and other Western nations are supporting infrastructure and energy projects to facilitate mining and reduce logistical costs. Efforts to de-risk mining in the Copperbelt include upgrading rail lines and developing solar power projects. Meanwhile, the Congolese government is asserting more control over its mineral resources, revising deals with Chinese companies and aiming to formalize artisanal mining to secure a fairer share of the revenue from its mineral wealth. This marks a pivotal shift in the geopolitics of critical minerals, highlighting the strategic competition between the West and China over Africa’s mineral resources.

Hastings And Baotou Sky Rock Sign Binding Term Sheet For Integrated Tolling And Offtake Arrangement (February 16, 2024, Source) — Hastings Technology Metals Ltd. (ASX: HAS) has entered into a binding term sheet with Baotou Sky Rock Rare Earth New Material Co., Ltd for an integrated tolling and offtake arrangement concerning the Yangibana Project’s rare earth concentrate. This arrangement allows Hastings to toll treat its concentrate in China, transforming it into separated rare earth oxides, and sell them, improving Hastings’ revenue and cash flows beyond previous models. The agreement, lasting seven years with a possible five-year extension, guarantees a minimum of 10,000tpa of concentrate processing. This deal complements Hastings’ existing contract with thyssenkrupp and is part of negotiations with other potential customers for further offtake agreements. The updated financial model reflecting this integrated approach will support the project’s funding, showcasing significantly enhanced project economics, including a notable increase in post-tax NPV, IRR, and life of mine free cashflow, while reducing the capital payback period.

The Up and Coming Uranium Boom (February 15, 2024, Source) — In an interview with Hallgarten + Company’s Christopher Ecclestone and the Critical Minerals Institute‘s (CMI) Tracy Weslosky, the discussion centered around the uranium market’s burgeoning prospects. Ecclestone expressed skepticism regarding the effectiveness of a US ban on Russian uranium, suggesting that Russian uranium could be rerouted through Kazakhstan. He highlighted the challenges Western countries might face in replacing Russian uranium sources. Ecclestone described the uranium market as vibrant, contrasting it with the stagnation in battery metals, and emphasized uranium’s unique investment appeal. He advised investors to focus on proven assets from previous booms, cautioning against investing in new, unproven fields. Ecclestone also critiqued the hype around thorium and small modular nuclear reactors, advocating for their potential but also indicating a need for realism. Lastly, he mentioned Argentina and the Athabasca region as key areas for uranium investment, highlighting the importance of geographic and asset-based considerations in the uranium industry.

DOE Awards $17M To Conduct FEED Studies for Production of Rare Earth Elements, Critical Minerals (February 15, 2024, Source) — The U.S. Department of Energy (DOE) is allocating over $17 million to three projects for extracting rare earth elements and critical minerals from coal-based resources. Funded by the Bipartisan Infrastructure Law, this initiative aligns with President Biden’s Investing in America agenda to diminish reliance on foreign critical minerals vital for clean energy technologies, including solar panels and electric vehicles. Leveraging America’s substantial coal reserves and waste, the projects aim to foster a self-reliant supply chain, enhance national security, support environmental sustainability, and create quality jobs. This strategic move towards utilizing domestic resources for critical mineral production underscores a significant push towards energy independence, aligning economic revitalization with clean energy advancements.

India to Capitalise on Coveted ‘Critical Minerals Club’ to Acquire Overseas Assets (February 15, 2024, Source) — India is strategically enhancing its position in the global critical minerals market by focusing on acquiring overseas assets through collaborations with Western countries and leveraging partnerships within the US-led Minerals Security Partnership (MSP). This international coalition aims to ensure reliable critical mineral supply chains amidst global disruptions. India, which joined the MSP in 2023, is encouraging public sector undertakings (PSUs) like Coal India Limited, NLC India Ltd., and NTPC Ltd. to secure strategic assets in lithium, cobalt, and graphite to bolster its green energy transition and manufacturing capabilities in electronics, including electric vehicles and semiconductors. Deals have been made, notably with Australia and countries in South America and Africa, to secure these essential materials. The initiative reflects India’s ambition to become self-reliant in critical minerals crucial for the technology-driven world economy, particularly as it aims to accelerate its green energy transition and indigenous manufacturing.

Uranium Prices at a 17-Year High, Energy Fuels Rapidly Increases Uranium Production in 2024 (February 14, 2024, Source) — Uranium prices have surged to a 17-year high at $106/lb, driven by reduced supply and increased demand, with Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) poised to benefit significantly. The uranium market’s optimism is further bolstered by a commitment from over 20 countries at COP28 to triple nuclear energy capacity by 2050, highlighting a significant shift towards nuclear energy to meet clean energy goals. Additionally, 118 governments have pledged to triple renewable energy capacity by 2030. Energy Fuels, the leading uranium producer in the USA, has initiated production at three mines, targeting a significant increase in uranium output to over 2 million lbs by 2025, alongside exploring additional production avenues. With uranium’s strategic importance in the clean energy transition underscored, Energy Fuels is leveraging favorable market conditions and long-term growth prospects, underlined by its ambitious expansion and production plans.

