Lithium demand from mobile phone companies, computers and other gadget is projected to increase 650% by 2027. A new report from Roskills Market Outlook Report and BMO are anticipating dramatic need for lithium. Even with some of the challenged facing the EVM it will move forward. The next 9 years will drain less than 1% of projected reserves in the ground demand is expected to keep building.
Even the development of vanadium batteries or Redox Batteries for large, industrial scale energy storage should not damped the demand for smaller personal technology usage.
The catalyst for change, in the mining sector seems to be surrounding the EVM orElectric Vehicle Market. All advances of this magnitude will cause issues but this is not a new idea. We have been prepping for the idea for 30 years or so when the first electric car came out. In fact the first electric vehicle was back in 1832 but that is another story. The first mass production type version was the Prius back in 1997 but most think of Tesla, right now. Frik Els printed that a new report from AlixPartners study expects $255 billion pouring into R&D and capital expenditures to bring some 207 electric models to the market by 2022. A further $61 billion has been earmarked for autonomous-vehicle technologies according to the study.
We did not have to wait long to hear a great deal of news coming out of Canada and the hints dropped by giant miner Vale. The Newfoundland Voisey’s Bay nickel mine owned by Brazilian company Vale will be investing $2 billion to convert the mine from an open pit to underground mine by 2021. This investment extends the life of the nickel/cobalt mine to 2035. Cobalt is a by-product of nickel and copper extraction and will be a major consideration in the funding and extension of this mine. Wheaton Precious Metals and Cobalt 27 will acquire a fixed percentage of cobalt production from Vale's Voisey's Bay mine for US$690 million for purchase of finished cobalt equal to 75% of Voisey's Bay cobalt production commencing January 1, 2021.
"We see numerous similarities between cobalt and silver, as both are primarily produced as by-products and both are integral to sustainable clean energy and electronics" said Randy Smallwood, Wheaton's President and Chief Executive Officer.
This is great news for the mining sector, and for the province which could use the employment and revenue. The mining of cobalt is primarily done in the Congo, so having such a major deal done here in Canada is welcomed and shows not only the interest in coming to safe investment jurisdictions but recognition of markets to the demand for materials needed in the electric vehicle market.
CITIC Mining, a Chinese state-owned conglomerate will become Canada's Ivanhoe Mines’ biggest shareholder after billionaire Robert Friedland’s company agreed to sell a 20% stake for about $560 million. This has been a long-term relationship between Ivanhoe and CITIC, nearly 15 years in which the company was struggling with developing a copper/gold mine in Mongolia. As we know, there are a myriad of issues that arise when dealing with foreign countries laws, regulations, customs and best interest. This long-term relationship is a great example of how producers and countries can work together to match the demand required for future growth.
“In 2003, the original Ivanhoe Mines was grappling with the challenge of developing its vast copper-gold discoveries at the Oyu Tolgoi Project in southern Mongolia. Following extensive discussions, Ivanhoe and CITIC established a strategic alliance to cooperatively pursue a number of selected common interests in metals production and related technologies.”
There has been a great deal of revived enthusiasm for copper as we seem demand increasing particularly y becase of electric vehicle growth. Ivanhoe’s flagship Kamoa-Kakula project in the Democratic Republic of Congo – considered the most significant copper discovery in decades. The money will be put to good use in this project as China also has a strong appetite for copper, with consuming roughly 50% of copper a year.
Russian gold miner Polyus on Thursday provided an update on its Sukhoi Log project, one of the world's largest untapped gold deposits. Polyus is the 7th largest gold producer and this news continues to raise eyebrows as Russia continues to be a fervent purchaser of gold, and expressing interest in gold projects. Russia has increased their reserves dramatically along with China, as many see the two working together for an alternate system to what many see as a failing fiat system.
It is expected that 1.6 million ounces per year will be extracted at an extraction cost of $460 per ounce. As in most mining this is not a new discovery necessarily as it was discovered in 1961 by the Bodaybo expedition and extensively explored by Soviet geologists in the 1970 to the 1990's. Placer Dome, now Barrick had drilled extensively their in the late 1990's: about 320,000 meters. This data, coupled with current verification and amassed data suggest 2.0g/t over 58m.
What is of particular interest to me is reminding people that we face a similar scenario back home in Canada. The Golden Triangle has a rich history and enormous data with companies currently exploring, verifying and gathering data. I cover a number of companies you need to consider and research. Talk to your broker, or take some time to see if you want to shift into a sector that is primed to move forward ahead of the curve.
Brazilian mining giant Vale has confirmed that it will be making a major announcement regarding the Newfoundland/Labrador nickel/cobalt mine. It is thought that due to increased demand and price for cobalt the plan to expand the mine will move forward. Cobalt is extracted as a by product of nickel or copper mining and is essential in electric vehicles, mobile phones and other battery technology. What is interesting is that Vale has suspended the sale of another of its mines in New Caledonia in the South Pacific. It is not known if the two are correlated, or what this will mean for certain in regard to the mine; although, some expect that the expansion would mean the mine would extend until 2035.
Fortescue Metals Group CEO Elizabeth Gaines stated that this major iron ore producer would be looking for new mines, and new metals. This is an interesting indicator for me as she lists gold, copper, and lithium as new targets. This shift is not lack of focus, quite the opposite it merely illustrates the demand for metals required for the future. For those that may not know copper and lithium is notably used in the electric vehicle market and in batteries for energy storage. Gold is still arguably the foundation of economy but also used in electronics. This diversification does not show any weakness in the iron market, quite the opposite I believe it shows that Gaines acknowledges the need and demand for copper and lithium. She has further added that the company will focus on South America, namely Ecuador and Argentina. Where is the demand: China.
If you want to feel uneasy, look at that fact. Apple is one of the companies that takes part in aggressive stock buyback programs. These programs are good tools to use but are a double edge sword. Money ultimately should be piled into your business to create product and growth, to invest in new technology not in financial engineering. I am not interested right now in why Apple does this because I would not buy the service they provide, nor the phone and for that reason i would not want the stock. The fact that it has such an effect in the S&P should also be worrying anyone that believes we have free and open markets. There are deep and disturbing questions we have to start asking about how those who run our markets are moving them. Make no mistake it is not you or I. We do not move these markets in any way. In fact, most retail investors, almost 90% are in passively invested funds. We have given up responsibility for our financial future to global hedge funds and market funds. Now this is not an Apple bashing piece. I prefer other companies but quite frankly I will keep my phone for years - i am not a good consumer and do not buy into the silly upgrades that nearly no one uses to an advantage. I am not even that upset about there manufactured/planned obsolescence program that derails battery power over time. I have always suspected that most products are carefully engineered to fail; to have a specific, short lifespan. This was once thought as cynical conspiracy theory, but we see it as fact, with Apple admitting this program. It would not take much effort to see this in a long list of other companies. What it does show is an overwhelming sense of cynicism in the whole system. We see it socially and politically. The people being ignored in so many countries. People need to look at what they own as a portfolio. They need to start asking some questions and maybe if you are a person in charge of your own destiny start reading some reports on new markets that have are ahead of the curve. Green technology, battery power, energy storage, materials that make stronger alloys all of these can be found in mining. There is a surge happening in this sector and not enough people are telling you about it. It is fascinating what is being accomplished and it takes little to start to push these companies into the spotlight that are helping to craft an incredible future.