The Minerals Behind Battery Electric Vehicles
00:00, 27th December 2018

What is going on?

Demand for lithium, cobalt, copper and nickel is rising as automakers accelerate manufacturing of battery electric vehicles (BEVs), according to a report by Moody’s.

These elementary metals are crucial for the production of electric batteries, with the report adding “significant investment in exploration and development of new mines will be necessary to meet the rising metal demand”.

“Declining ore grades for copper, continued lack of investment in new mines and the time required to bring new discoveries to production will constrain metal availability and, ultimately, the metal sector's ability to meet growing demand from automakers for battery electric vehicle production” says Carol Cowan, a Moody's Senior Vice President.

Moody's forecasts copper consumption in BEVs could increase more than six times based on the rating agency's base scenario of penetration levels reach 8% by mid-2020. This demand level would far outstrip supply, which will be relatively flat over the next several years.

Analysts expect BEV's share of new vehicle sales will rise to approximately 7%-8% by the mid-2020's and reach nearly 17%-19% by the late 2020's.

According to a report by Morgan Stanley: “As many as one billion battery electric vehicles (BEVs) could be on the road throughout the world by 2050.” 

This is “spurred in part by existing and proposed emissions legislation that could sharply increase the cost of manufacturing internal combustion engines” 

“A confluence of competitive, technological and regulatory forces have pulled-forward auto maker’s plans to aggressively introduce EVs over the next 3 to 5 years vs. 20 to 25 years previously.” said Adam Jonas, Morgan Stanley’s Head of Global Auto & Shared Mobility Research.

This follows an announcement by Denmark’s Prime Minister, Lars Lokke Rasmussen, to ban the sale of new fossil-fueled cars in 2030 and aim to have more than 1 million electric or hybrid vehicles on its roads by that date. 

What are mining exploration and development companies doing?

2017 was a big year for two of the largest mining companies with Glencore (GLEN) FOLLOW, producing 1.3 million tonnes of copper, and selling 4 million tonnes through its marketing business and Antofagasta (ANTO) FOLLOW producing 704,300 tonnes from its assets. 

With reports and forecasts that the BEV market is poised to grow substantially, AIM companies are also positioning themselves to gain exposure.

Bezant resources BZT FOLLOW, gold-copper mining exploration and development company, currently owns the rights to a JORC compliant resource producing an estimated 20 million tonnes per annum of copper and gold.

The project is estimated to have a $3.7 billion post-tax net cashflow and a post-tax NPV of $739 million, this dwarfs its 3.4m mkt cap, currently listed on AIM at 0.34p a share. 

Laurence Read Chief Executive Officer of Bezant Resources (BZT) FOLLOW spoke on the VoxMarkets Podcast and provided some more insight into its Mankayan copper/gold asset.

Strategic Minerals (SML) FOLLOW the AIM listed mineral development and production company invests in major exploration projects for nickel, cobalt and tin resources. It is developing projects for prospective battery materials to satisfy the burgeoning BEV market.

It acquired the Leigh Creek Copper Mine in March 2018 and began recommissioning of the mine this year. It expects a significant quantity of copper production in 2019. 

What are car manufacturers doing?

Tesla may have been the pioneer in BEVs, but others are following suit. Audi, the German automobile manufacturer owned by Volkswagen Group, revealed plans to release a fully electric SUV, The Audi e-Tron Quattro, with 3 more full electric vehicle models to be released soon.

This follows the growing trend as other established carmakers including Jaguar, Mercedes-Benz and Porsche also expect to release electric vehicles over the next two years. 

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