LG Energy signs 2nd agreement with WesCEF to expand lithium supply (February 13, 2024, Source) — LG Energy Solution from South Korea and Wesfarmers Chemicals, Energy, and Fertilisers (WesCEF) from Australia have signed their second agreement to expand LG’s lithium supply chain. WesCEF will supply LG with 85,000 tons of lithium concentrate, expected to yield about 11,000 tons of lithium hydroxide, sourced from the Mt. Holland project in Western Australia, set to start in early 2025. This agreement builds on a previous deal for 50,000 tons of lithium hydroxide in 2022. Additionally, LG Energy is focusing on expanding its presence in India’s electric vehicle market, already leading in supplying battery cells to e-scooter makers. In 2023, LG secured a deal with Chile’s SQM for 100,000 tons of lithium for seven years, highlighting its efforts to bolster its supply chain amidst increasing lithium demand for rechargeable batteries.

First Phosphate Corp. Completes Pilot Production of LFP Battery-Grade Purified Phosphoric Acid (February 13, 2024, Source) — First Phosphate Corp. (CSE: PHOS) announced the successful completion of a pilot project that converts high purity phosphate concentrate into battery-grade purified phosphoric acid (PPA) for the lithium iron phosphate (LFP) battery industry. In collaboration with Prayon Technologies SA, the company has transformed phosphate concentrate into merchant grade phosphoric acid and then into PPA, conforming to food and battery-grade specifications. This achievement enables the production of LFP cathode active material and battery cells from a North American source of battery-grade PPA. First Phosphate aims to integrate its mining operations in Quebec, Canada, into the supply chains of LFP battery producers, emphasizing high purity, responsible production, and a low carbon footprint.

CATL, BYD, others unite in China for solid-state battery breakthrough (February 12, 2024, Source) — In a bold move to spearhead the electric vehicle (EV) revolution, China’s leading battery and automobile manufacturers, including CATL and BYD, have joined forces under the government-led China All-Solid-State Battery Collaborative Innovation Platform (CASIP). Established in January, CASIP aims to commercialize all-solid-state batteries by 2030, enhancing EV performance with greater energy density and safety. This initiative, uniting industry rivals and leveraging AI technology, seeks to position China at the forefront of the next-generation battery technology, challenging current leaders like Japan and Western countries. With the participation of major companies and state support, China is poised to transform the EV market and maintain its global leadership in automotive battery innovation.

Investor.News Critical Minerals Media Coverage:

• February 15, 2024 – The Up and Coming Uranium Boom https://bit.ly/3uAUdcv
• February 14, 2024 – Uranium Prices at a 17-Year High, Energy Fuels Rapidly Increases Uranium Production in 2024 https://bit.ly/48wVY8N

Investor.News Critical Minerals Videos:

• February 13, 2024 – Tom Drivas on the 3 world-renowned rare earths experts on Appia’s Critical Minerals Advisory Committee https://bit.ly/49bVMNj

Critical Minerals IN8.Pro Member News Releases:

• February 15, 2024 – First Phosphate and Integrals Power sign Joint Development Agreement to Produce Environmentally Compliant Battery Grade Iron III Phosphate Precursor for the LFP Battery Industry https://bit.ly/3uDdslR
• February 14, 2024 – Imperial Mining Announces Effective Date of New Trading Symbols after TSXV Approves of Name Change to Scandium Canada Ltd. https://bit.ly/48hRylO
• February 13, 2024 – Western Uranium & Vanadium Mining Operations Update https://bit.ly/4bvDKHr
• February 13, 2024 – Donald Swartz, CEO American Rare Earths, to speak at “The Future Panel” https://bit.ly/3UF2MO5
• February 13, 2024 – First Phosphate Corp. Completes Pilot Production of LFP Battery-Grade Purified Phosphoric Acid https://bit.ly/3P51pF5
• February 13, 2024 – Defense Metals Updates Metallurgical Test Work and Preliminary Feasibility Study Progress for its Wicheeda Rare Earth Elements Project https://bit.ly/3HYiV9R
• February 13, 2024 – Power Nickel extends resource mineralization at Nisk Main https://bit.ly/49aJCE9
• February 12, 2024 – F3 Hits 66.8% U3O8 over 0.5m within 42.4% over 2.0m at JR https://bit.ly/3HUa6Oa

Welcome to the mid-September 2023 Critical Minerals Institute (“CMI”) report, designed to keep you up to date on all the latest major news across the critical minerals markets. Here is the IEA list of Critical Minerals.

