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 CMI Directors 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 Ford Motor’s strategic decision to delay its all-electric SUV and truck productions in favor of expanding its hybrid offerings, signaling a broader trend in the automotive sector towards hybrid technologies. The resurgence of the uranium market, with prices doubling due to the growing demand for clean energy, underlines the critical role of uranium in achieving 2050 climate targets. Moreover, the DRC’s decision to suspend nine subcontractors at ERG mines due to non-compliance issues highlights the persistent challenges and evolving regulatory landscape in the cobalt industry. This action reflects a commendable direction by the Congo government towards enhancing industry standards and governance. The entry of Aclara Resources Inc. into the U.S. rare earth processing market was both newsworthy and offered Jack Lifton an opportunity to update readers on the advancements of REE processes in North America today.

This week’s TMR Report also highlights significant developments across the global critical minerals landscape, including the European Union and the United States’ efforts to broaden their reach in securing critical minerals amidst a stalled bilateral agreement, and Ionic Rare Earths Limited’s joint venture with Viridis Mining to establish a rare earth refining and recycling presence in Brazil. The U.S. Department of Energy’s $75 million investment in a Critical Minerals Supply Chain Research Facility aims to reduce reliance on foreign sources and bolster national security. Furthermore, the collaboration between NOVONIX Limited and Lithium Energy Limited to form Axon Graphite Limited through a public listing emphasizes the strategic moves within the natural graphite sector. MP Materials’ awarded tax credit to advance U.S. rare earth magnet manufacturing marks a significant step towards reducing dependency on imported critical materials. Lastly, the extension of Canada’s Mineral Exploration Tax Credit (METC) and the Biden-Harris Administration’s announcement of a $4 billion initiative in tax credits for clean energy supply chain projects underline the ongoing efforts and investments to strengthen the critical minerals sector, underscoring the importance of these developments for our energy security, economic prosperity, and environmental sustainability.

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Ford to delay all-electric SUV, truck to focus on offering hybrid vehicles across its lineup by 2030: (April 04, 2024, Source) — Ford Motor has announced a strategic shift in its electric vehicle (EV) plans, postponing the production of a new all-electric SUV and pickup truck to focus on expanding its hybrid vehicle offerings across its entire North American lineup by 2030. Despite this delay, Ford remains committed to the EV market, planning to continue its investments in electric technology. The production of a three-row SUV in Canada has been rescheduled from 2025 to 2027, and the launch of a next-generation pickup, codenamed “T3,” has been moved from late 2025 to 2026. This decision reflects broader industry trends, with many automakers reassessing their EV strategies amid slower-than-expected adoption rates and high production costs. Additionally, Ford aims to leverage new battery technology to enhance the durability and value of its future EVs, focusing its efforts on newly established plants like the “BlueOval City” in Tennessee, rather than converting existing facilities.

Uranium price creates new ASX boom: (April 04, 2024, Source) — In 2023, uranium prices doubled from US$48 to US$91 per pound, peaking at US$106 in 2024, highlighting a significant recovery from previous lows. This resurgence, fueled by the demand for clean energy and carbon emission reductions, has revived interest in uranium projects, now seen as viable at around US$100 per pound. Global initiatives to expand nuclear energy, with significant investments in new reactors in the US, China, and France, underscore uranium’s critical role in meeting 2050 climate targets. Despite temporary price dips, the market outlook remains positive, driven by global nuclear expansion and supply constraints. This bullish sentiment has revitalized the uranium sector, particularly benefiting ASX-listed companies engaged in uranium exploration and mining, reflecting a broader industry optimism and investment in nuclear energy’s future.

Congo Suspends ERG Subcontractors at Major Cobalt Mine: (April 04, 2024, Source) — The Democratic Republic of Congo has suspended nine subcontractors at Eurasian Resources Group (ERG) mines, citing non-compliance with laws requiring Congolese ownership. This move, announced on March 14, intensifies tensions between ERG and the government, which is pushing for greater domestic benefits from the mining sector. Congo, a major global supplier of cobalt and a significant copper producer, is enforcing regulations to ensure local control of mining operations. The government’s actions also reflect ongoing disputes with ERG over asset development and environmental concerns. Despite the suspensions, ERG insists it adheres to local laws, emphasizing its support for Congolese suppliers and its commitment to legal compliance. The sanctions target subcontractors at Metalkol and Frontier, two key ERG projects in Congo, but are not expected to affect output due to a transitional period for bringing in compliant firms. The controversy highlights Congo’s efforts to secure more benefits from its mineral resources while navigating challenges with international mining companies.

Disruptive Shift to Rare Earth Processing as Aclara Moves into American Market: (April 03, 2024, Source) — Jack Lifton of the Critical Minerals Institute (CMI) offered an analysis on Aclara Resources Inc.‘s (TSX: ARA) strategic entry into the U.S. rare earth processing market. Aclara aims to utilize ionic clay deposits from Chile and Brazil for heavy rare earth elements (HREEs) crucial in magnet manufacturing. They’ve partnered with the Saskatchewan Research Council and Hatch Ltd. for processing facility development. Lifton, however, questioned the project’s ambitious timeline and compared Aclara’s efforts to established players like Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR), which is advancing in light rare earth (LREE) separation. The column highlights the competitive nature of the rare earth market, with Aclara facing challenges from Energy Fuels, MP Materials (NYSE: MP) and Ucore Rare Metals Inc. (TSXV: UCU | OTCQX: UURAF). Lifton suggests Aclara needs deeper industry integration and strategic partnerships, indicating a complex journey ahead in a competitive and technological landscape.

EU, US seek broader reach on critical minerals as own deal stalls: (April 03, 2024, Source) — The European Union (EU) and the United States (US) are not expected to finalize a critical minerals agreement at an upcoming meeting. Despite this, they plan to launch initiatives to partner with resource-rich countries. The EU aims for an accord allowing minerals processed in Europe to be eligible for US clean vehicle incentives, focusing on cobalt, graphite, lithium, manganese, and nickel. A senior European Commission official cited the absence of an imminent deal but confirmed a joint commitment to future agreements. Difficulties include US demands for labor standards verification at mining sites. Moreover, the EU and US are seeking to differentiate their offerings from China’s by emphasizing infrastructure funding, sustainability, and value-added business opportunities for developing countries, with plans to engage with ministers from Namibia, Ukraine, Kazakhstan, and Uzbekistan among others.

Ionic Rare Earths Limited (ASX:IXR) and Viridis Mining to Form REE Refining and Recycling JV in Brazil: (April 03, 2024, Source) — Ionic Rare Earths Limited (ASX:IXR) and Viridis Mining and Minerals Limited (ASX:VMM) have announced a 50:50 joint venture (JV) to establish a dominant position in the global supply chain for Rare Earth Elements (REE) in Brazil. This strategic partnership aims to utilize IonicRE’s intellectual property and Viridis’ global assets to become a leading supplier of high-quality, reliable rare earths crucial for various industries and energy transition. The JV plans to co-fund a Brazilian production facility, aiming to complete a Scoping Study by the end of 2024 and a preliminary feasibility study within 18 months. IonicRE’s recent success in producing rare earth oxides at its Belfast facility and Viridis’ promising Colossus Ionic Adsorption Clay REE Project in Brazil highlight the joint venture’s potential to accelerate growth and leverage Brazil’s rich rare earth resources. This collaboration aligns with Brazil’s ambition to become a global leader in rare earth production, offering an exceptional opportunity for both companies to advance their positions in the rare earth supply chain significantly.

