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Commodities and Cryptos: Oil Finishes on a High Note, Gold Back Above $1800, Bitcoin Cash Fraudulent Press Release

Oil Crude prices are finishing the week on a positive note as the energy traders digest all the near-term risks.  This week, Iran signaled they are ready…

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Oil

Crude prices are finishing the week on a positive note as the energy traders digest all the near-term risks.  This week, Iran signaled they are ready to restart nuclear talks at the end of the month, President Biden is weighing tapping the SPR, US production is rising, and OPEC+ resisted calls to increase output faster over short-term crude demand concerns.

WTI crude was unable to extend gains after a strong NFP report that suggested the labor market recovery is back on track.  The oil market deficit is firmly in place and that should limit downward pressure with crude prices.

Gold

The only thing that matters for gold traders is what happens in the bond market.  Risk appetite was strong today as US job growth impressed in October and the prior two months had significant upward revisions.  Today is not a day to talk about the lack of desire to hold safe-havens, but focus on how the market is repositioning itself.  Wall Street went from pricing a few rate hikes next year, to only feeling confident about one increase.  Today’s strong jobs report does not change the message that the Fed sent this week that they will not commit to a rate hike in 2022 and this is why real yields are finishing the week lower.

Risk appetite is too strong for gold to have a sustained move above $1800, but it should see that level as strong support going forward.

Cryptos

Hackers were able to get a news release out that Kroger will accept Bitcoin cash.  This was quickly repudiated, and Bitcoin Cash quickly gave back all of its earlier gains.  The fraudulent press release did not impact the price of Bitcoin.

Bitcoin is trading slightly higher for a handful of reasons that include increased demand for inflation hedges, a much more friendly environment from New York City, and continued retail and institutional interest with new products.   All over the world, Bitcoin products are gaining more attention, from the US and their new ETFs to Australia and their new spot Bitcoin ETF.

Bitcoin is struggling to return to record high territory as too many investors can’t pass up the easy trade that is buying equities.  Bitcoin’s consolidation might extend a little longer, but the bull case is firmly intact.

Author: Ed Moya

Energy & Critical Metals

The cyclical semiconductor sector could be headed back to oversupply: Here’s how several Aussie stocks are placed for 2022

It’s no secret that the semiconductor sector has been experiencing supply shortages since the onset of the COVID pandemic. When … Read More
The post…

It’s no secret that the semiconductor sector has been experiencing supply shortages since the onset of the COVID pandemic.

When times are good the chip makers invest in more chip capacity to the point where there’s oversupply and prices and production comes down – and no one invests anymore.

And about 12-18 months down the line this translates to shortages, and investment picks up again.

But COVID triggered a complete halt in investment in production capacity and at the same time demand increased for laptops with people around the world working from home.

And now there’s a global shortage which is impacting supply chains and production levels – but could the sector be reaching a turning point?

Mark Kennis from Stocks Down Under and Pitt Street Research says that if investors want to keep close tabs on the sector, they should keep an eye on the Philadelphia Semiconductor Index.

“It’s by far the most important index for semiconductor stocks,” he told the Stocks Down Under Semiconductor Conference last week.

“It’s a basket for US based stocks listed in the US, equipment players, fabs companies, and a few foundries.

“Right now, it’s near all-time highs, and it’s a really good index to watch because typically the investors in this space look about six to nine, sometimes even 12 months ahead.

“So, if you see a turning point in stocks, that’s usually a good indicator that the industry is turning, maybe going back to an oversupply situation again.”

Here are how the stocks presenting at the conference see 2022 playing out.

BrainChip (ASX:BRN)

The company is by far the biggest player by market cap in the sector, with its Akida 1000 Neuromorphic System-on-Chip able to learn in real time, mimicking neurobiological architectures and working like a mini brain.

The company made a swathe of announcements in November, entering into a four-year licence agreement for its Akida IP with  MegaChips – a pioneer in the Application Specific Integrated Circuit (ASIC) industry.

BrainChip also completed functionality and performance testing of Akida, which achieved performance and lower power consumption results.