Global critical minerals and electric vehicle (“EV”) update

Early September 2023 saw several major global events that impacted critical minerals.

The EU raised interest rates by 0.25% to a new 22 year high of 4.5%, signaling this may be the peak in rates. The US Fed is set to meet on September 20 with most analysts expecting a pause (at the current 5.5% rate, also a 22 year high), despite this week’s 3.7% CPI number, up from 3.2% the previous month. Rising interest rates in the West is slowing the economy which slows demand for most critical minerals. This has been a trend in 2023 with most critical minerals prices falling.

China announced a rate decrease last month and a decrease in the reserve rate ratio this week, all of which is starting to boost their sluggish economy. This is important as China is a key driver of critical mineral prices.

Global plugin electric car sales have generally been improving each month of 2023 after a slow start in Q1. Global EV sales reached 1.2 million units in August 2023, up 39% YoY, bringing YTD sales to 8.2 million. Sales in China have grown by 35% YTD, in EU and EFTA and UK by 30%, and in the US and Canada by 59%. 2023 sales look set to finish at ~13.5 million and 17% market share, which would be a 28% increase on 2022 (10.522 million and 13% market share). BYD Co. Ltd. (OTC: BYDDF) and Tesla Inc. (NASDAQ: TSLA) are dominating EV sales as you can read here in an article by CMI Director Matt Bohlsen.

Global plugin electric car ‘monthly’ sales in 2023 (source)

In mid-September we heard news that the Saudis and the US are in talks to secure critical metals in Africa needed to help the US with their energy transition. CMI Co-Chair Jack Lifton and CMI Director Melissa Sanderson shared their views on this controversial topic here. The Chinese have a long track record of mining in Africa, so it will be interesting to see what happens now they have sovereign wealth funds, such as that from Saudi Arabia, as competition. Glencore PLC (LSE: GLEN | OTC: GLCNF | HK: 805) has also increased its DRC activity with the recently announced backing of Tantalex Lithium Resources Corp.‘s (CSE: TTX | OTCQB: TTLXF) DRC lithium project.

Battery news – CATL has a new superfast charging battery that can revolutionize fast charging

In some groundbreaking battery news, Contemporary Amperex Technology Co. (“CATL”) the world’s leading battery manufacturer, recently announced a new ‘superfast charging’ lithium iron phosphate (“LFP”) battery. It is reported that the new 80kWh battery, named Shenxing, is “capable of delivering 400 km of driving range with a 10-minute charge as well as a range of over 700 km on a single full charge.”

Now that’s impressive, especially given current batteries typically take about 3x longer to charge. It certainly has the potential to revolutionize fast charging speeds.

CATL has a new superfast charging LFP battery, named Shenxing (source)

Lithium

Lithium chemical spot prices fell so far in September 2023, with China lithium carbonate spot at CNY 186,500 (US$ 26,022). Prices now look to be close to reaching a bottom due to being close to the current marginal cost of production of ~US$ 25,000/t. News out of China has reported that some marginal lepidolite producers have recently been halting production.

The good news is that lower material prices have led to battery cell prices falling below the magical US$ 100/kWh for the first time in 2 years. At this price, electric cars potentially reach purchase price parity with internal combustion engines as we are now seeing in China, where almost 2 out of every 5 new cars purchased are EVs (July was 38% and 2023 YTD is 36% market share).

Of interest in September it was reported that the Australian Government said “tax breaks for lithium are ‘on the table’”. Australia is already the world’s largest supplier of lithium ore but has ambitions to grow its lithium chemicals production and to value add in other areas. 

We also had a most interesting report that quotes leading lithium industry expert stating: “Mr Lithium says he’ll ‘be dead’ before the lithium market is oversupplied.” 

September also saw an interesting report stating: “The world’s largest deposit of lithium may have been discovered inside a US supervolcano”. The report is referring to a study conducted by Lithium Americas Corp. (TSX: LAC | NYSE: LAC), which hypothesizes that the McDermitt Caldera contains 20 to 40 million metric tons of lithium.

Rare Earths

Neodymium (“Nd”) prices showed some strong recovery so far in September 2023 after a rough 2023 which has seen prices fall ~33% YTD. Most of the other rare earths prices have also been struggling in 2023, weighed down by a slowing China. 

In an interesting rare earths September market update titled “The Chinese Rare Earths Monopoly Saga Continues”, leading global expert Jack Lifton stated: “China is doubling the size of its rare earth permanent magnet industry. It is said that this will happen by 2025. This means that China needs more, much more of the magnet precursor rare earths and all of the heavy rare earths, in particular, that it controls.” 