DOE Invests $75 Million to Strengthen Nation’s Critical Minerals Supply Chain: (April 02, 2024, Source) — The U.S. Department of Energy (DOE), under President Biden’s Investing in America agenda, announced a $75 million investment for a Critical Minerals Supply Chain Research Facility, aimed at bolstering the nation’s supply chains for critical minerals and materials essential for energy security, economic prosperity, and national security. This initiative, part of the Bipartisan Infrastructure Law, focuses on reducing reliance on foreign sources by accelerating the production of critical minerals from diverse sources. The facility will collaborate with other government initiatives and aims to enhance supply chain efficiencies and support a circular economy. A supply chain assessment highlighted the risks of over-reliance on foreign and adversarial sources for these materials, underscoring the importance of this project for the U.S.’s clean energy transition, manufacturing sector revitalization, and overall competitive edge. The project will involve nine national laboratories, emphasizing community engagement and benefits in line with the Justice40 Initiative. This is in addition to FECM’s commitment of $58 million since January 2021 to further support critical mineral and material projects across the country.

NOVONIX Limited and Lithium Energy Limited to Combine Natural Graphite Interests with Intention to Take Combined Business Public: (April 02, 2024, Source) — NOVONIX Limited (NASDAQ: NVX | ASX: NVX) and Lithium Energy Limited (ASX: LEL) are combining their natural graphite exploration interests into a newly formed company, Axon Graphite Limited, aiming for a public listing through an initial public offering (IPO) on the Australian Securities Exchange (ASX). Both companies will each retain up to 28.57% ownership post-IPO, intending to create a significant natural flake graphite project. This move is designed to unlock value for shareholders of both NOVONIX and LEL, with eligible shareholders given priority in the IPO. The combination of NOVONIX’s Mt. Dromedary project and LEL’s Burke and Corella projects under Axon signifies the development of a major resource aimed at supporting the electric vehicle and energy storage sectors. The IPO seeks to raise between $15 million to $25 million, setting the stage for Axon to become a key player in the battery materials sector, benefiting from the anticipated growth in demand for anode materials and high-grade graphite products.

MP Materials Awarded $58.5 Million to Advance U.S. Rare Earth Magnet Manufacturing: (April 01, 2024, Source) — MP Materials (NYSE: MP) has been awarded a $58.5 million tax credit by the IRS and Treasury, under the Section 48C Advanced Energy Project, to support the construction of the first fully-integrated rare earth magnet manufacturing facility in the United States. This grant was part of a competitive process by the Department of Energy assessing around 250 projects for their viability and environmental impact. The facility will focus on producing neodymium-iron-boron (NdFeB) magnets, essential for various applications including electric vehicles, wind turbines, and defense systems. With global demand for these magnets expected to triple by 2035, MP Materials’ initiative aims to commence the commercial production of magnet precursor materials in Fort Worth, Texas, by summer and finished magnets by late 2025, supplying to companies like General Motors. This project addresses the U.S.’s near-total reliance on imports for these critical materials, mainly from China, and aims to establish a sustainable, end-to-end supply chain.

Relief and Renewal: Canada’s METC Extension Breathes New Life into Mineral Exploration: (March 31, 2024, Source) — The Canadian government announced the extension of the Mineral Exploration Tax Credit (METC) until March 31, 2025, addressing concerns in the mining sector over the future of flow-through financings. This move has been met with relief, particularly as the deadline approached without prior confirmation, sparking anxiety among stakeholders. The METC plays a vital role in supporting exploration companies by enhancing flow-through share pricing, thereby facilitating fundraising. Critics, including Peter Clausi from the Critical Minerals Institute (CMI), had voiced concerns over the uncertainty caused by the government’s silence, which hampered planning and investments. The extension is seen as crucial for continued investment in the sector, particularly benefiting junior mining companies and associated industries, including First Nations communities. Despite debates over the sufficiency of the projected $65 million support, the decision signifies the government’s recognition of mining’s importance to Canada’s economy and its commitment to sustainable development and Indigenous economic participation.

Central Asia’s rising role in global rare earth metal competition: (March 31, 2024, Source) — Central Asian countries are becoming increasingly significant in the global competition for rare earth metals, crucial for technological and economic development. Eldaniz Gusseinov and Abakhon Sultonazarov highlight this trend against the backdrop of geopolitical shifts, such as the Ukraine conflict, prompting Western countries to seek alternatives to Russian and Chinese supplies. Central Asia, rich in mineral reserves, is eyed by the West to reduce dependencies, particularly as they move towards renewable energy sources. Kazakhstan emerges as a focal point with substantial reserves of rare earth elements like scandium, yttrium, and lanthanides, pivotal for industries ranging from computing to automobile manufacturing. The U.S. and EU are exploring investments in Kazakhstan to diversify their supply chains. Meanwhile, the U.S. and China vie for influence in the region, leveraging their strategic advantages. Central Asia’s untapped mineral wealth, including significant rare earth deposits, positions it as a critical player in global supply chains, with the potential to alter the dynamics of resource control and economic development amidst great power competition.

Biden-Harris Administration Announces $4 Billion in Tax Credits to Build Clean Energy Supply Chain, Drive Investments, and Lower Costs in Energy Communities: (March 29, 2024, Source) — The Biden-Harris Administration has announced a groundbreaking $4 billion initiative in tax credits to foster over 100 projects across 35 states aimed at bolstering clean energy manufacturing, reducing greenhouse gas emissions, and securing the supply chain for critical minerals. This move, part of President Biden’s Investing in America agenda and funded by the Inflation Reduction Act, represents a major leap forward in the domestic production of clean energy and the strategic development of critical minerals essential for energy independence and technological advancement. Managed by the Department of Energy (DOE) in partnership with the Treasury and the IRS, the initiative focuses on a diverse range of projects, including significant investment in communities historically dependent on fossil fuels, aiming to create high-quality jobs and promote a transition to a cleaner economy. The Qualifying Advanced Energy Project Tax Credit (48C) program, rejuvenated with a $10 billion boost from the Inflation Reduction Act, provides up to a 30% investment tax credit for approved projects that meet specific wage and apprenticeship standards. With a particular emphasis on critical minerals recycling, processing, and refining, this program is a key component of the Administration’s strategy to ensure a sustainable, secure, and competitive energy future.