Company founder and chief technology officer Peter van der Made – who handed over the CEO reins to Sean Hehir last month – told the conference that the extremely low power consumption is good for the planet compared to current AI computing which generates huge amounts of greenhouse gases.

“If you look at the collected data centres of the world, they emit around 600 million pounds of greenhouse gases,” he said.

“An Akida 1000 is estimated to be around 97-99% more energy efficient processing.

By 2030 if we continue the way we’re going, data centres will account for 30% of global electricity – and Akida can solve that problem with its low processing power.

And Akida is independent from the cloud, doesn’t require an internet connection to operate and can learn in milliseconds as opposed to weeks with traditional AI.

“With Akida, it’s completely independent of the cloud, all the information is processed on the chip itself, so it’s very secure, whatever stays within the chip itself cannot be hacked,” van der Made said.

The production chips are now being integrated into complete PCIe and Mini-PCIe boards, with these boards and evaluation systems being shipped to Early Access Customers for further testing and verification to see how they work as part of customers’ products.


 

BlueChiip (ASX:BCT)

The company’s core technology is a MEMs device which sits sort of adjacent to the semiconductor market.

Managing director Andrew McLellan addressed the conference fresh off the back of the company’s announcement that its own branded cryovials have been registered with the United States FDA (USA) and received European CE IVD certification.

The company’s Bluechiip-Enabled sample management solutions product line includes sample storage consumables, readers, and stream sample management software.

“We target very highly sophisticated markets, IVF marketplace, clinical trials, cell therapies, population cryobanking, vaccines, that all require ultra low temperature ID and traceability,” he said.

“There’s well over 300 million high value bio samples that are stored, and preserved and processed in minus 196 °C environments – and this is a well over $600 million annual target market for us.

“There’s also applications emerging in the vaccine developed to be shipped and transported at minus 80 degrees.”

And the McLellan says the company has been untouched by supply chain disruptions.

“We’ve got capacity to manufacture up to 10 million chips a year, we’ve got 3 million chips in stock as it stands,” he said.

“They’re worth around $2.5-3 each, so easily valued at around $10 million.

“And we can scale that very rapidly and quickly.”


 

Weebit Nano (ASX:WBT)

The ReRAM player announced a $25.7 million placement to 4 Israel-based institutional investment and pension funds, and a $9 million entitlement offer this month.

CEO Coby Hanoch told the conference that since the company has made progress since signing its first commercial agreement with US based fab SkyWater in September.

“When President Biden announced a $52 billion investment in semiconductors he was holding the Skywater wafer in his hand,” he said.

“By the end of next year, we should be qualified and then be able to start mass production.”

Biden waving a SkyWater wafer around

It certainly helps that Weebit uses standard material in the fab, making it as simple as possible to ramp up manufacturing, which adds a 5% cost to the wafer – as opposed to 10-20% with flash.

Plus, Hanoch said the embedded memory market – where you embed a memory system on a chip – is growing rapidly and is expected to reach over US$100 billion in just a few years.

“One of the big advantages we have in the embedded space is that we can go down to very small geometry, the smaller nanometres,” he said.

“And flash basically is stuck at about 40 nanometres so all of the advanced applications today have to jump through hoops to really connect to the non-volatile memory.

“We already announced we scaled our tech to 28 nanometres, which is one of the sweet spots of our industry.”


 

BluGlass (ASX:BLG)

Laser diode player BluGlass executive chair James Walker said that the company is soon to be the fourth gallium nitride (GaN) laser diode supplier in the game.

“We are well on our way for transitioning from an R&D company to a product manufacturing technology development company,” he told the Stocks Down Under Semiconductor Conference.

“We can operate in the high value high margin product space where there are very few players.

“GaN laser diodes sell for tens of thousands of dollars, so it’s high margin, low volume and fits beautifully into our capacity.

“We have enough capacity that we can actually make enough epitaxy – which is the first component of a laser diode – to generate over $170 million worth of revenue.”