The interesting part is that the West, boosted by the U.S Inflation Reduction Act (“IRA) and the EU Critical Raw Minerals Act (“CRMA”), is also working to rapidly build up their own supply chains of key critical metals, notably the magnet rare earths. 

One such development in this direction is by Neo Performance Materials Inc. (TSX: NEO”) (“Neo”), who recently held their groundbreaking for a new permanent magnet plant in Estonia, Europe. The new plant targets Phase 1 production to reach 2,000/t pa in 2025, with Phase 2 targeting production of 5,000 tonnes/year (to support the manufacturing of ~4.5 million electric cars). The new plant will be fed by Neo’s rare earth oxide feed to come from Neo’s existing rare earth separations plant in Estonia. Another company Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) is also making great strides at developing a US supply chain for critical rare earths as you can read here. There are also several other junior rare earths companies, notably in Canada and Australia looking to supply the sector in future years.

Cobalt, Graphite, Nickel, Manganese and other critical minerals

Cobalt prices (currently at US$ 14.84/lb) continue to be very depressed in 2023, not helped by the slowdown in the global electronics sector. Some reports that China may be starting to pick up as well as some strength in superalloys (used in aerospace & military) demand gives a glimmer of hope.

Flake graphite prices are also very weak with prices near the marginal cost of production. Flake graphite is forecast by Macquarie and others to start heading into deficit from about 2024. Leading western graphite producer Syrah Resources Limited (ASX: SYR) has been slowing production. Syrah announced in September that they had received a US$150 million conditional loan commitment for Balama approved by United States International Development Finance Corporation. The US government is supporting Syrah as they are well advanced towards construction of an active anode materials (spherical graphite) plant in the USA, which happens to have an off-take deal with Tesla (NASDAQ: TSLA).

Nickel prices have remained quite strong the past 3 years; however, oversupply concerns from Indonesia and a slowing Chinese economy have taken their toll in 2023. A pickup in China stainless steel demand will be key to watch out for.

Manganese prices continue to be weighed down by weak Chinese demand as the Chinese housing industry continues to rebalance after years of over construction and oversupply. On the positive side manganese is starting to be used in lithium manganese iron phosphate (“LMFP”) batteries, by both Gotion Hi-Tech and CATL’s Qilin battery.

Special Thanks to the Editor of The Critical Minerals Institute Monthly Report, Matt Bohlsen who is a CMI Director.

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.

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The Critical Minerals Institute was created to offer education, collaboration, and an online resource to learn about critical mineral projects, emerging technologies, legislative initiatives, government funding, human capital needs, and capital market investment opportunities. There is no charge or sign up required for access to the Critical Minerals Institute website: www.criticalmineralsinstitute.com. A range of enhanced benefits are available to individual and corporate members of the CMI, including attendance at the CMI Summit, virtual events and additional resources. For details see: www.criticalmineralsinstitute.com/cmi-membership/.

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For more information, go to: Critical Minerals Institute

The Democratic Republic of Congo (DRC) is rapidly emerging as a focal point for global entities eager to obtain crucial metals pivotal for green technologies. This surge in interest has placed both the United States and the mining giant, Glencore PLC (LSE: GLEN | OTC: GLCNF | HK: 805), at the forefront of news, particularly regarding their expanding interests in the DRC.

Recent reports from Reuters reveal advanced talks between the United States and Saudi Arabia to secure metals from Africa for their green energy transitions. Concurrently, the UAE has penned a $1.5 billion agreement with the DRC to mine and process critical materials. This raises significant queries: Is Saudi Arabia charting a similar trajectory? How will these accords impact the region’s fragile power infrastructure? Moreover, given the proposed framework allowing U.S. companies to purchase a part of Saudi’s yield, what might be the potential cost for U.S. entities? This arrangement, echoing the prevalent market control where U.S. miners and manufacturers are tethered to China’s market hegemony, prompts the contemplation: Is the U.S. merely substituting China with Saudi Arabia?

In a parallel move, the Financial Times has shed light on Glencore’s ambitions in the DRC. The corporation’s strategy is to fortify its stance in the electric vehicle battery domain by bolstering its investments in the African country. Their alliance with the Toronto-listed Tantalex Lithium Resources Corp. (CSE: TTX | OTCQB: TTLXF) for a lithium mining project epitomizes this vision. Nevertheless, Glencore’s African endeavors have not been without their share of scandals. In the previous year, they acknowledged bribery practices across the continent, culminating in a sizable $180 million settlement with the DRC. Probes into their DRC activities persist.

