Battery metals & the energy transition - Wright et al - Sep 2016 - Greenfields Research / Rowton Ltd / Centre for Exploration Targeting / The University of Western Australia

Which battery

metals will be the

winners in the

energy transition?

Joshua P. Wright

Rowton Ltd, United Kingdom

John P. Sykes

Centre for Exploration Targeting, The University of Western Australia

Greenfields Research, United Kingdom

Allan Trench

Centre for Exploration Targeting, The University of Western Australia

Business School, The University of Western Australia

CRU Group, United Kingdom

Metal Pages China Metals Week Conference:

Beijing, China: 6-8th

Sept 2016

Image: Diego Barbieri / Shutterstock.com

Metal Pages China Metals WeekMetal Pages China Metals Week

The present situation for

battery metals

Which battery metals will be

the winners in the energy transition?

7 Sep 2016Which battery metals will be the winners in the energy transition?


Slide 2 of 25

Metal Pages China Metals Week

The world is entering the ‘energy transition’

Increased

energy

demands

Increased

environmental

focus

Increased

transportation

BATTERIES

Power storage/averaging

Portable energy

Rechargeable (reduced

waste & energy efficient)


Image: TonyV3112 / Shutterstock.com Image: Claudio Divizia / Shutterstock.com

Slide 3 of 25


Creating new opportunities for battery metals

Lead-acid Alkaline (zinc-manganese)

Lithium-ion


Nickel-cadmium/zinc

Nickel metal (rare

earth) hydrideVanadium redox

Slide 4 of 25


The mining sector has piled in!


2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Lithium Rare Earths Graphite Lithium (again)

TalisonLithium to raise $194m in IPO

Business News WA,24 Nov 2009

RARE EARTHS BECOME HOT COMMODITIES –US IPO UP FIVEFOLD IN 10 MONTHS

TheBull.com.au, 06 Jun 2011

Why these

graphite miners

have soared

more than 87%The Motley Fool,

24 Jun 2014

Lithium-ion

battery demand

sends shares in

miners soaring,

but analysts

predict bubble

will burst

ABC, 14 Jun 2016

They’ve got the power: Battery stocks charging up, analysts say

The Sydney Morning Herald, 2 Jul 2014

Slide 5 of 25


Battery metals market growth mixed so far

0

100

200

300

400

500

600

700

800

Growth of metal market groups

2005-14 (US$ billions)

Other LME Metals Precious Metals

Other Minor Metals Battery Metals

Battery Metal2005-14 Price

Change

Lithium 155%

Rare earths 59%

Manganese 52%

Lead 43%

Zinc 32%

Nickel -5%

Cobalt -25%

Cadmium -51%

Vanadium 72%

Source: USGS (2014)

7 Sep 2016Which battery metals will be the winners in the energy transition?Slide 6 of 25


How do metals markets

undergo rapid growth?





Slide 7 of 25


Major market shifts have occurred before

0

50

100

150

200

250

300

190

0

191

2

192

4

193

6

194

8

196

0

19

72

198

4

199

6

200

8

Growth in market size indices of copper and nickel 1900-

2013 (1900 = 1)

Cu Index Ni Index

0

5

10

15

20

25

30

195

0

195

6

196

2

19

68

197

4

198

0

198

6

199

2

199

8

200

4

201

0

Growth in market size indices of copper and uranium 1950-2013

(1950 = 1)

Cu Index U Index


0

100

200

300

400

500

600

700

800

900

190

0

191

2

192

4

193

6

194

8

196

0

197

2

198

4

199

6

20

08

Growth in market size indices of copper and aluminium

1900-2014 (1900 = 1)

Cu Index Al Index

Slide 8 of 25


Instigated by discovery, supply and demand


Aluminium Nickel Uranium

Bauxite

discoveries in

North America

Bayer and

Hall-Heroult

processes

Aviation

demand

Bulk open pit

mining

Discoveries in

Sudbury &

New Caledonia

Bulk open pit

mining

Flotation &

smelting

advances

Demand for

armour

Demand for

nuclear

weapons

Demand for

nuclear power

Ability to handle

radiation

Bulk mining for very

low grade radium

Radium-uranium

discoveries in the Congo

Source: Sykes et al., 2016b

Slide 9 of 25


Some metals markets are less constrained

Metal Constraints removed

Cobalt Discovery Su. Demand

Lithium Di. Supply Demand

Nickel Discov. Supply De.