Plus, the company has demonstrated working remote plasma chemical vapour deposition (RPCVD) tunnel junction laser diodes in a world-first proof-of-concept.

The prototypes have demonstrated good lasing behaviour, with potential to address the 50% performance loss presently sufferance by GaN laser diodes due to excess heat.

The company is confident that the GaN laser diode market is a $735 billion opportunity.


 

4DS (ASX:4DS)

4DS raised $2.5 million via a placement at $0.048 per share last month, and launched an SPP to raise a further $2.5 million to fund the development of its Interface Switching ReRAM technology with imec in 2022.

But the company also recently reported testing results from its Third Non-Platform Lot and Second Platform Lot wafers which showed that the endurance of the Third Non-Platform Lot memory cells has potentially degraded when compared to the Second Non-Platform Lot performance reported in February.

The company highlights the need to switch from using Non-Platform Lots to using Platform Lots which include imec access transistors.

The Third Platform Lot will also include a test chip – an imec 1 megabit array using 4DS’ ReRAM cells, with executive director David McAuliffe telling the conference the company expects to be out of fab in early Q3 2022.

“Between now and then I think we’ll see a significant increase in the valuation of the company,” he said.

“Our end goal in 2022, is to show that the technology is able to be put on a megabit array – which I think the industry will be very interested in.

“That’s the goal for 2022 – challenging, but achievable.”


 

Archer Materials (ASX:AXE)

CEO Dr Mohammad Choucair told the conference straight up that there’s a need to differentiate Archer from other groups in the semiconductor sector.

“The only similarity between Archer and the others in this important sector is the word semiconductor,” he said.

“Other than that, we’re in completely different arenas. And this is because Archer is developing a quantum chip and is really the only company on the ASX doing so and in fact, one of only a few in the world doing so.

“We have a unique value proposition that holds up the world first in that we’re building a qubit processor that could potentially allow for quantum computation at room temperature and onboard modern devices.”

Last month the company successfully fabricated microfluidic channels required for its biochip, integrated sensor components and other features within them on a silicon wafer.

The fabrication, miniaturisation, and integration of the microfluidic channels is a vital step on the development pathway for the company’s biochip, that would allow tiny amounts of liquid or gas samples (e.g. saliva, blood, breath, etc.) to be analysed.


 

 

The post The cyclical semiconductor sector could be headed back to oversupply: Here’s how several Aussie stocks are placed for 2022 appeared first on Stockhead.


Author: Emma Davies

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Energy & Critical Metals

Canaccord Reiterates Ratings On Uranium Royalty Following Latest Purchase

On December 2nd, Uranium Royalty Corp (TSXV: URC) announced that they have entered into a supply stream with CGN Global. This
The post Canaccord Reiterates…

On December 2nd, Uranium Royalty Corp (TSXV: URCannounced that they have entered into a supply stream with CGN Global. This deal is for 500,000 pounds of U3O8 from CGN which will be delivered between 2023 and 2025 at a weighted average price of $47.71 per pound. 300,000 pounds will be delivered on October 20th, 2023 and the other 200,000 pounds will be delivered in 100,00 increments on June 14th, 2024, and April 2nd, 2025, respectively.

Uranium Royalty Corp currently has 3 analysts covering the stock with an average 12-month price target of C$6.33, a 26% upside to the current price. Out of the 3 analysts, 2 have strong buy ratings and the other analyst has a buy rating. The street high sits at C$7.50 while the lowest comes in at C$5.

In Canaccord’s note, they reiterate their C$7.50 12-month price target and speculative buy rating, calling the deal attractive. They believe that this deal will provide shareholders with some form of leverage, “at a time when prices are expected to rise due to a fundamental supply-demand imbalance.”

Canaccord believes that the term contracting cycle is now underway and that utilities are actively engaged in both off and on-the-market discussions. They believe that this will help lower volatility and tighten the spot market, while the general public will continue to worry about the security of the long-term supply of uranium.

