Great Prospects for the full basket of “energy metals”

The end-use applications of lithium-ion batteries are multiplying at a breakneck pace. Battery makers have responded aggressively and we have a new peak of lithium-ion battery manufacturing capacity in the pipeline. An additional 153 GWh has been added to planned capacity build-outs last year alone, taking the total to 372 GWh. It shows no signs of stopping and, indeed, analysts expect the market to require about 750 GWh of capacity by 2025, of which 645 GWh is for EVs alone.

The market has long been excited about electric vehicles (EVs), including the emergence of large, all-electric trucks and busses, and the more recent unveiling of an ocean-going electric freight-carrying vessel. However, several grid-connected energy storage installations, such as the Hornsdale energy storage in Australia, seem to have taken the market largely by surprize and, to be honest, we’re really just scratching the surface of energy metal usage.

We are increasingly seeing new technologies pushing into the mass market, such as consumer and commercial drones, which combine several existing technologies into one and 5G-connected ambulances, which can access digitized trauma data and perform procedures in transit. There is also robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, The Internet of Things, 3D printing and autonomous vehicles – all of which require significant amounts of energy metals to become commercially viable.

Such incredible growth comes at a price. The manufacturing world is now finding, for example, that cathode buyers are seeking up to 500% more product than they used to purchase. It’s an amazing situation for what, until recently, was a somewhat slow-but-steady-paced industry.

This, of course, has been great for cobalt investors and lithium too.  However, battery metals are more than just the two major headline-grabbers and I feel this is a good time to touch on a few other metals in the basket: nickel and graphite.

Compared to lithium and now cobalt, nickel has been much slower to receive attention and I find that interesting. Not only is nickel a key battery material but, in terms of increasing battery-grade capacity, nickel has a similar challenge to lithium. Nickel sulphate supplies need to go from about 75 000 t today, to at the very least 200 000t by 2025. Such increases in capacity are not dissimilar to lithium’s – three, four, even five times greater than we have today. The problem is that nickel is largely driven by steel demand, so we’re talking about a profound shift and I feel that nickel is just starting its journey.

In the case of graphite – the high-quality, large-flake material used as the anode material in lithium-ion batteries – prices have lagged behind those of lithium and cobalt thus far. The global market comprises about 650 000 t/y, however, it is estimated that, should just 1% of the auto market comprise EVs, it would consume up to 100 000 t of flake concentrate….

The market is anticipating that there will be a 300% increase in demand for high-quality graphite by 2025, given that a lithium-ion battery requires 10 to 20 times more graphite than it does lithium. Combined with an increasingly positive outlook for the global steel market, and the explosive growth of the EV market, several new graphite mines will be required to lock in supplies for the future base case scenario.

The scale and speed of this battery-fuelled, industrial revolution and its incredible hunger for resources is the reason we founded Cobalt 27 because, of all the battery metals, cobalt is the hardest to get exposure to. However, as I look around, it’s clear that cobalt isn’t the only battery metal that has a lot to offer investors.

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about the author

Anthony Milewski

Anthony Milewski

Anthony Milewski has spent his entire career in various aspects of the investment world, including as a company CEO, board director, advisor, founder and investor, with a focus on commodities

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