Small Canadian miners in pole position for electric vehicle battery boon

VANCOUVER: Canadian developers of cobalt and lithium mines stand to benefit from a round of investments from the makers of electric vehicles and the batteries powering them, a potential gamechanger for small miners short on money to develop deposits of these critical battery ingredients.

Toronto-listed cobalt companies, Ecobalt Solutions and Fortune Minerals,areintalks,rangingfrom preliminary to more advanced, with more than a dozen groups, including car and battery makers, on financing their projects, their chief executives told Reuters.

The interest in miners from downstream players along the battery supply chain – a new area of investment for most – would provide a life-line to miners at time when equity funding for developers remains relatively tight after a five-year downturn on weak metals prices.

“We anticipate additional transactions in the coming months and years. It is a function of demand-supply imbalance,” said John Kanellitsas, President and Vice Chairman of Lithium Americas Corp, which raised nearly US$300 million this year for a project in Argentina.

A string of potential financing deals in Canada comes after a handful of predominantly lithium miners in Australia – the world’s biggest lithium producer - secured investment from mainly Chinese automakers and battery makers this year looking to lock in future raw material supply.

Lithium mine developers have been able to secure funding earlier than their cobalt peers as fears of a supply shortage started in late 2015, when cobalt was still in surplus.

Like lithium, cobalt’s price has doubled - but most of that upswing has come this year on concerns of multi-year shortfalls in the next decade as demand from the electric vehicle sector surges.

Cobalt’s fortunes are more closely tied to batteries than lithium’s: about 55 per cent of all cobalt goes into battery chemicals compared to about 40 per cent for lithium, according to a December 4 BMO Capital Markets report.

Althoughtherearenoguarantees that deals will be struck, the cobalt miners, who have been advancing their projects for more than a decade, are in their strongest position yet to secure funding, said Cormark Securities analyst MacMurray Whale.

That is because of deficit forecasts due to constrained supply and expected soaring demand from the electric vehicle market. “All those elements together suggest to me that it can’t be better,” Whale said.

With more than 1,200 publicly listed mining companies, Canada has long been the global hub for mine developers with projects around the world. — Reuters