Lastly, they add that if spot prices were to rise, Uranium Royalty would be well-positioned as they hold a total of 1,548,068 pounds of U3O8 at an average cost of $40.89.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Canaccord Reiterates Ratings On Uranium Royalty Following Latest Purchase appeared first on the deep dive.


Author: Justin Young

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Already-Scarce Battery & Energy Metals Facing More Pressure from Fossil-Fuel Phase-Out

2021.12.04
For all their successes building Europe’s strongest economy, the Germans have made some pretty dumb moves regarding energy policy.
In 2002,…

Already-scarce battery & energy metals facing more pressure from fossil-fuel phase-out

2021.12.04

For all their successes building Europe’s strongest economy, the Germans have made some pretty dumb moves regarding energy policy.

In 2002, Germany enacted a law to phase out nuclear power, but the government led by Chancellor Angela Merkel decided in 2010 to extend the lifetimes of the country’s reactors by an average of 12 years. This was based on the judgment that Germany would not be able to meet its power demand using renewable energy sources – wind and solar power – nor could it meet the government’s ambitious goal of a 40% reduction in carbon emissions by 2020 burning more coal and natural gas.

Then, playing populist politics and over-reacting to the partial meltdowns in Japan’s Fukushima Daiichi nuclear complex, Merkel’s government immediately shut down almost half of the country’s nuclear power. Germany, overnight, decided 40% of its nuclear power capacity would be eliminated, and removed 8,800 megawatts (MW) from the grid; the remaining 12,700 MW of nuclear-supplied electricity will be gone by 2022.

The country rapidly approaching that deadline, Germany has moved to shut down six nuclear plants or 8.5 gigawatts (1GW = 1,000MW) by the end of next year. Three of its newest and best plants are due to close in just over a month, removing 4.05GW, equivalent to the average electricity consumption of Denmark, from northern Europe’s power grid.

Germany also plans to take all its natural gas plants offline by 2038.

According to Clean Energy Wire, the country in the first six months of this year got 41.4% of its power from renewables; 17.8% from lignite, a form of coal; 16.7% from natural gas, 11.7% from nuclear and 8.4% from hard coal. 

The real surprise here is not that Germany is following through on its 20-year-old nuclear phase-out, but the fact that the energy sources designed to take its place are so inadequate.

“Energiewiende” (energy transition) refers to Germany’s policy of increasing its share of renewables, and phasing out nuclear power, which before Fukushima amounted to about 25% of the country’s total electricity load.

However Germany’s production of solar and wind power has failed expectations, with the gap between supply and demand having to be met by nuclear and coal, and consumers faced with horrendous power bills.

A recent analysis by Verivox found that Germany’s US$0.45 per kilowatt hour is the third-highest-priced electricity in the European Union (behind the Czech Republic and Romania) and more expensive that all the other G20 countries.

In 2021, due to unfavorable weather conditions, the country’s production of wind and solar power for the first three quarters plummeted compared to the same period in 2020, with onshore wind producing 18% less, 14% less from offshore plants, and solar energy producing only half as much.

Despite energiewiende, Germany’s energy sources this year were dirtier than previously, with hard coal consumption 20% higher from January to September and electricity and heat generation from hard coal increasing by 28%. (Germany has two types of coal, hard coal and lignite). Coal-fired power production is considered to be the worst form of electricity generation for the environment, despite power plant companies’ use of scrubbers and claims of “clean coal”.

The irony is, notwithstanding the country’s disdain for fossil fuels and nuclear energy, if it wasn’t for these traditional base-load sources, deployed to make up for the failure of solar and wind to deliver as expected, Germany would have been facing black-outs.

In fact parts of the country could still be plunged into darkness if Germany’s ill-conceived plan to retire three nuclear power plants in the middle of winter without a reliable source of replacement power comes to pass.

Infographic by Peter Bardland

Germany of course isn’t the only country whose near-religious zeal to convert to clean energy has run up against astronomical power prices. Closer to home, we have the example of Ontario.