Investor.News Critical Minerals Media Coverage:

• April 03, 2024 – Ecclestone Takes Critical Mineral Hit Lists to Task in the Hallgarten + Co Resource Monthly “Debasing Criticality’s Currency” https://bit.ly/3IZLkwV
• April 03, 2024 – Disruptive Shift to Rare Earth Processing as Aclara Moves into American Market https://bit.ly/43J4C2V
• March 31, 2024 – Relief and Renewal: Canada’s METC Extension Breathes New Life into Mineral Exploration https://bit.ly/4cFr1lI
• March 29, 2024 – Boosting Market Interest Through the Strategic Advantage of a Stellar Advisory Board https://bit.ly/3vlAWwk

Investor.News Critical Minerals Videos:

• April 04, 2024 – Danny Huh on Neo Battery Materials’ Process Innovation, 9th Patent and Position in NBM Korea https://bit.ly/3VL2V2X

Critical Minerals IN8.Pro Member News Releases:

• April 04, 2024 – Power Nickel Announces C$2 Million Private Placement https://bit.ly/49meqkQ
• April 03, 2024 – Voyageur Pharmaceuticals Ltd Grants Deferred Share Units Compensation to Independent Directors https://bit.ly/3U3sDyH
• April 03, 2024 – Zentek Announces U.S. Distribution Agreement for ZenGUARDTM-Enhanced Surgical Masks with Medwell Solutions https://bit.ly/4cKM4U3
• April 03, 2024 – Defense Metals Appoints Guy de Selliers de Moranville to the Board of Directors https://bit.ly/3vzlxsj
• April 03, 2024 – Panther Metals PLC – Fulcrum Metals Announce Potential Disposal of Uranium Projects https://bit.ly/44012BX
• April 02, 2024 – First Phosphate Drills a 2 m Vein of Massive Apatite at Its Begin-Lamarche Project in Saguenay-Lac-St-Jean, Quebec, Canada https://bit.ly/3VIAGCb
• April 02, 2024 – Fathom Continues to Expand the Historic Gochager Lake Deposit to Depth with Intersections of Semi-Massive to Massive Sulphide Mineralization https://bit.ly/3TKmO7I
• April 02, 2024 – CBLT Announces Program at Past Producer Falcon Gold and Revisits Historical High Gold Values https://bit.ly/49jcVnl
• April 02, 2024 – Panther Metals PLC – Obonga Graphite: Awkward East Exploration Permit Application https://bit.ly/4atD3gm

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. From the Inflation Reduction Act’s challenges for the American EV industry to China’s lithium market developments and Treasury Secretary Janet Yellen’s strategic visit to Chile, our report covers a wide array of developments crucial for stakeholders. The unveiling of Tesla Inc.’s (NASDAQ: TSLA) lithium refinery in Texas, alongside CATL’s confirmation of its lithium mine’s normal operations, paints a picture of the industry’s efforts to navigate through pricing volatilities, supply chain complexities, and geopolitical tensions. Moreover, the significant moves by major financial institutions in the uranium market and Gecamines’ strategic overhaul in the DRC underline the shifting paradigms in the mining and investment landscapes of technology metals.

This TMR report also highlights the broader implications of these developments on the global stage, including efforts to diminish reliance on China for essential metals, the impact of Tesla’s pricing strategies on the used EV market, and the strategic dialogues around rare earths markets. The visit by US Treasury Secretary Janet Yellen to Chile is spotlighted as a key initiative to bolster ties around critical minerals, emphasizing the urgency of diversifying supply chains amid growing demands for green transition materials. Additionally, the narrative around the challenges posed by the Inflation Reduction Act for Tesla and the US car industry, coupled with BHP’s cautionary stance on the Australian nickel sector, illustrates the complex interplay between policy, market dynamics, and strategic resource management. As we delve into these stories, our aim is to provide a comprehensive overview that informs and stimulates discussion among policymakers, industry leaders, and stakeholders, navigating the intricate pathways towards a sustainable and competitive future for critical minerals and technology metals.

MP Materials swings to quarterly loss on falling rare earths prices (February 22, 2024, Source) — MP Materials Corp. (NYSE: MP) reported a fourth-quarter loss, attributed to declining rare earths prices and increased production costs, despite expectations of a larger deficit. Amidst unsuccessful merger discussions with Lynas Rare Earths Ltd. (ASX: LYC) and competition from Chinese firms, CEO Jim Litinsky emphasized the potential for mutual learning and cost reduction among companies. Despite a 2.7% drop in shares on Thursday, a slight recovery was observed in after-hours trading. The company experienced a significant shift from previous year’s profit to a $16.3 million loss. Sales of rare earths concentrate to China decreased by 34% due to lower production at its Mountain Pass mine, exacerbated by facility issues. However, MP is advancing in refining rare earths domestically, with ongoing projects in California and Texas, and has initiated production in a new facility in Vietnam.

Stalling the American EV Industry: The Unintended Consequences of the Inflation Reduction Act’s Attempt to Bypass China for Critical Minerals (February 22, 2024, Source) — The Inflation Reduction Act (IRA), integral to President Joe Biden’s environmental strategy, seeks to transition the American automotive industry towards a US-centric electric vehicle (EV) supply chain, reducing reliance on Chinese materials. This shift, exemplified by initiatives like Tesla Inc.’s (NASDAQ: TSLA) lithium refinery in Texas, aims to enhance the competitiveness of American-made EVs. However, the IRA’s stringent requirements for sourcing materials domestically or from approved countries by 2024 pose significant challenges, complicating efforts by major manufacturers to maintain affordability and quality. Jack Lifton, an expert in the field, highlights the complexity of creating a new EV supply infrastructure and the strategic challenges of overtaking China’s advanced position in the EV sector. The article emphasizes that realizing the IRA’s vision demands innovation, strategic foresight, and time, presenting both obstacles and opportunities for the U.S. automotive industry in its quest for sustainability and energy independence.

Battery factories: Europe’s mechanical engineering companies are lagging behind (February 22, 2024, Source) — The report “Battery Manufacturing 2030: Collaborating at Warp Speed” by Porsche Consulting and the German Engineering Federation (VDMA) highlights the expansion of battery factories, with around 200 set to be constructed worldwide in the next decade, predominantly in Europe. Despite this growth, European mechanical engineering firms are trailing behind their Asian counterparts, particularly in supplying high-tech equipment for these factories, with only 8% of such technology currently coming from Europe. This low market share limits Europe’s influence on technical development in the battery sector. The study suggests that to avoid technological dependency and enhance their market position, European companies must aim for at least a 20% market share, requiring significant growth and collaboration to offer integrated factory solutions competitive with turnkey plants from China. The study emphasizes the potential for growth and the critical need for European firms to innovate and collaborate to secure a substantial stake in the rapidly expanding battery production technology market, estimated at 300 billion euros by 2030.

