It’s no secret that the global mining industry felt the pressure over the past four years. Nowhere was the slowdown more acute than in the exploration space, where the dialling back of budgets was felt early and hard says MSA Group.
Ramping up of budgets has, as usual, taken longer than expected to be felt in order to give the brokers and nomads in London the spring in their step that makes us ‘explorationists’ feel confident again.
It appears that that time has come, however, led predominantly by unprecedented forecast demand for “green” battery metals that will be required to underpin the electric vehicle (EV) revolution.
This article first appeared in Mining Review Africa Issue 6 2018
It’s not back to the heady days of 2005/2006 and there is still a great deal of geopolitical concern lingering, but the suits in London are definitely a little more jaunty.
From where I sit though, something about the current recovery feels different to previous ones.
The post GFC recovery was too quick and too sentiment-driven to be sustainable, a knee-jerk reflex in an industry where the fundamentals were deeply flawed.
Now though, we appear to have a real, pressing demand for many of the elements that are contributing to the upswing in exploration and mining spend.
MSA has, in the past 18 months, been privileged to become involved in the mining industry in India and nowhere, outside of China, is the need for natural resources to fuel and sustain future growth as pronounced as in the second most populous country on earth.
Although the authenticity of the statement requires some challenging, the Indian government has recently supported a push to electrify every vehicle on Indian roads by 2030.
This is ambitious to say the least, so we went about doing some of our own research to quantify what the implications of this would be.
Essentially, India would need to bring into production 40 average-sized lithium pegmatite mines by 2030, and have a considerable pipeline of projects to ensure ongoing sustainability.
They also require >1 000% increases to their cobalt and nickel endowments.
That’s just for the batteries to power the projected numbers of buses, cars and scooters likely to be on Indian roads by 2030.
Batteries of course need to be charged, and our estimates are that India would need to add around 36 million MWh to their power grid to keep the EV’s moving.
Commendably, over 30% of the current grid capacity in India comes from renewables.
On a simple (and untrue) assumption that all of this additional generation capacity was to come from nuclear, as opposed to coal or renewables, India would require > 200 Mt of uranium per annum just to achieve this.
These numbers are staggering and, to most minds, beyond attainment.
Regardless, our assumptions in generating them and the firmness of the push to get into the EV space, they do demonstrate is that India is going to have to look outside its borders and the race for the green energy and associated natural resources has truly started.
What applies to India certainly applies to many other developed or rapidly growing economies and it’s no surprise that much of the activity at a junior explorer level in the past 12 – 18 months has been around the battery metals – lithium, cobalt, zinc, nickel, vanadium, graphite and copper and this trend is strongly echoed in MSA’s order book.
The knock-on effects are substantive as well – electrically powered vehicles generally require lighter chassis, so the push towards composites and lightweight metals such as aluminium should further bolster the resources sector.
One of our young geologists recently pointed out that a globally ageing population is going to require a lot more future “support” in terms of prosthetics and walking aids which will need to be light and strong as well!
From an African perspective, we are blessed with geological endowment that plays straight into the EV revolution – world-class hard-rock lithium, nickel, cobalt, copper, zinc and aluminium and graphite resources abound in sub-Saharan Africa.
Cobalt in particular has attracted significant interest from juniors and with the concerns around conflict-free sourcing, many jurisdictions outside the DRC are suddenly becoming increasingly more attractive.
Similar issues around the tin and tantalite production from the DRC are seeing juniors, miners and technology companies looking at projects elsewhere like Namibia and Zimbabwe.
Both these countries have a history of tin and tantalite (and lithium) production and opportunities abound in both the primary (hard-rock) and tailings retreatment space and both countries are attractive commodity destinations; despite Zimbabwe’s uncertain political future.
The current revival in the minerals industry is underpinned by improved demand fundamentals, although in a different suite of minerals to previous bull commodity markets. This demand is supported by global government strategic agendas to shore up supply and offtake to ensure long term sustainability. It is clear that Africa has a pivotal role to play in this fourth industrial revolution but how the various countries choose to play their roles, remains to be seen.
About the author
Brendan Clarke is an exploration geologist with 18 years of experience across the commodity spectrum globally. Brendan has worked in over 30 countries, including most of sub Saharan Africa, the Middle East and India, on projects ranging from early-stage target generative plays to definitive feasibility studies on projects that have become operational mines. In his role as Head of Geology at MSA, Brendan is responsible for the delivery of between 30 and 50 projects annually and is focused on delivering world-class, innovative and cost-effective solutions to his client base.