The provincial Liberals decided to build gas plants in Mississauga and Oakville as part of a commitment to end coal-produced power in Ontario. However after local opposition, they canceled the plants at a cost of CAD$1 billion. In 2015 under the watch of then-Premier Kathleen Wynne, an auditor general’s report found that Ontarians had paid $37 billion more for power than they should have between 2006 and 2014, because the province had allowed exorbitant prices for wind, solar and other alternative energy sources.

Battery & energy metals

The shift to renewable energy and the electrification of the global transportation system doesn’t happen without a major push to mine more metals. Copper for electric vehicle motors, charging stations and electrical transmission lines; lithium for Li-ion batteries; and graphite for the anode part of the battery are in high demand now, and the need for them is only going to increase, as governments push for stricter limits on greenhouse gas emissions in an effort to limit global temperature rise.

According to Bloomberg New Energy Finance (NEF), by 2030 consumption of lithium and nickel will be at least five times current levels, demand for cobalt used in EV batteries will be 70% higher, and copper, manganese, iron, phosphorous and graphite — all needed in clean energy technologies and to expand electricity grids — will see sharp spikes in demand.

This is nothing new from our perspective. AOTH has been covering the markets for these in-demand “future-facing metals” for years. High demand is occurring at the same time as a supply crunch is taking hold, particularly for copper, lithium and nickel, which is shoring up prices and driving the valuations of deposits containing these metals higher.

For example, the EV battery market alone is projected to consume well over 1.6 million tonnes of flake graphite per year, resulting in a 10-fold increase in demand by 2030. This is worrisome considering that total graphite mined in 2020 for all uses, including lump graphite for pencils and graphite used in nuclear reactors, was only 1.1 million tonnes.

It is estimated that the natural flake graphite market could reach a deficit as soon as 2023, with few new sources being developed around the world.

The prices of lithium carbonate and lithium hydroxide, both used in the Li-ion battery cathode, have soared this year on break-neck demand and tight supply. Benchmark Mineral Intelligence forecasts lithium demand to more than triple between 2020 and 2025, rising to an annual million tonnes and out-pacing supply by 200,000 tonnes.

Added to these structural supply deficits, supply chain bottlenecks relating to the covid-19 pandemic have further pressured prices, resulting in a disturbing trend for end-users known as “greenflation”. Indeed the costs associated with “going green” are starting to become a serious concern.

While low costs in relation to fossil fuel sources have been a driving force of the clean energy boom, this is beginning to change. Higher prices of the commodities needed for renewable energy are increasing the costs of setting up green power projects.

According to a recent article in Oilprice.com,

A 2019 report from the nonprofit Rocky Mountain Institute found that it was cheaper to build and use a combination of renewables like wind and solar than to build new natural gas plants. Another 2020 report from Carbon Tracker found that in every single one of the world’s energy markets, it’s cheaper to invest in renewables than in coal.

But this remarkable trend has now gone into reverse gear, with prices of metals such as tin, aluminum, copper, nickel, and cobalt, which are essential to energy transition technologies, climbing between 20% and 90% this year, thanks to massive global supply chain disruptions.

The piece by Alex Kimani goes a step further in predicting that “metals have been tipped to become the oil of the future,” with clean-energy technologies requiring more metals than their fossil fuel-based counterparts.

According to a recent Eurasia Review analysis, prices for copper, nickel, cobalt, and lithium could reach historical peaks for an unprecedented, sustained period in a net-zero emissions scenario, with the total value of production rising more than four-fold for the period 2021-2040, and even rivaling the total value of crude oil production.

Rising greenflation could prove to be a big problem for countries hoping to lighten their carbon footprints. That’s because a colossal shift to renewables is seen as the only way of achieving climate neutrality by 2050, meaning rising costs could be “baked into” plans for electrification and decarbonization going forward.

According to BloombergNEF’s New Energy Outlook, getting to “net zero” carbon emissions by 2050 will require rapid scaling of investment in the energy transition over the next 10 years.

It says over 75% of the effort to cut emissions falls to the power sector; and that if the world is even get close to achieving its net-zero goal, we must accelerate deployment of low-carbon solutions, meaning even more wind, solar, batteries and electric vehicles than are being planned currently.

