* I think someone needs to pass this on to Felix asap, just a reminder of what they will miss out on, give up, lose if they don't pull their finger out, as
Thereās a $30 billion prize waiting if Australia heads downstream to produce lithium batteries
The buzz phrase at the International Mining and Resources Showcase in Sydney this week is ācritical mineralsā, capturing both the need to develop battery supply chains in Australia and the genuine scarcity of these metals compared to demand in the coming decades.
One of the big questions for the resources sector and Australian Government is just how much work it can do to take its rich mineral endowment and convert it into a manufacturing powerhouse.
It is something Australia, which lost its car manufacturing industry several years ago, has rarely enjoyed.
Even its biggest export industry, iron ore, is founded on the relatively low capex and cost base associated with mining ore and shipping it at huge scale to be converted into steel in China.
But as the worldās largest producer of lithium for the emerging electric vehicle battery supply chain ā WAās hard rock spodumene mines supply around half of the worldās lithium carbonate equivalent production ā experts say we are well placed to capture the added value normally left on the table downstream.
āIn seven yearsā time, we have to see a six-fold increase in the amount of hydroxide produced in order to meet what we think will be EV demand forecasts, thatās 25% compound annual growth,ā CRU Group head of Australia and New Zealand Alex Tonks said.
āNot many commodities have grown like that. It is going to be difficult for the industry to keep up, but it is an enormous opportunity.
āWeāre not looking at the current prices, which are very, very high. On a long term average basis if Australia only exports spodumene, it will only really be creating an industry of a few billion dollars a year.
āIf we can turn it all into hydroxide, you end up with an industry closer to about $10 billion a year.
āIf you can turn it all into an NMC 811 battery, you end up with an industry of about $30 billion a year, thatās broadly comparable to the met coal exports of today. So we do think it is worth pursuing, at least trying to get to cathode materials in Australia.ā
Rare earths demand from wind turbines to grow fourfold
The EV boom will see demand for lithium grow something like 15 times in just two decades, Tonks says.
It is a scary proposition.
The only market where comparable growth levels has been seen is the iron ore trade to China from the early 2000s on.
It is not only lithium where CRU Group sees booming demand for critical minerals, something that could be accelerated by US subsidies, which will see tax credits for manufacturing from commodities sourced from Russia and China phased out by 2024.
Rare earth magnet demand is also expected to rise fourfold by 2040, largely driven by the growth of offshore wind for energy generation.
āIn our view itās really the wind rollout that drives that. By 2040, we expect wind turbine capacity to be 4.1 terawatts, versus 0.7 at the moment,ā Tonks said.
āSo wind will be a major driver, particularly offshore wind, which requires a very, very large amount of permanent magnets.
āThatās going to produce a huge deficit in the rare earths market. Really, by the mid 2020s, you can see that supply gap emerging. And itās going to be quite large from the 2040s, I should say that that includes a lot of projects that are already being developed here in Australia, that are absolutely required.
āEven with that youāre going to see a very, very substantial supply gap in this market. So itās important that more projects are brought on otherwise youāve going to see thrifting or substitution, which is not what we want.ā
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Food for thought
Frank
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