Exploring Ontario: Future Battery Metal Supply Source

Date: Jan 2, 2019

With a fresh wave of resource exploration companies looking to discover and develop new projects, Ontario is likely to play a significant role as a future battery metals supply source.

Battery metals such as lithium, cobalt, nickel and vanadium are in high demand for today’s high techworld — from mobile devices to electric vehicles (EVs) to large scale energy storage systems.

End users that require battery metals to power new technology for the new era of energy are increasingly looking for secure ethical sources. Looming supply shortages in the face of increasing demand, especially in Western markets, are making stable mining jurisdictions like Ontario, Canada all the more attractive for battery metals exploration.

Big demand for battery metals cobalt and vanadium

The world’s biggest automakers, including Ford (NYSE:F), Volkswagen (ETR:VOW3), General Motors (NYSE:GM) and Toyota (NYSE:TM) are planning massive roll outs of EV models in the near future. By 2050, according to Morgan Stanley (NYSE:MS), EVs may account for nearly half of the estimated total 130 million cars to sold globally that year. Compare that to the only 1 percent of total global car sales in 2016 and it should be quite clear that demand for battery metals is set to explode over the coming decades.

Cobalt is one of the battery metals most likely to benefit from the demand of lithium-ion batteries over the next few years. By 2020, 60 percent of lithium-ion battery cathode formulations will include cobalt, according to Citibank. The price of cobalt may be down 27 percent year-to-date on the London Metal Exchange as of mid-December 2018, but there is still a lot of confidence remaining in the market given demand projections amidst rising supply security concerns.

Traditionally an industrial metal used in steel manufacturing, today vanadium represents another key material for the battery market, especially for large-scale stationary energy storage to support wind and solar facilities. Vanadium redox flow batteries (VRFBs) are considered the most effective large-scale stationary energy storage technology available. According to Benchmark Mineral Intelligence, over the next decade the global stationary energy storage market will grow exponentially from 3.7 GWh in 2018 to between 100 and 120 GWh by 2028.

The price of vanadium pentoxide flake, which is used to make VRFBs, has been on a steady climb in 2018 more than doubling from the start of the year to reach record highs by the third quarter. Benchmark Mineral Intelligence Managing Director Simon Moores told the Investing News Network that VRFBs could become the second-leading technology in the battery market following lithium-ion batteries.

Huge concerns over supply of cobalt and vanadium

Growth in the electric vehicle and renewable energy industries in North America not only depends on increasing demand for these technologies but also on securing a stable supply of battery metals like cobalt and vanadium. Supply for both of these metals happens to be largely influenced by market forces outside of North America.

The majority of the world’s global cobalt production comes from the conflict-ridden Democratic Republic of Congo (DRC), which is also home to the world’s largest-known cobalt reserves. The DRC’s chronic corruption and constant political conflicts alongside the government’s recent tax hikes for mining companies and cobalt giant Glencore’s (LSE:GLEN) production setbacks, presents significant supply-side risks for the EV battery industry.

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