The report says the following milestones will need to be hit 2030 to be on track for net-zero by 2050:

  • Add 505 gigawatts of new wind power each year to 2030 (5.2 times the 2020 total)
  • Add 455 gigawatts of solar PV each year to 2030 (3.2 times the 2020 total)
  • Add 245 gigawatt-hours of batteries each year to 2030 (26 times the 2020 total)
  • Add 35 million EVs added to the road each year to 2030 (11 times the 2020 total)
  • Reduce coal-fired power generation 72% from 2019 levels by 2030, and retire up to around 70%, or 1,417 gigawatts, of coal-fired power capacity by 2030

NEF’s ‘Green Scenario’ requires an even more dramatic scale-up to renewables, with:

  • Wind: 25 terawatts in 2050, or average of 816 gigawatts installed per year to 2050
  • Solar: 20 terawatts in 2050, or average of 632 gigawatts installed per year to 2050
  • Batteries: 7.7 terawatt-hours in 2050, or average of 257 gigawatt-hours installed per year

One of the most important takeaways from New Energy Outlook 2021 is this statement:

Achieving net-zero carbon emissions by 2050 will require as much as $173 trillion in investments in the energy transition.

Part of that huge investment should be a significant, to put it mildly, earmarking of public and private money that would go into a major ramp-up of mining the materials required for making the global shift from fossil fuels to renewables.

The mining industry is going to need help in finding and developing new sources of copper, lithium and graphite, what I have deemed The Big Three Commodities of Electrification and Decarbonization.

Unfortunately, however, the task is being made that much harder by more supply-related curve balls being thrown.

Graphite

Let’s start with graphite.

Tesla’s Elon Musk has been complaining about the high cost of graphite needed to make electric-vehicle battery anodes. There is no substitute for this unique mineral, which along with diamonds, is the only source of natural carbon. Graphite is an excellent conductor of heat and electricity, making it an ideal anode material.

Tesla and SK Innovation, the Korean battery-maker building two new plants in the US, are among the hundreds of auto-industry players reportedly asking for tariff waivers on parts and materials imported from China.

The tariffs were imposed during the US-China trade war, most of which are still in place. Among them is a 25% levy on synthetic graphite.

As we have previously written, China really has the US over a barrel when it comes to graphite. Because China controls the market for coated spherical graphite, the only kind suitable for an EV battery’s anode, the United States is 100% dependent on a foreign supplier. Tesla confirmed as much when it stated in a public comment, via CNBC, that only mainland China could provide the quantity of graphite it needs in flake or powder form to manufacture its batteries in the U.S.

“As a result of Tesla’s due diligence process for suppliers of artificial graphite, globally and in the United States, Tesla has concluded that no company in the United States is currently capable of producing artificial graphite to the required specifications and capacity needed for Tesla’s production,” Tesla wrote.

The situation isn’t going to get better anytime soon.

Doubts have been raised over whether China can keep up with surging global demand. The top graphite producer has already taken steps to retain its graphite resources by restricting its export quota and imposed a 20% export duty.

Metal Bulletin reported in October that Chinese graphite prices are likely heading higher in the last quarter of this year due to rising electricity costs and reduced power supply, as well as insufficient inventories and inadequate availability of feedstock for spherical graphite processing.

Lithium

The majority of the world’s lithium brine production is in the “lithium triangle” spanning, Chile, Argentina and Bolivia. In 2020 Chile was the second-largest producer of the crucial battery ingredient, mining 18,000 tonnes.

Importantly, it is also the world’s largest copper producer.

For many years Chile’s pro-mining government made the country a focus for investment, however its recent lurch to the left is casting doubts on how much of a player the former bastion of free-market policies and privatization will be.

Currently in the midst of an election campaign, front-running leftist presidential candidate Gabriel Boric this week talked up his plans for a state lithium firm, and according to Reuters, slammed the Andean country’s “historic error” of privatizing its resources.

