battery metals & the energy transition - wright et al - sep 2016 - greenfields research / rowton...
TRANSCRIPT
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?
Image: Diego Barbieri / Shutterstock.com
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)
7 Sep 2016Which battery metals will be the winners in the energy transition?
Image: TonyV3112 / Shutterstock.com Image: Claudio Divizia / Shutterstock.com
Slide 3 of 25
Metal Pages China Metals Week
Creating new opportunities for battery metals
Lead-acid Alkaline (zinc-manganese)
Lithium-ion
7 Sep 2016Which battery metals will be the winners in the energy transition?
Nickel-cadmium/zinc
Nickel metal (rare
earth) hydrideVanadium redox
Slide 4 of 25
Metal Pages China Metals Week
The mining sector has piled in!
7 Sep 2016Which battery metals will be the winners in the energy transition?
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Lithium Rare Earths Graphite Lithium (again)
TalisonLithium to raise $194m in IPO
Business News WA,24 Nov 2009
RARE EARTHS BECOME HOT COMMODITIES –US IPO UP FIVEFOLD IN 10 MONTHS
TheBull.com.au, 06 Jun 2011
Why these
graphite miners
have soared
more than 87%The Motley Fool,
24 Jun 2014
Lithium-ion
battery demand
sends shares in
miners soaring,
but analysts
predict bubble
will burst
ABC, 14 Jun 2016
They’ve got the power: Battery stocks charging up, analysts say
The Sydney Morning Herald, 2 Jul 2014
Slide 5 of 25
Metal Pages China Metals Week
Battery metals market growth mixed so far
0
100
200
300
400
500
600
700
800
Growth of metal market groups
2005-14 (US$ 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
Metal Pages China Metals WeekMetal Pages China Metals Week
How do metals markets
undergo rapid growth?
Which battery metals will be
the winners in the energy transition?
7 Sep 2016Which battery metals will be the winners in the energy transition?
Image: Diego Barbieri / Shutterstock.com
Slide 7 of 25
Metal Pages China Metals Week
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
7 Sep 2016Which battery metals will be the winners in the energy transition?
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
Metal Pages China Metals Week
Instigated by discovery, supply and demand
7 Sep 2016Which battery metals will be the winners in the energy transition?
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
Metal Pages China Metals Week
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
7 Sep 2016Which battery metals will be the winners in the energy transition?
Least
constrained
Most
constrained
Slide 10 of 25
Metal Pages China Metals Week
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
For more information: Sykes et al., 2016a
7 Sep 2016Which battery metals will be the winners in the energy transition?Slide 11 of 25
Metal Pages China Metals Week
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
7 Sep 2016Which battery metals will be the winners in the energy transition?
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
Metal Pages China Metals Week
…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
7 Sep 2016Which battery metals will be the winners in the energy transition?
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
Metal Pages China Metals Week
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
For more information: Sykes et al., 2016a
7 Sep 2016Which battery metals will be the winners in the energy transition?Slide 14 of 25
Metal Pages China Metals WeekMetal Pages China Metals Week
What does the future look like
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?
Image: Diego Barbieri / Shutterstock.com
Slide 15 of 25
Metal Pages China Metals Week
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)
7 Sep 2016Which battery metals will be the winners in the energy transition?Slide 16 of 25
Metal Pages China Metals Week
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’
7 Sep 2016Which battery metals will be the winners in the energy transition?
COAL
POWER
BIG
MINING
PETROL
CARS
BIG
OIL
Slide 17 of 25
Metal Pages China Metals Week
Know when to ‘step’ through the TRANSITION
…but into which future?
7 Sep 2016Which battery metals will be the winners in the energy transition?Slide 18 of 25
Metal Pages China Metals Week
Finally ‘jump’ into the future: WONDERLAND?
Profits from new technology causes a business-led energy transition across the globe
7 Sep 2016Which battery metals will be the winners in the energy transition?
GREEN
ECONOMYINNOVATION
GLOBALISATION VOLATILITY
Slide 19 of 25
Metal Pages China Metals Week
Finally ‘jump’ into the future: BATTLEFIELD?
Geopolitics and conflict forces a government-led energy
transition in the fossil-fuel poor parts of the world
7 Sep 2016Which battery metals will be the winners in the energy transition?
OLD
WORLDWAR
NEW
WORLDBIG
GOVERNMENT
Slide 20 of 25
Metal Pages China Metals Week
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.
7 Sep 2016Which battery metals will be the winners in the energy transition?
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
Metal Pages China Metals WeekMetal Pages China Metals Week
Conclusions: Battery metals
and the energy transition
Which battery metals will be
the winners in the energy transition?
7 Sep 2016Which battery metals will be the winners in the energy transition?
Image: Diego Barbieri / Shutterstock.com
Slide 22 of 25
Metal Pages China Metals WeekMetal Pages China Metals Week
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).
7 Sep 2016Which battery metals will be the winners in the energy transition?
Image: Diego Barbieri / Shutterstock.com
Slide 23 of 25
THANK YOU
谢谢
CONTACT DETAILS
Joshua P. Wright:
John P. Sykes:
Allan Trench:
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
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
7 Sep 2016Which battery metals will be the winners in the energy transition?
With thanks to the CET Scenarios Team
Image: Diego Barbieri / Shutterstock.com
Slide 25 of 25