Lanthanum (REE) Di. Su. Demand

Vanadium Discov. Supply De.

Cadmium Discov. Supply

Lead Discovery Su.

Manganese Discov. Su. De.

Zinc Discov. Su. De.

Fu

lly u

nc

on

str

ain

ed

For more information: Sykes et al., 2016a


Least

constrained

Most

constrained

Slide 10 of 25


Some metals markets have more potentialF

ina

l m

ark

et

siz

e p

ote

nti

al

Lack of discovery, supply & demand constraints on the market

High potential

Few constraints

Low potential

Few constraints

High potential

Many constraints

Low potential

Many constraints

CoLi

La

V

Cd

Mn

NiZn

Pb




But the change is unpredictable!

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sh

are

of

Glo

ba

l C

u M

ine

pro

du

cti

on

United Kingdom Chile USA Other


Decline of UK

mining, rise

of Americas

Resurrection

of Chilean

industry

“…in 1898.. Bingham

Canyon… was something of

a joke… only barren quartz

rock flecked with a trace of

copper. Nobody could

make money out of so little.

…the world’s most famous

mining man [Chief Engineer

for the Guggenheims]

turned up his nose. It was

ridiculed by the most

respected mining journal of

the day. …The shovels

started… in June 1906.”Sources: Lynch (2002), Crowson (2012)

Slide 12 of 25


…and complicated by societal changes!

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Cu

ore

gra

de

(%

)

Cornwall (UK) Average UK Average

Michigan (USA) Average USA Average

Western World Average World Average


Change from high

grade underground

mining in UK to low

grade open pits in

USA

Further low

grade copper

mining

innovations and

rise of Chile

20th century copper

mining technology,

innovation &

discovery package

Dynamite

Steam

power

The

corporation

Mechanisation

Major public

infrastructure

Flotation

Improved

smelting &

refining

Airborne

geophysics

Porphyry

geological

model

Better work

practices

SXEW

Computation

Low cost

drilling

Globalisation

Free trade

Forward

contracts

Regime

change

Sources: Lynch (2002), Schodde (2010), Crowson (2012)

Slide 13 of 25


Some metals have societal constraintsA

bil

ity t

o r

es

olv

e c

on

str

ain

t

Type of market constraints

Resolvable societal

Constraintse.g. conflict

Unresolvable societal

Constraintse.g. toxicity

Resolvable technical

Constraintse.g. processing challenges

Unresolvable technical

Constraintse.g. geological scarcity

Co

Li

La

V

Cd

Mn

Ni

Zn

Pb




What does the future look like

for battery metals?





Slide 15 of 25


Navigating the energy transition is complex

Wonderland Battlefield

Left behind

High tech

Old

World

NOW

Transition

(An unknown number of

economic cycles to come)

Low tech

(Beyond which is

the unknown)



First ‘hop’ through the OLD WORLD…

..with an unknown number of economic cycles to come,

so you have to be good at ‘business as usual’


COAL

POWER

BIG

MINING

PETROL

CARS

BIG

OIL

Slide 17 of 25


Know when to ‘step’ through the TRANSITION

…but into which future?



Finally ‘jump’ into the future: WONDERLAND?

Profits from new technology causes a business-led energy transition across the globe


GREEN

ECONOMYINNOVATION

GLOBALISATION VOLATILITY

Slide 19 of 25


Finally ‘jump’ into the future: BATTLEFIELD?

Geopolitics and conflict forces a government-led energy

transition in the fossil-fuel poor parts of the world


OLD

WORLDWAR

NEW

WORLDBIG

GOVERNMENT

Slide 20 of 25


With different implications for each

WONDERLANDBusiness capabilities

• Spot new technology by working with

innovators ‘on the ground’;

• Understand niche markets before they

become the next big thing;

• Be able to scale globally quickly.