Copper

Chile has also proposed legislation that would see copper mine profits taxed at 75%. State-owned Codelco is the world’s largest red-metal producer in the world, and presumably is the model Boric envisions for creating a national lithium company.

Next door in Peru, the second-largest copper producer, the new leftist government led by Pedro Castillo is seeking to impose a 70% tax on copper mining profits, which would discourage further spending on existing and future projects.

Resource nationalism of a different sort has forced the closure of one of the country’s largest copper mines. Chinese miner MMG will reportedly end production from Las Bambas by mid-December following months-long road blockades that have prevented supplies from reaching the operation.

A dirt road used to transport copper is at the heart of the dispute with local communities, who want compensation for the land used to build the road and alleged damage to their crops. In all 400 production days have been lost since 2016, including a three-week-long roadblock protest at the end of 2020 that prevented MMG from exporting 189,000 tonnes of copper concentrate worth $530 million.  

Meanwhile in the DRC, Africa’s top copper producer, the Chinese embassy is apparently telling its nationals to leave three provinces where mining takes place, following a spate of attacks on Chinese working in the country’s mining industry.

According to Texas-based geopolitical consultancy Stratfor, an attack on Nov. 24 against an artisanal gold mine in Ituri province left four people dead, including two Chinese nationals. The other two provinces of concern are North Kivu and South Kivu, where small-scale artisanal mining is common.

Infamous for its wars, child labor and appalling working conditions, last year about 1,300 civilians were killed in the DRC over eight months, involving armed groups and government forces in the eastern part of the country. More than half a million were forced from their homes.

Militants often attack villages as a ruse for stealing metals and selling them on the black market.

The attack on Chinese marks a new development in conflict-ridden Africa, where Chinese companies have tried to win local support for mining through the building of schools, water systems, roads and other infrastructure. Perhaps that is not enough anymore and the locals are getting more desperate.

Conclusion

All of the above manifestations of resource nationalism — Chinese mining employees being attacked in the DRC, copper producers in Chile and Peru facing higher taxes, a possible nationalization of Chile’s lithium industry, and Chinese quotas/ export duties on graphite — are on top of existing structural supply issues for key electrification & decarbonization graphite, lithium and copper. Anti-mining governments or governments that don’t appear to govern at all, like the DRC, make increasing mine output to meet higher demand all that much harder.

And with decarbonization agendas being rolled out by several countries including the United States, which just passed $2.8 trillion in new infrastructure and climate-related investments, the demand side of the equation is only going to strengthen.

(While some US politicians like Alaska Sen. Lisa Murkowsi “get” the need to support a “mine to battery to EV” supply chain in North America, the best the US government can is to provide consumer incentives. For example Joe Biden’s Build Back Better Act would raise the EV purchase credit to $12,500 from $7,500, making it one of the most aggressive EV incentives in the world)

They need to do more.

Countries like Germany are phasing out nuclear and coal-fired plants but have not yet achieved the renewable power capacity needed to replace shuttered power-generation facilities.

Yet the only plan in town, so to speak, is renewables, if the goal of net-zero carbon emissions by 2050 is to be met.

This means an incredible ramp-up of renewable power is needed, with all the required metals that go along with that.

Without security of supply, though, it’s all but impossible for mining companies to reach that level of production. As the example of Tesla and graphite has shown, the total dependence on Chinese graphite imports for making electric cars in the United States means the only way of lowering costs is to urge the US government to reduce tariffs on what is increasingly becoming a hostile power whose geopolitical interest are counter to America’s and most Western countries. (the US also relies on Russia for many critical metals, such as palladium and nickel)

The trick is sourcing production locally, instead of relying on foreign suppliers and paying exorbitant shipping costs to get the raw materials from battery-making facilities in Asia to North American auto assembly plants.

There are no doubt several companies with the capability of adding to a North American battery supply chain. We could actually start building a locally-sourced, locally-made battery supply chain, from mine to battery to electric car.

Richard (Rick) Mills
aheadoftheherd.com
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Author: Gail Mills

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