Critical Minerals Institute (CMI) Director and DRC expert Melissa “Mel” Sanderson’s discernment provides a deeper layer of scrutiny to these advancements. She underscores the ethical paradox in the U.S.’s methodology — a predisposition for mining in regions with more lenient ESG standards, while overlooking potential ventures domestically under more rigorous norms. She perceives this as a manifestation of an “out of sight, out of mind” philosophy.

Enriching the discourse, CMI Co-Chair Jack Lifton remarked, “I am deeply acquainted with this scenario. The American public remains oblivious to the fact that the lithium will be claimed by the highest bidder, not necessarily the most ethical. The Chinese had collaborated with an Australian firm that forfeited the concession due to alleged “corruption.” It’s plausible that they will, if not already, synergize with Glencore concerning expenses. Being Swiss, Glencore isn’t bound by loyalty to the EU or the USA. It’s widely recollected that an African leader observed, ‘While Americans offer promises, the Chinese construct airports.’ The U.S. and its industries are channeling funds into ‘domestic’ ventures from finite or economically precarious sources, providing fertile ground for unscrupulous practices.”

In today’s interconnected age, cultivating global alliances is undeniably pivotal. Yet, the overarching strategic, ethical, and environmental repercussions of these engagements demand unwavering attention. As the global compass aligns with sustainability, it becomes imperative for entities like the U.S. government and Glencore to holistically evaluate the broader socio-political and environmental consequences inherent in their decisions. Reflecting upon this might hint that ethical, sustainable, and dependable alternatives may be more accessible than they presume. For more information on the CMI, click here

The global pursuit of key battery metals like nickel and copper appears to be reaching a fevered pitch. Mining M&A is being spurred on by investors betting on rising demand for critical minerals that are key for the global green energy transition.

The latest example came this past Monday when global miner Glencore PLC (LSE: GLEN) (who is also in hot pursuit of Canada’s Teck Resources Limited (TSX: TECK.A | TSX: TECK.B | NYSE: TECK)), Stellantis N.V. (NYSE: STLA | Euronext Milan: STLAM | Euronext Paris: STLAP) and Volkswagen AG‘s (Xetra: VOW3 | OTCPK: VWAGY) battery unit PowerCo agreed to back a US$1 billion deal by special purpose acquisition company (SPAC) ACG Acquisition Company to buy two mines in Brazil. The UK-listed SPAC will buy a nickel sulfide mine in Santa Rita and a copper mine in Serrote from private equity funds. The nickel sulfide will be refined at Glencore’s facilities in Western Europe and North America once the sale has been finalized, with the final product used in EV batteries by Stellantis and PowerGo, along with other manufacturers.

It appears to be a great time to be in the nickel space as end users and mining majors continue to try and lock up key supply sources. One company looking to get in on the action is Fathom Nickel Inc. (CSE: FNI | OTCQB: FNICF), a publicly traded resource development and exploration company that is targeting high-grade nickel sulfide discoveries located in Saskatchewan.

The Company is accelerating exploration on its flagship Albert Lake Project, a 90,000+ hectare project that was host to the historic and past-producing Rottenstone deposit which is recognized as one of the highest‐grade deposits of its type ever mined in Canada. Also located in the prolific Trans Hudson Corridor in Saskatchewan is the Gochager Lake Project, a 19,560-hectare project that is host to a historic, open-pitable resource.

What makes Fathom Nickel stand out to me is the historical numbers that came from the Rottenstone Mine. The Mine operated from 1965 -1969 and produced very high-grade Ni-Cu+PGE-Au (26,000 tonnes; 3.28% Ni, 1.83% Cu, 9.63 g/t Pd, Pt-Au). Albeit, this information is not considered NI 43-101 Compliant, it certainly grabs your attention.

Fathom funded exploration programs at Albert Lake in 2016, 2018, 2021, and 2022, with the 2021–22 drilling and borehole electromagnetic (BHEM) surveys leading to the discovery of the 300+ meter Bay-Island mineralized corridor which is open to the north and south. This new mineralized intrusive is located 400–500m west-northwest of historic Rottenstone deposit with consistent mineralized intervals up to 18 meters thick. Drill hole AL22052 intersected 0.62% Ni, 0.29% Cu, 0.58 g/t Pd-Pt over 13.3m (0.98% NiEq).

This is all a pretty good starting point but where is the catalyst for investors going forward? The Company is finalizing its summer plans for the initial phases of exploration at both Gochager Lake and Albert Lake. Geophysical crews are expected to mobilize to Gochager Lake on June 6 and initiate a geophysical program expected to last two to three weeks. A separate geophysical crew is expected to mobilize to Albert Lake later in June. The results from the summer program will lead to additional drilling to be conducted in Fall-2023/Winter-2024.