“This is a very important article, because it illustrates that the EV battery manufacturing industry has become technologically dependent upon Chinese manufacturing technology for efficient and economical production. Is this the beginning of the end for any attempt by the non-Chinese world to catch up? No, we’ve already reached that point, and what other manufacturing industries in the West are circling the drain?” – Jack Lifton, CMI Co-Chair & Co-Founder

China’s CATL says its lithium mine operating normally (February 22, 2024, Source) — Chinese battery giant Contemporary Amperex Technology Co. (CATL) has confirmed that its lithium mine in Jiangxi province is operating normally, amidst market speculation of a halt due to falling lithium prices. The Jianxiawo mine, rich in hard rock lepidolite and a subsidiary of CATL, faced rumors of reduced or stopped production due to economic challenges. However, CATL asserts production is ongoing as planned, despite market rumors suggesting otherwise. After the Lunar New Year holiday, it was noted that only one of two production lines resumed operation. The mine, which began phase-one production recently, aims for a 200,000 tons capacity of lithium carbonate equivalent (LCE) upon completion of all phases. Despite high production costs compared to current market prices, analysts predict significantly lower output this year than initially expected, with potential delays in future expansion due to these costs. The speculation had earlier boosted Australian lithium stocks.

China’s lithium carbonate futures jump on talk of environmental crackdown (February 21, 2024, Source) — On Wednesday, China’s lithium carbonate futures prices experienced a significant rally, driven by market speculation regarding potential environmental inspections in a key production area. This speculation raised concerns about possible output restrictions, leading to a 6.35% increase in the most-active July contract on the Guangzhou Futures Exchange, reaching 99,600 yuan per metric ton. Speculation centered around Yichun, a major lithium production city in Jiangxi province, facing environmental checks that could limit operations for producers failing to properly manage lithium slag. Despite these rumors, major producers in Jiangxi continued their operations as planned, with some undergoing scheduled maintenance. The price surge, reflecting concerns over supply constraints, followed a rally in Australian lithium stocks prompted by rumors that Chinese battery maker CATL had closed its Jianxiawo mine.

Yellen to Visit Chile in Push to Boost Ties on Critical Minerals  (February 21, 2024, Source) — US Treasury Secretary Janet Yellen is scheduled to visit Chile next week as part of an effort to strengthen the United States’ ties with Chile, focusing on the South American nation’s significant role in the green transition through its contribution to renewable energy policies and as a supplier of critical minerals. This visit is a strategic move by the US to diversify its critical minerals supply chain and reduce its dependence on China, which currently leads the market for essential metals necessary for energy transition technologies. Chile, possessing one of the world’s largest lithium reserves, is seeking foreign investment to expand its capacity within the global battery supply chain. The visit, which follows Yellen’s attendance at a G20 finance ministers’ meeting in Sao Paulo, aims to deepen bilateral economic relations, particularly in the context of Chile’s potential to benefit from President Biden’s green stimulus program due to a free-trade agreement with the US, thereby supporting North American electric vehicle production.

Tesla’s price cuts are driving down car values so much that EV makers are sending checks to leasing firms to compensate them (February 21, 2024, Source) —  Tesla’s price reductions have significantly lowered the resale value of used electric vehicles (EVs), prompting automakers to issue compensation to leasing companies like Ayvens to cover these losses. This adjustment comes as the industry is pushed to sell more EVs to avoid fines, with leasing firms seeking protections against further depreciation in the $1.2 trillion second-hand car market. The demand for used EVs fell due to Tesla’s price cuts, affecting companies that play a vital role in the corporate car market. To mitigate risks of depreciation, negotiations for buyback agreements and re-leasing options are underway. Regulatory pressures for lower fleet emissions compound the issue, as unstable used-EV pricing challenges the transition to electric mobility by 2035. Corporate shifts, like SAP SE discontinuing Teslas for employees, underscore the broader impacts of volatile EV pricing on the industry.

Biden’s EV Dreams Are a Nightmare for Tesla and the US Car Industry (February 20, 2024, Source) — The Inflation Reduction Act (IRA), initiated by President Joe Biden to foster a US-centric electric vehicle (EV) supply chain and reduce reliance on Chinese components, poses significant challenges for Tesla and other American car manufacturers. Despite Tesla’s initial steps towards compliance, including sourcing batteries from within the US and building a lithium refinery in Texas, the company’s substantial procurement of Chinese lithium-ion batteries underscores the complexity of shifting away from China’s supply network. The IRA mandates stringent sourcing requirements for battery components and raw materials, aiming to cut China’s dominance in the EV sector. However, these measures have compelled carmakers to navigate a difficult transition, risking the affordability and competitiveness of EVs. As Tesla, GM, Ford, and others strive to adapt to these evolving standards and develop alternative supply chains, they face the daunting task of balancing economic, environmental, and strategic objectives in a rapidly changing global market dominated by geopolitical tensions and the strategic distribution of critical minerals.

Goldman, hedge funds step up activity in physical uranium as prices spike (February 20, 2024, Source) — Investment banks Goldman Sachs and Macquarie, along with some hedge funds, are increasingly engaging in the uranium market, driven by a spike in uranium prices to 16-year highs. While many banks remain cautious, these institutions are actively trading physical uranium and, in Goldman’s case, its options. This shift is fueled by utilities’ need for new supplies amid shortages. The interest in uranium is also growing among hedge funds and financial institutions, a notable change after the sector’s stagnation post-Fukushima disaster. Uranium prices have doubled over the past year, reaching $102 a pound, prompted by production cuts from top producers and a renewed interest in nuclear energy as a means to reduce carbon emissions. Goldman Sachs has also introduced options on physical uranium for hedge funds, marking a significant development in the market. This increased activity reflects a broader appeal of uranium to financial investors, with notable investments in physical uranium as well as equities related to the sector.

Gecamines plans overhaul of mining JVs in world’s top cobalt supplier (February 20, 2024, Source) — Gecamines, the state miner of the Democratic Republic of Congo, is seeking to renegotiate terms of its copper and cobalt joint ventures to increase its stakes and gain more control. Aiming to leverage global demand for minerals essential for the green energy transition, Gecamines plans to secure better off-take contracts and ensure local representation on venture boards for improved asset management. The strategy addresses past oversights, focusing on rectifying prolonged indebtedness and insufficient investment by some partners. Recent deals, like the one with China’s CMOC Group, exemplify Gecamines’ efforts towards securing equitable terms, demonstrating a push for enhanced returns, community benefits, and transparency in the world’s top cobalt supplier and a leading copper producer.

Industry Leaders Lifton and Karayannopoulos China’s Influence on Rare Earth Prices and Markets Today (February 19, 2024, Source) — In an insightful interview, Jack Lifton and Constantine Karayannopoulos delve into the complexities of the rare earths market. Karayannopoulos, wary of current market trends, notes a decline in prices for key elements like neodymium and praseodymium and maintains a cautious outlook due to the industry’s cyclical nature. Lifton points out the impact of China’s economic struggles on low rare earth prices, advocating for strategic investments in mining and processing at this juncture. Both experts discuss the discrepancy between market expectations and reality, particularly in the context of China’s economic growth and the slower-than-anticipated expansion of its magnet industry, vital for electric vehicle production. They emphasize the significance of investing in raw materials and processing to navigate and leverage China’s market dominance effectively, offering a comprehensive view on economic trends, geopolitical strategies, and investment opportunities in the rare earths sector.