Winners & losers

• In a globalised world only one or two

battery technologies, hybrid car

companies, and renewable energy sources

will win, so backing the right idea early is

critical.

• However advantage is only ever

temporary, as the next big thing is already

on its way – innovate ruthlessly to stay on

top.

BATTLEFIELDBusiness capabilities

• Work closely with government to ensure you

understand their needs and get the big contracts;

• Global scaling is impossible;

• Understand your local market, and what technologies

can work in your part of the world.

Winner & losers

• In a divided world many ‘just good enough’ battery

technologies will exist, supported by government and

their geopolitical need, so picking ‘a winner’ is less

important – government relationships are more

important.

• The slow changing nature of government and the

focus on defence of the state means that within each

block this is a stable, slow changing world with long-

lasting competitive advantage.


Because it is not possible to see what the world will look like after the energy transition mineral explorers, miners,

renewable energy companies, hybrid car companies, battery makers and other companies affected by the energy

transition need to be prepared to thrive in both scenarios – however both scenarios require different capabilities:

Slide 21 of 25


Conclusions: Battery metals

and the energy transition





Slide 22 of 25


Battery metals and the energy transition

• The energy transition will likely have a substantial impact on some currently minor

metals markets;

• Some minor metals markets have the potential for transformational growth

becoming a major ‘battery metals’ industrial sector;

• However, of the battery metals some face more severe constraints on geological

discovery, technical supply and demand growth, as well environmental and socio-

political constraints;

• In the end, the socio-political context of the energy transition will determine what

sort of future we progress into; with different implications for the ‘battery metals’

sector in each;

• Some battery metals such as lithium, vanadium and nickel do, however, seem to

have more potential than the others;

• For the affected businesses navigating the energy transition will be difficult as it is

not obvious when it will arrive, or what it will look like when it does;

• Companies seeking to capitalise on growth in the ‘battery metals’ sector need to:

– Target those markets with the most potential for substantial market growth;

– Approach these markets in a holistic manner, removing discovery, supply,

demand, technical, environmental and socio-political constraints;

– Be ready for a ‘strategic triple jump’: hop through the present, step through the

energy transition, and jump into the future (whatever it may be).



Slide 23 of 25

THANK YOU

谢谢

CONTACT DETAILS

Joshua P. Wright:

[email protected]

John P. Sykes:

[email protected]

Allan Trench:

[email protected]

Metal Pages China Metals Week Conference:

Beijing, China: 6-8th

Sept 2016


mailto:[email protected]




References

• Sykes, J. P., & Trench, A. 2016. Using Scenarios to Investigate the Long-term

Future of Copper Mining and Guide Exploration Targeting Strategies. AusIMM

International Mine Management Conference, Brisbane, Australia, 22-24 August,

pp265-289.

• Sykes, J. P., Trench, A., & McCuaig, T.C. 2017. The energy transition: A mining and

exploration industry perspective. World Renewable Energy Congress, Perth,

Australia, 5-9 February, in press.

• Sykes, J. P., Wright, J. P., Trench, A., & Miller, P. 2016a. An assessment of the

potential for transformational market growth amongst the critical metals. Applied

Earth Science, 125:1, pp21-56.

• Sykes, J. P., Wright, J. P. & Trench, A. 2016b. Discovery, supply and demand: From

Metals of Antiquity to critical metals. Applied Earth Science, 125:1, pp3-20.

• John P. Sykes, Allan Trench, T. Campbell McCuaig, Jonathan Bell, Jeremie Giraud,

Constanza Jara Barra, Ahmad Saleem, David Stevenson and Jan Tunjic


With thanks to the CET Scenarios Team


Slide 25 of 25

Battery metals & the energy transition - Wright et al - Sep 2016 - Greenfields Research / Rowton Ltd / Centre for Exploration Targeting / The University of Western Australia

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