And to fund all this activity, Fathom recently closed the second and final tranche of its upsized non-brokered offering of flow-through units and non flow-though units, previously announced on May 8, 2023. Together with the previously closed first tranche, the total gross proceeds of the offering is C$2.96 million. This includes participation by a key strategic investor Crescat Capital LLC, bringing Crescat’s ownership/control position in Fathom to approximately 17.4% of the common shares currently outstanding.

With a bright long-term outlook for nickel used in the manufacturing of batteries needed for energy storage in the high-growth renewable energy and EV industries, companies like Fathom Nickel should have ample opportunity to raise funds and continue to pursue prospective opportunities in mining friendly jurisdictions. Perhaps sometime in the future, Fathom will be yet another Canadian mining company to be courted by Glencore.

Fathom Nickel trades with a market cap of C$23.6 million following the closing of its latest equity offering.

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.

Nickel prices have had a very good year in 2022, up 43% YTD to US$28,199/t at the time of writing. This has been mostly due to a tight market with demand remaining strong and limited new supply.

2023 is forecast to be another tight year for the nickel market, although some analysts are concerned with potential new supply from Indonesia. Sumitomo sees a tight nickel supply/demand balance for the battery sector with some potential oversupply of nickel pig iron (NPI) in 2023. Nickel pig iron is a low grade ferronickel commonly used in China as a cheaper alternative to pure nickel for the production of stainless steel.

Sumitomo Metal Mining forecasts (as of Sept. 2022) small nickel deficits for 2022 and 2023

Source: Sumitomo Metal Mining (see page 11)

A huge demand wave ahead for nickel this decade and next

Looking out further, in 2021 the IEA forecast that nickel demand is set to increase by 7x to 19x from 2020 to 2040. This is driven by conventional demand from stainless steel plus surging demand from batteries, mostly to supply the electric vehicle boom. Not all batteries will use nickel; however nickel, manganese, cobalt (NMC) cathode batteries are set to remain as a dominant battery chemistry in Western markets due to their superb energy density, combined with a good long cycle life. In 2022, the IEA forecast that 60 new nickel mines would be needed by 2030.

Jessica Farrell, BHP’s Asset President of Nickel West, recently was quoted as stating: “We anticipate demand for nickel in the next 30 years will be 200% to 300% of the demand in the previous 30 years”.

The leading nickel companies

Vale S.A. (NYSE: VALE) is consistently in the top 3 global leading producers of nickel. In 2020 they ranked second producing 215,000t. In 2021, Vale was the world’s largest iron ore and nickel producer with iron ore and pellets making up 81% of revenue in Q2, 2022, nickel making up 9%, and copper 3%. Vale has been working on expanding production capacity of both iron ore and nickel. Vale’s key nickel assets are well located in Voisey’s Bay in Canada. Vale has nickel supply agreements to supply nickel to Tesla (NASDAQ: TSLA), Ford Motor Co. (NYSE: F), Northvolt, and more recently General Motors (NYSE: GM). Vale’s stock currently trades on a 2023 PE of only 5.97 and an indicative 2023 dividend yield of 6.6%.

Norilsk Nickel was the leading global nickel producer in 2020 with 236,000t. Being a Russian company 2022 has not been kind for investors in Nornickel with the stock price plunging and stock trading being suspended from all Western stock exchanges. Nornickel recently stated: “MMC Norilsk Nickel shares are listed on the Moscow and on the Saint-Petersburg Stock Exchanges, ADRs are accepted for trading on the Saint-Petersburg Stock Exchange.”

Glencore PLC (LSE: GLEN | OTC: GLCNF) ranked the number 3 leading global nickel producer in 2020 with 110,000t of production. Glencore’s 2022 production for the first 9 months of the year was 81,600t, 15% up on the same period in 2021.

BHP Group Limited (NYSE: BHP) is ranked 4th in 2020 with 80,000t of nickel production. BHP’s Nickel West mine has been ramping up operations in recent times with ore sent to BHP’s Kwinana Nickel Refinery which can produce 100,000tpa of nickel sulphate. BHP is looking to grow their nickel business and recently announced a takeover offer of OZ Minerals Limited (ASX: OZL) (who themselves have an option deal to acquire Havilah Resources’ Kalkaroo Project in SA that contains copper, gold and cobalt).

BHP’s Nickel West operations in Western Australia

Source: BHP website

Others – Other key global nickel producers include Jinchuan Group (HK: 2362), Sumitomo Metal Mining Co. (TYO: 5713 | OTC: SMMYY), Anglo American (LSE: AAL | OTC: AAUKF), Eramet (OTC: ERMAY), Sherritt International (TSX: S | OTC: SHERF), IGO Limited (ASX: IGO | OTC: IIDDY), Panoramic Resources (ASX: PAN | OTC: PANRF), Nickel Industries Limited (ASX: NIC | OTC: NICMF), Nickel 28 Capital Corp. (TSXV: NKL), Mincor Resources (ASX: MCR | OTC: MCRZF), and a few more.