BHP says Australian support for nickel miners ‘may not be enough’ to save industry (February 19, 2024, Source) —  BHP Group (ASX: BHP | NYSE: BHP) warned that Australian government efforts to support the nickel industry might not suffice amid challenges, as a write-off in its nickel operations led to a nearly 90% drop in first-half net profit. The crisis in Australia’s nickel industry is due to a price collapse from a supply glut in Indonesia. Despite government measures like production tax credits and royalty relief, BHP’s CEO, Mike Henry, suggested these might be inadequate due to structural market changes. BHP, facing a $3.5 billion pre-tax impairment charge on its Nickel West operation, is contemplating suspending its activities there, despite healthy nickel demand from the electric vehicle sector. However, Henry highlighted copper, potash, and iron ore as stronger growth areas for BHP. The company announced a higher-than-expected interim dividend, reflecting robust copper and iron ore performance, and anticipates stability in commodity demand from China and India.

US Bid to Loosen China’s Grip on Key Metals for EVs Is Stalling (February 19, 2024, Source) — The U.S. is striving to diminish its reliance on China for crucial metals like gallium and germanium, vital for electric vehicles and military technology. Efforts have been hampered by the diminished efficacy of the U.S. National Defense Stockpile and budget cuts, revealing vulnerabilities to supply shocks. Despite the Biden administration’s initiatives to diversify metal sources through international deals and domestic projects, China’s control over the global metal supply remains strong. Recent legislative reforms aim to enhance strategic stockpiling and procurement flexibility, but challenges in establishing a coherent strategy and securing stable mineral supplies continue. The situation underscores the complex dynamics of global supply chains and the critical nature of these metals for technological and defense applications.

JPMorgan, State Street quit climate group, BlackRock steps back (February 15, 2024, Source) — JPMorgan Chase and State Street’s investment arms exited the Climate Action 100+ coalition, a global investor group advocating for reduced emissions, withdrawing nearly $14 trillion in assets from climate change initiatives. BlackRock scaled back its participation by shifting its membership to its international arm. These moves follow the coalition’s request for members to intensify actions against companies lagging in emission reductions. Despite political pressure from Republican politicians accusing financial firms of antitrust and fiduciary duty breaches, none cited politics as a reason for their departure. State Street cited conflicts with the coalition’s new priorities, which include engaging policymakers and public emission reduction commitments, as misaligned with its independent approach. BlackRock aims to maintain independence while prioritizing climate goals for its clients.

Investor.News Critical Minerals Media Coverage:

• February 22, 2024 – Stalling the American EV Industry: The Unintended Consequences of the Inflation Reduction Act’s Attempt to Bypass China for Critical Minerals https://bit.ly/3T8IpYE
• February 22, 2024 – Revolutionizing Energy Storage with NEO Battery Materials’ Strategic Advances in Silicon Anode Technology https://bit.ly/3T5rO80

Investor.News Critical Minerals Videos:

• Industry Leaders Lifton and Karayannopoulos China’s Influence on Rare Earth Prices and Markets Today https://bit.ly/3SNSuZk

Critical Minerals IN8.Pro Member News Releases:

• February 22, 2024 – American Rare Earths Announces A$13.5m Placement to advance Halleck Creek Project https://bit.ly/3wuU1fB
• February 22, 2024 – First Phosphate Project Receives Letter of Support from Mario Simard, Canadian Parliamentary Deputy for the Riding of Jonquière, Québec https://bit.ly/3SQAP3i
• February 21, 2024 – Nano One Adds 4 More Lithium Battery Manufacturing Patents in Asia – Boosts Total to 40 https://bit.ly/3I6EmFL
• February 21, 2024 – Power Nickel Expands on High Grade Cu-Pd-Pt-Au-Ag Zone 5km northeast of its Main Nisk Deposit https://bit.ly/433eJj3
• February 20, 2024 – American Clean Resources Group Acquires SWIS Community, LLC, an Environmental Water Technology Company https://bit.ly/3T6iSis
• February 20, 2024 – First Phosphate Provides Update on Plans for a Purified Phosphoric Acid Plant at Port Saguenay, Quebec https://bit.ly/4bINVs4
• February 20, 2024 – Western Uranium & Vanadium Receives over $4.6M from Warrant Exercises https://bit.ly/3UI3DxH
• February 20, 2024 – Appia Unveils Significant REE, Cobalt and Scandium Assay Results From 47 RC Drill Holes at the Buriti Target Within Its PCH IAC REE Project, Brazil https://bit.ly/3ST4GIG
• February 20, 2024 – Fathom Nickel Announces the Closing of Its Second and Final Tranche of Private Placement https://bit.ly/3wjSSr7
• February 20, 2024 – Canadian GoldCamps to Earn 50% of Murphy Lake for $10M Exploration Spend https://bit.ly/4bBbtz0

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Reviving the Domestic American Rare Earth Permanent Magnet Industry

Bad news for those who think that the shortage of rare earth processing in America can be resolved by the injection of “free” money (A/K/A subsidies [also known as taxpayer’s money]) into the “free” market as, drum roll, please, “tax credits,” grants, and loans. The Chinese have decided not to give up their decades-long, learned by trial and error as much as by science and engineering, dominance in rare earth processing. China has announced a (further) tightening of its strict laws against the export of rare earth themed industrial technology. In particular, this means that technologies for producing rare earth metals, alloys and MAGNETS may not be shared with ANY foreign (to China) entity as a matter of national security!

Indeed, most of the mining, refining, processing, and fabricating technology for rare earths and their commercial products originated in Europe and the United States between the end of World War II and the early 1980s, but, at that time a combination of newly exploited deposits in China and the need to lower costs for the rapid expansion of the rare earth permanent magnet industry drove rare earth processing and manufacturing engineering to China and Japan.

By the end of the twentieth century, the rare earth permanent magnet manufacturing industry had essentially vanished from the West. By two decades later, it has become even more narrowly confined to China.

Scientists in the West (more and more of whom are of Asian origin) certainly understand the science behind rare earth permanent magnets. Still, the manufacturing engineers who produce products based on this “science” are a vanishing breed. Since they have had little or no employment in the specialty of the mass production of rare earth permanent magnets since the late twentieth century, their numbers have diminished to below replacement level; in other words, the specialty is dead.

Of course, none of this is of interest either to our technologically illiterate governing class (the self-serving aristocrats previously known as politicians), or to their subservient academic mob of backbiting “advisors.” The Field of Dreams, also known as the U.S. Congress, goes by the mantra, “We will fund it, and it will happen. So, let it be enacted, so let Wall Street prosper.”

