Challenges in Battery Mineral Market
Rapid changes in battery technology for the growing electric vehicle (EV) market introduce uncertainties for mining professionals. These uncertainties affect asset valuation and strategy planning, says Andrew van Zyl, managing director for South Africa for SRK Consulting.
World Association of Mining Lawyers Conference
At the recent World Association of Mining Lawyers conference in Germany, Van Zyl and Jeff Parshley, SRK Consulting U.S. corporate consultant in mine closure, discussed these challenges.
Battery Mineral Demand and Volatility
“Battery mineral demand drives much of the mining excitement today. However, this demand is very volatile, complicating valuations and planning decisions,” Van Zyl explains. This volatility is a significant issue as the mining sector strives to meet stringent environmental, social, and governance (ESG) compliance requirements.
Price Fluctuations in Lithium and Cobalt
Examples of this volatility include the fluctuating lithium price and the cobalt price. The lithium price increased sharply due to anticipated supply shortages, only to drop sharply due to lower Chinese demand and potential substitutions for EV batteries. Similarly, the cobalt price soared from around $20,000 per metric ton (mt) to $100,000/mt, only to drop to $40,000/mt in a few months after a chemical company announced a way to reduce cobalt usage in batteries by 75%.
Impact of Responsible Sourcing
Van Zyl also highlights the impact of responsible sourcing of battery minerals on the risk exposure of mining operations. Mining companies in many African countries are starting to engage more constructively with the artisanal mining sector, despite its association with labor exploitation and poor safety standards.
Despite Volatility, Best Practices Remain
Despite commodity price volatility, Van Zyl emphasizes that good mining projects must be built on technical best practice foundations. These include optimizing capital and operating costs, implementing responsible mining, and achieving zero harm.
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