Closing remarks

2022 was a great year for the nickel sector. 2023 looks like being a bit tougher as a global slowdown looms and as new Indonesia supply comes online; however, looking out this decade it looks hard to see where the 60 new nickel mines needed will come from.

There are several exciting nickel juniors working to fill the impending nickel supply gap this decade. Some are ii8 members here at InvestorIntel, such as Power Nickel (TSXV: PNPN), so feel free to read up on them over the upcoming Christmas break.

What a week! Last Thursday, Russia invaded Ukraine. Then this week global supply chains went crazy, with skyrocketing price moves and a global-scale sense of worry about where it all leads.

I won’t dwell on war news, meaning stories and imagery from front lines. It’s tragic and painful to witness, and no doubt you follow events.

But definitely, it’s worth discussing the economic impacts of the war. In particular, consider the almost immediate commercial isolation of Russia that’s now taking shape with a wide array of sanctions on Russia’s government, her banks, businesses and people.

This is an entirely new page for the world economy. And what’s happening is not as easy as just saying, “Russia is bad so let’s punish her.” Sad to say, though, that’s where much thinking across the world is focused. Do something. Make it fast. Think about it later.

Another way to say it is that Russia is a major, global-scale source of key energy and industrial resources. These range from products straight from the well like crude oil and natural gas, to refined hydrocarbons like gasoline, diesel and chemicals. Plus, Russia produces a vast array of industrially critical elements, again ranging from ores and concentrates to highly refined and processed alloys.

For example, as Russian sanctions kicked into play over the past few days the price of oil pulled up into a strong climb, with Brent Crude hitting $114 per barrel at one point. This reflects market uncertainty over future access to Russian exports. Meanwhile, one sees stories of tanker-loads of Russian oil going “no bid” because traders are uncertain about the legality of even making an offer. It’ll sort out, more or less. But for now, it’s a serious mess.

Other important commodities with a Russia-trade angle are also rising in price. Wheat futures are soaring to two-decade highs, according to market tracking services. And lumber futures are up sharply as well, reflecting concern over diminishing Russian supply.

Other materials rising in price include aerospace-grade aluminum, now at record levels according to a market follower with whom I spoke earlier. Meanwhile, a significant fraction of the world’s aerospace grade titanium – about 60% by some calculations – comes from Russia.

Or consider spot prices for other widely used, critical industrial elements like copper, nickel and uranium. All have a strong Russia supply angle, and all are at 10-year highs, per trading data.

You get the picture, right? Literally, overnight, anti-Russia sanctions have created uncertainty over future supplies of key energy resources and metals.

Meanwhile, share prices for important Russian producers have collapsed. Consider just two key companies in the Russian investment space, gas producer Gazprom (OTC: OGZPY) and metals producer Norilsk Nickel (OTC: NILSY). Both companies’ share prices have tumbled in recent days, as you can see here:

Is there an investment angle? Well, the possibilities are many and depend on your risk tolerance.

For the truly bold, the collapse of Russian share prices creates a contrarian setup. If you are aggressive, and perhaps a bit crazy, feel free to wade into the selloff and buy shares of Norilsk and Gazprom. Of course, we don’t yet know what will happen as events unfold, so the “buy low” idea could also lead to even more losses, of not a complete wipeout. You’ve been warned.

Or frame it this way: Russia now has a very significant level of what’s called “war risk” in everything that has to do with its investment climate. Perhaps there’s an upside in the not-too-distant future, but for now the entire space is a very dangerous place to be for most investors.

The safer investment idea is to focus on U.S. and Canadian names that work in the resource space that’s affected by Russian sanctions. Of course, there are many names out there ranging from small exploration plays to large and mighty companies.

For example, let’s look at nickel. Large nickel producers include Brazilian play Vale (NYSE: VALE), as well as Swiss-based Glencore (OTC: GLNCY) and Australia’s BHP Group Ltd. (NYSE: BHP). These names have global operations and everything you would want in a major player. If customers need nickel and cannot obtain it from Russia and Norilsk, they can buy it from these other guys.

On the much smaller, exploration side, though, my strongest play is a Canadian junior operating in Montana, called Group Ten Metals Inc. (TSXV: PGE | OTCQB: PGEZF). This company is relatively early stage in its efforts, but with significant progress on the books. The play is focused within the well-regarded Stillwater District, where the company holds a massive land package. Exploration has already revealed extensive mineralization in copper, nickel, platinum, palladium, rhodium, gold, silver and even chrome. It’s a superb asset (I’ve visited the site and seen the mineralization), with strong technical and management talent.