But, no amount of money, high fashion, good dining, or good looks (Have you ever seen the staffers in the House and Senate office buildings or the young Wall Streeters?) can substitute for legacy engineering, where the older experienced generation of manufacturing engineers has nurtured a younger generation to carry on and avoid the inevitable mistakes and costly dead ends so common to the well educated but inexperienced. Of course, engineering is of no interest to the table-top and bench-scale “scientists” who plague our society and influence our governors with their innovation and disruptive technology!

The tiny remaining rump of Western rare earth permanent magnet makers are mostly smoke and mirror specialists; they buy magnet alloy “blanks” from Chinese manufacturers and finish them into end-user forms in their non-Chinese home countries. Thus, this makes such products count as “domestic.”

I don’t see how such magnets can pass the “non-Chinese produced mandate of the IRA, so users of them will not qualify for the Bidenomic “tax credits.” And, I suspect, that if the U.S. tax rebate (subsidy) on domestic magnet production now before Congress is enacted, then China will simply terminate the sale of such blanks to foreigners, or for export, cutting off the scam of importing such blanks into the U.S. and calling the magnets then produced domestic.

What’s going to happen if and when the Chinese government declares such exports to simply be “technology” forbidden for export as an impediment to (Chinese) national security?

I think we’re about to find out.

In an insightful interview conducted by Brandon Colwell, the Director and Government Relations Liaison for the Critical Minerals Institute (CMI), with CMI Co-Chairman Jack Lifton, the focus is on the burgeoning challenges and strategic responses related to critical mineral supply chains in North America, especially in the context of China’s dominance. Jack, a veteran in the field with over 60 years of experience, points out the significant gap in subject matter expertise within the governments of the United States and Canada. This gap, he argues, hinders the effective development and implementation of policies in the mineral sector. He emphasizes the complex and time-consuming process of converting a mineral discovery into an economically viable mining project, underscoring the need for more informed and strategic decision-making in governmental investments and policy development in this domain.

Jack also delves into the recent fiscal commitments by the U.S. and Canadian governments towards critical minerals and battery manufacturing, expressing skepticism about their impact due to the governments’ limited understanding of the industry. He advocates for the inclusion of industry specialists in policy-making processes, especially in evaluating and financing mining projects. Jack raises concerns about the potential misallocation of government funds, stressing the importance of directing these investments towards those with genuine expertise and experience in the industry.

Lastly, Jack addresses the specific challenges within the critical mineral supply chain, particularly highlighting the processing segment as the most critical and challenging area. He notes the decline in North American capabilities in this area due to historical outsourcing and a lack of sustained investment in processing technologies. Jack contrasts this with China’s significant progress and dominance in processing technologies, presenting a significant challenge for North America in its bid to rebuild a competitive and independent critical mineral industry. He underscores the need for substantial investment in education and the development of expertise in process engineering and metallurgy. In conclusion, Jack discusses the broader implications for industries dependent on these minerals, such as the automotive industry, and the potential impact of government policies and market dynamics on these sectors.

To access the complete video, click here

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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

Demand for lithium-ion batteries (and hence lithium) in North America is set to surge 13.8 fold from 2022 to 2035. The US Inflation Reduction Act has led to a massive increase in planned battery manufacturing in North America to support a North American supply chain for electric vehicles and energy stationary storage.

The main problem now is supplying these planned battery factories with key raw materials, especially lithium. Today’s company is focused to fill that lithium supply gap.

North American lithium-ion battery manufacturing is forecast to increase from 47 GWh in 2022 to 650 GWh in 2035 (a 13.8x increase)

Consolidated Lithium Metals Inc.

Consolidated Lithium Metals Inc. (TSXV: CLM | OTCQB: JORFF) (“CLM”) (formerly Jourdan Resources Inc.) is a North American hard rock lithium explorer and developer. CLM is focused on exploration in Quebec for hard rock spodumene lithium in the heart of the Abitibi Greenstone Belt.

CLM’s lithium projects are located ~30kms north of Val-d’Or with over 18,000 hectares of claims strategically located adjacent to the North America Lithium (“NAL”) (Sayona Mining Limited (ASX: SYA | OTCQB: SYAXF) 75%: Piedmont Lithium Inc. (Nasdaq: PLL | ASX: PLL) 25%) restarted lithium operation.

Location map showing CLM’s projects (red shading) 30kms north of Val-d’Or, Quebec, Canada

CLM’s 4 lithium projects have drill-ready targets with confirmed lithium bearing pegmatite already identified on two flagship projects, Vallée and Baillargé. The vast majority of claims are 100% owned by CLM.

CLM’s 4 lithium projects are:

• Vallée JV (75% CLM: 25% SYA) & East Vallée (100% CLM) – The Vallée JV Project is located adjacent to and along strike of the NAL mining operation claims. The mineralized spodumene pegmatite dykes that NAL is mining continue directly onto the claims. A C$4 million, 14,000 meter, drill program is planned for 2023. Sayona can earn up to 50% interest by solely funding C$10 million in exploration in the next 3 years. East Vallée is at an earlier stage but also shows strong potential.
• Baillargé (100% CLM) – Potential high-grade lithium in 3 dyke systems with several hundred meters of strike length and with a C$1.5 million, 4,500 metre, diamond drilling exploration program underway. A small drill program in 1955 encountered high-grade lithium averaging 2.48% Li2O over 2.19 metres.
• Preissac-LaCorne – Hosts multiple lithium showings along the producing Vallée Lithium Trend. CLM state: “The Preissac-La Corne property covers three (3) underexplored prospective areas that include series of showings which host significant amounts of mineralization in Lithium (Li) Molybdenum (Mo), Cesium (Cs), Rubidium (Rb), Tantale (Ta), Niobium (Nb) and Berylium (Be) associated with granite and pegmatite.”
• Duval – Early stage grassroots project with several historical lithium showings over a 6.5 km section of the highly prospective Vallée Lithium Trend.

CLM’s 4 lithium projects near the very large NAL lithium restarted mine and on, or near, the Vallée Lithium Trend

Closing remarks

CLM is an exciting lithium junior with 4 very well located lithium projects adjacent and near the NAL lithium mine and operation claims in Quebec. CLM is actively exploring for lithium with over 18,000 metres of drilling planned and underway on CLM projects in 2023.

Consolidated Lithium Metals Inc. trades on a market cap of C$27 million and is in process of completing the last stage of an up to C$2 million flow through financing. The current drill program results are a key factor to watch in the near term. Any nice lithium drill hits should be very well received by the market given the region’s history and large NAL mine nearby. One to follow closely in 2023.

The news keeps on coming about new investments in battery gigafactories in North America as companies realize that governments are willing to throw stupid amounts of money at them in the form of grants, subsidies, and loans to make this dream come true. The leader of the pack is the U.S. Inflation Reduction Act (IRA), which was signed into law last August and offers US$369 billion of subsidies for electric vehicles and other clean technologies. The Act also incents EV makers to produce more vehicles in North America and secure the key minerals for them outside of China.

