Fall in battery metal prices concern for Canada
Slumping prices for the minerals needed in the energy transition away from fossil fuels is a concern for Canada and its allies, says Energy and Natural Resources Minister Jonathan Wilkinson, since it is preventing capital from moving into projects the country wants to develop.
“It is a concern for a number of countries like Canada that produce these minerals and hope to produce many more going forward,” he said. “It is something that Australia, Canada, the European Union and others are talking about.”
In 2023, the price of lithium fell 82.3 per cent, nickel dropped 29.1 per cent, cobalt swooned 38.5 per cent and manganese fell 22.3 per cent, according to Benchmark Intelligence, due to an increase in supplies, subdued Chinese demand and a weaker-thanexpected electric vehicle market.
These are considered critical minerals by the Canadian government since they are used to build batteries and are expected to power EVS, the demand for which is expected to increase in the future as the world gradually moves away from fossil fuels.
Falling prices also drive away investors, who miners depend upon for exploring and developing projects. For example, some of Canada’s junior lithium miners have decided to either move to commodities that are in demand or postpone their exploration activities until prices rise again.
Albemarle Corp., the world’s largest lithium producer, in January said it would have to cut costs and lay off employees. North American Lithium Inc., majority owned by Sayona Mining Ltd. and Canada’s only major lithium producer, in late January said it was looking to reduce its cost base.
Wilkinson said auto and battery makers need to more highly value commodities made responsibly and in an environmentally friendly manner. Without that, it will not be possible for countries to reach their net-zero goals.
As an example, the minister said the decline in nickel prices is due to a rise in Indonesian supplies, which have a carbon footprint many times higher than that of nickel produced in Canada or Australia.
“At the end of the day, countries that produce minerals with high ESG (environmental, social and governance) standards need to have counterparts that are consuming and buying critical minerals with high ESG standards,” he said. “We need to figure out the mechanism through which that is going to happen. That’s an active conversation.”
Every commodity has a price cycle, but Wilkinson said he is not trying to “eliminate” that. He is more concerned about the “market manipulation” that can happen when supply is concentrated in the hands of a few countries. In 2022, Indonesia was responsible for nearly half the world’s nickel production.
Developing a steady supply of these raw materials is important for Canada since it needs to feed three battery plants that will be built here in the coming years. It has committed to invest more than $30 billion through incentives to auto and battery makers to build these plants.
Wilkinson said his team has “eyes on a number of specific projects” for each mineral that will allow Canada to be “fully sufficient to feed” the battery plants and supply allies.
The current production situation of critical minerals in Canada though is grim. There are many explorers, but Canadian companies do not produce enough battery materials yet.
The minister intends to change that by speeding up the time it takes to build a mine, which can currently take up to 10 to 15 years due to regulatory hurdles. He wants to bring that down to five years.
“You will see a more detailed action plan on exactly what we intend to do with respect to regulatory and permitting processes within the next few months,” he said.