It’s also worth noting that Group Ten holds lands directly adjacent to Sibanye-Stillwater, Ltd. (NYSE: SBSW), currently producing minerals in the region. This situation makes it more likely that Group Ten can eventually obtain necessary mining permits and move towards development and production.

To sum up, we can’t do anything about the tragic war in Ukraine. Meanwhile, the anti-Russia sanctions are a massive, international phenomenon, again out of our hands. But already these dynamics have set up severe supply chain issues, all based on just a few days of history being made. And more disruptions are, no doubt, in the pipeline as events unfold and politics play out.

Finally, looking ahead the world is not simply on a glide path to a new version of the Cold War. No, Western nations are on the path to a “Commodity War” scenario, firmly embedded inside the looming political, economic and perhaps military confrontations. In this sense, holding real assets – including ores in the ground – is critical to your investment future.

On that note, I rest my case.

That’s all for now… Thank you for reading.

Best wishes…

Byron W. King

Way back in 2011 there were nearly 250 rare earth themed junior mining ventures looking at 400 “deposits” mainly in Canada and Australia. Today, just two of them are producing, Lynas Rare Earths Limited (ASX: LYC) and MP Materials Corp. (NYSE: MP) (the successor in interest to the bankrupt Molycorp of yore). These two ventures, even then, stood out from the pack by their common purpose of delivering a value-added product, individual separated (or blended) rare earth chemical forms, in the case of Lynas, and “magnets,” in the case of Molycorp. All of the others, without exception, stated that their saleable product would be a “mixed con.” This was the great “con” of the rare earths’ boom and bust of 2010-2013.

A concentrate of a mixture of all of the rare earths, from which the chemical elements that interfere with the separation of those rare earths into individual, or purposely blended combinations, of individual rare earth salts, is what is targeted to be produced at a mining operation where the ore is “mined,” concentrated, cracked and leached, and then is chemically processed to remove elements that interfere with the next step, selective separation of the individual elements in a form required for the next step in the supply chain that ultimately results in a finished product for sale to consumers.

For the rare earths this concentrate is, for practical purposes of safety and economics, a mix of rare earth carbonate solids. This should have been the initial target of 2011’s 250 rare earth juniors. It wasn’t. They overwhelmingly (other than Lynas and Molycorp) did nothing to advance towards this target. That turned out to be a good thing, because the only non-Chinese customers for this “mixed con” before 2017 were Solvay in France (9,000 tpa capacity to produce individual rare earth salts), Silmet in Estonia (2,500 tpa), and assorted small operations in Asia, outside of China, with a combined capacity of perhaps 3,000 tpa. All of these bought their feedstock from China or (a tiny amount) from Russia at the time.

No 2011 junior sold a single gram of mixed con to the marketplace prior to 2017 (Lynas)

Why was the first 21^st century, rare earth boom, such a bust?

Because none of them had the knowledge, education, experience or skill in processing or mineral economics to see that integration into a total rare earths supply chain targeted to a final product is necessary for profitable operation. Almost without exception the profitable part of the rare earth supply chain is concentrated in the metals, alloys, and magnet making end, and the only way to make a mine and separation system profitable is to distribute costs along a total supply chain. (America’s Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR), which is operating on a total supply chain model through magnet alloys, is an exception, because it is able to make a profit selling a mixed carbonate due to the skill of its administrative and operation management and a unique, for North America, existing processing infrastructure).

If there is to be a domestic American, or European, total rare earth permanent magnet supply chain then there will have to be in place operating commercial rare earth separation systems, rare earth metals and alloys production, and rare earth permanent magnet production capability and capacity to support it.

In fact, if there are to be total domestic supply chains for any critical metals, then, not just a mine, but also all of the downstream elements of the supply chain have to be in place before that can happen.

I note that for the cobalt chemicals necessary for the production of lithium-ion battery cathodes, the Canadian integrated cobalt processing junior, Electra Battery Materials Corporation (TSXV: ELBM | OTCQX: FTSSF), has entered into a supply agreement for cobalt concentrates from the world’s largest non-Chinese producer, Glencore, to process that concentrate into fine cobalt chemicals for the battery manufacturing industry in its existing Canadian facility. When and if Electra can produce cobalt concentrates from its company-owned deposits there will already be in place the downstream operations to support that. In the meantime, it will buy feedstocks from others, and/or also toll them for others. Electra’s management looks also to have given considerable thought to pricing, so as to ensure profitability.

This business model, to have in-house as much of the total final product supply chain as is necessary to be profitable, is the only practical business model for the production of critical metals and materials.

As of December 31, 2021, America’s Energy Fuels (rare earths) and Canada’s Electra (cobalt) are setting the pace for the future development of a North American critical metals’ industry by commencing operations.

Happy New Year!