Not to be outdone, Canada is trying hard to compete with the U.S. by spending ghastly sums of taxpayers’ money to bring some of that activity north of the border. Time will tell if this will be a prudent use of ‘our’ hard-earned dollars but in the meantime let’s take a look at the latest news on the battery plant front.

Volkswagen to build its largest gigafactory in Southern Ontario

Last Friday, the Government of Canada let the ‘cat out of the bag’ as to how much it was willing to provide to lure Volkswagen AG (XTRA:VOW3) to Southern Ontario to build its largest gigafactory to date in St. Thomas, with an annual production capacity of up to 90 GWh in the final expansion phase. The Federal Government has agreed to provide up to C$13 billion (US$9.7 billion) in subsidies and a C$700 million grant, which does not include any potential funds from the provincial government of Ontario.

When you realize that this plant is expected to cost about C$7 billion to build, you can see why it was a pretty easy choice for VW. I’m pretty sure I could sell management on a deal like this back in the day when I was trying to put together infrastructure projects. In the Government’s defense, the numbers roughly match what Volkswagen would have received from the United States through the IRA. With that said, I’m still not convinced we should try and match what a country with 10 times our GDP is doing.

GM and Samsung to invest over US$3 billion to build a new EV battery manufacturing plant

Not to be outdone, the United States had a couple of announcements of its own to temper Canada’s ‘win’. Yesterday General Motors Co. (NYSE: GM) and Samsung SDI (KRX: 006400) said they will invest over US$3 billion to build a joint venture EV battery manufacturing plant in the U.S. (The companies did not identify the location of the plant.) The plant, expected to start production in 2026, aims to have an annual production capacity of 30 GWh.

This marks GM’s fourth U.S. battery manufacturing facility having already done 3 joint ventures with LG Energy Solution (KRX: 373220) in the form of Ultium Cells LLC plants, including a US$2.6 billion plant in Michigan set to open in 2024. In December, the U.S. Energy Department finalized a US$2.5 billion low-cost loan to the Ultium joint venture to help finance the construction of the new manufacturing facilities which also include Ohio and Tennessee.

Hyundai and SK On to build battery plant in Georgia

Not surprisingly, with South Korean President Yoon Suk Yeol in Washington to meet President Joe Biden this week, confirmation of another EV battery manufacturing facility joint venture was made. Although an MOU was signed last December, Hyundai Motor Company (KRX: 005380 | OTC: HYMLF) and SK On, a battery unit of SK Innovation Co. Ltd. (KRX: 096770) ratified plans yesterday to set up a battery JV in the state of Georgia, in an investment worth approximately US$5 billion.

When fully operational, Hyundai expects an annual production capacity of 35 GWh with the facility expected to begin manufacturing battery cells in the second half of 2025. These two companies appear to be embracing Georgia as their home away from South Korea given Hyundai separately broke ground in October on a US$5.54 billion electric vehicle and battery plant in Georgia’s Bryan County, while SK Innovation opened a US$2.6 billion battery plant in Commerce, Georgia, in January that is producing batteries for the Ford F-150 EV.

Battery metals supply concerns

This begs the question of where are all the raw materials to build all these batteries going to come from. Perhaps all these subsidies to attract the manufacturing facilities will be for not as we see others getting in on the act. And not just any “others” but those who already control more than half of global lithium resources, and include by far and away the world’s largest copper producer.

That’s right, while in Toronto last month for the PDAC Convention, Argentina’s Mining Undersecretary Fernanda Avila suggested that Argentina, Chile, Bolivia, and Brazil are planning to coordinate action on turning more of the region’s mined lithium into battery chemicals, as well as moving into manufacturing of batteries and even EVs.

It makes a lot of sense (at least to me) that these resource-rich nations would like to move further along the value chain by leveraging their mineral wealth into expanded processing capacity and perhaps as far as vehicle manufacturing. Chinese carmaker Chery Automobile Co. has already stated it wants to build a US$400 million EV and battery plant in Argentina in an effort to tap into the lithium triangle.

Another lithium-producing area of Argentina is in talks with China’s Ganfeng Lithium Co. (SHE: 002460 | HK: 1772 | OTC: GNENF) and Gotion High-tech Co. to make battery cathodes.

Final thoughts

Will this be another case of China being a better visionary when it comes to the electric vehicle supply chain? As a taxpayer who is helping to subsidize Volkswagen’s efforts, I certainly hope that isn’t the case. But then again, our government doesn’t exactly have a great track record of being efficient and effective stewards of capital.

As announced last week at the Prospectors & Developers Association of Canada (“PDAC”) mining conference in Toronto, the Canadian government released news regarding their Critical Minerals Strategy. In particular, Canada’s Resources Minister Wilkinson stated there will be “over $344 million for Canadian critical minerals development.” The Minister also said that equity stakes could come through the soon-to-be-launched Canada Growth Fund and loans could be arranged through the Canada Infrastructure Bank. This is good news for Canadian critical minerals projects. The Canada Growth Fund was announced last year and is to be backed by $15 billion in Federal funds. This compares with Australia’s (clean energy finance corporation – A$10 billion) and Japan’s (Green Energy Fund – JPY2 trillion) initiatives but still falls well behind USA’s US$369 billion Inflation Reduction Act.

The Canadian Critical Minerals Strategy is part of Canada’s climate plan, which outlines Canada’s goals of reducing greenhouse gas emissions by 40-45% below 2005 levels by 2030 and reaching net-zero emissions by 2050.

The Government of Canada has invested in the critical minerals industry recently through various projects including the mining of rare earths in the Northwest Territories and electric vehicle battery assembly in Quebec.

With this latest announcement, two companies that have already been chosen to receive funds are Search Minerals Inc. (TSXV: SMY | OTCQB: SHCMF), receiving C$5 million, and Geomega Resources Inc. (TSXV: GMA | OTCQB: GOMRF), receiving C$3 million.

Search Minerals Inc.

Search Minerals is a rare earths explorer and developer in Labrador, Canada. Search’s flagship project is the Port Hope Simpson (“PHS”) Property which includes the Foxtrot resource, Deep Fox resource, Silver Fox, Awesome Fox, and Fox Meadow deposits. The properties are prospective for Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy), Terbium (Tb), Zirconium (Zr), and Hafnium (Hf).

Search plans for mining and primary production of the Deep Fox and Foxtrot deposits in Labrador and further refining of concentrate into REE mixed oxides and carbonates on the Island of Newfoundland thereafter.

The 2022 PEA (based only on the Foxtrot and Deep Fox Resource) resulted in a post-tax NPV8% of C$1.31B and a post-tax IRR of 41.5%. Initial CapEx was estimated at C$422 million (including a C$61 million contingency) with a mine life of 26 years. The PEA is based on an annual production of approximately 1,437 t of magnet rare earths oxides (Nd+Pr: 1,291 t, Dy: 125 t, and Tb: 21 t).

Search said on March 7 that they plan to use the C$5 million government funding towards a demonstration plant. Search stated:

“The Government of Canada has contributed $5 million in non-dilutive support to Search Minerals via a Contribution Agreement which will be used to fund the construction and operation of a demonstration plant for rare earth extraction and recovery. The total project cost is estimated at approximately $9.3 million with a further $1 million of funding under application from other sources. Search Minerals’ contribution to the construction costs is expected to be approximately $3.3 million. The demonstration plant will process ~20 tonnes of rare earth concentrate prepared from 72 tonnes of Deep Fox and Foxtrot mineralization…….”

The demonstration plan will support a Feasibility Study expected to be completed in 2024.

Search Minerals currently trades at C$0.07 and on a market cap of C$29 million.

Geomega Resources Inc.

Geomega Resources is focused on rare earths recycling but also owns the largest rare earth bastnaesite 43-101 resource estimate in North America at their Montviel REE Project in Quebec, Canada.

Geomega is fully funded to develop the first rare earth magnet recycling facility outside of Asia, to be located in Saint-Bruno, Quebec, Canada. The Project is undergoing detailed engineering in preparation for procurement and construction.

Geomega Resources REE recycling demonstration plant summary

The Montviel REE Project Indicated Resource is 82.4 Mt @ 1.5% TREO & 0.17% Nb2O5 plus 184Mt Inferred Resource. The Project has road access nearby and access to power and labor.

The Montviel REE Project in Quebec, Canada

Source: Company presentation

Geomega Resources Inc. currently trades at C$0.215 and on a market cap of C$30 million.

Closing remarks

It appears that the time has finally come for the Canadian junior critical minerals miners to get some real government support. A lot more will be needed to bring projects into production in a timely manner, but it is at least a good start.

Last July and August, I did a 6-part series called the “Dean’s List” which looked at North American explorers and miners that could benefit from government commitments to critical minerals, like the Inflation Reduction Act. This is especially important given how many of those materials are controlled, either through mining, ownership, or processing by China, which isn’t exactly “singing from the same hymn book” as the United States and many of its allies these days. Despite the current global tensions, it also comes down to math. There just isn’t enough of many of these commodities at present to meet the explosive growth being projected in the various segments of the “green” revolution.

One of the articles from last year’s series focused on graphite. I consider graphite to be one of the least publicized critical minerals, especially given this anode material is the single largest component (by weight) of lithium-ion batteries used in EVs (up to 48%) and energy storage technologies. On top of that, almost 80% of graphite mine production in 2021 came from China, while China makes almost 100% of the graphite anode material. Lastly, graphite also requires the largest production increase of any battery mineral in order to meet forecast demand.

Graphite Growth Requirements for Battery Demand Forecasts

Naturally one would expect that the price of graphite would be following a similar path as lithium, which was the second best-performing commodity in 2022, and despite coming off its recent highs, lithium is still triple its three-year average. However, it appears graphite is not following suit, despite all the table pounding about the growing supply/demand imbalance, at least not yet. Although there is a slight caveat to this comment as there are no standardized prices for natural graphite and there are no fungible spot or futures markets.

Flake Graphite Price – 2022

Graphite Prices

There are a couple of reasons that graphite prices haven’t taken off like lithium prices and I’ll try to provide some clarity on that. But as we go through this it will begin to appear that it’s only a matter of time before graphite sees its time to shine. Unless of course, you are a consumer of graphite, then you might want to start working on how you will explain to Elon Musk why dropping all the prices of his Tesla models might not be a great idea.

Historically, industrial uses of graphite have always been the main driver of demand. Currently, steelmaking is still the largest source of demand for graphite, but another interesting use, at least in the U.S., is over 7% of annual demand in 2021 came from brake linings. Graphite production for these well-established industrial uses has helped keep the market well supplied, reducing price volatility. In fact, weakness in steelmaking demand, along with a return to more normal graphite production post-COVID (remember that China didn’t open up their economy until well after the rest of the world) is the primary reason for graphite prices to have come off the boil.

Synthetic Graphite

The second reason graphite prices haven’t taken off (yet) has to do with the fact that anode manufacturers have an alternative, a synthetic graphite derived from petroleum coke (a carbon-rich, solid material that comes from oil refining). I could talk for hours about petcoke from my previous career but I think that would only be interesting to me and maybe one other person I know. As noted earlier, there are a lot of opaque corners in the world of graphite, but I was able to find the following comment: “Today, synthetic graphite anodes dominate in terms of market share, accounting for approximately 57 percent of the anode market” which is attributed to Benchmark Mineral Intelligence but it might be behind their paywall. I also found this quote in an article on the Benchmark Mineral website: “Synthetic graphite anode supply grew by more than 30% during 2022, and is anticipated to even surpass that in 2023, given a supply deficit developing for natural graphite feedstock.” It appears a lot of the growing anode demand for graphite is being supplied by fossil fuels and not natural graphite.

The Time for Natural Graphite

My interpretation of all this information is that it is simply a matter of when, not if, graphite prices start to rise as we have seen with lithium. The reasons are multi-faceted and thus it could make for a slow and steady rally or if all factors coalesce at one time it could become a parabolic rise.

1. As anode demand becomes a more material component of overall graphite demand it removes any previous flexibility from the supply side. If steel making or any other industrial use for graphite returns to historic levels it will quickly put pressure on the rapidly growing anode component of the demand equation. The first graph above shows how just anode growth alone will impact the overall demand outlook, let alone any other industrial uses. In the grand scheme of things, I don’t see steel consumption going to zero anytime soon freeing up that graphite supply.
2. The synthetic graphite derived from petroleum coke is going to be influenced by oil prices. If oil prices go back over $100/bbl that is going to have a material impact on synthetic graphite prices. Granted, oil prices could just as easily go back to the $50-$60/bbl range and partially offset the overall graphite price rise due to general demand growth, but my personal opinion is that we’ll see $100/bbl before we see $50/bbl (perhaps an article for another day).
3. But the biggest impact could come from the ESG side. “The production of synthetic graphite can be four times more carbon intensive than that of natural graphite”, another interesting fact attributable to Benchmark Mineral Intelligence that I could only find in this article. Kinda makes you think we can’t see the forest for the trees when you are making decisions like this in an effort to reduce carbon emissions. If battery makers demand low carbon anode material we could see a step change in prices, literally overnight, as natural graphite becomes the only option.

It would appear now might be a very good time to be developing a natural graphite deposit outside of China.

In this video, Critical Minerals Institute’s (CMI) Co-founder and Chairman Jack Lifton talks about the growing lithium demand from the electric vehicle industry. Discussing the current state of domestic American lithium supply, Jack explains why the target outlined by President Biden of 50% electric vehicle sales share in 2030 with 100% domestic content is impossible to achieve.

Speaking on the United States’ Inflation Reduction Act, Jack discusses how the automotive industry has failed to accept the problem of an adequate domestic American lithium supply chain. He goes on to say, “If it is not even possible to buy enough lithium to make enough batteries in the United States for half of our own production, what about the rest of the non-Chinese world?”

To access the full episode, click here

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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.