Supply-chain problems in the forecast as battery metals demand surges – study

Staff Writer | April 18, 2023 |

Lithium mine on the Salinas Grandes salt flat Jujuy province, Argentina.

 (Image by Earthwork, Flickr.)

An expected surge in demand for battery-grade lithium, nickel, cobalt, manganese and platinum is set to create a variety of economic and supply-chain problems, according to new research out of Cornell University.


In a paper published in the journal Nature Communications, senior author Fengqi You and his colleagues examined 48 countries that are committed to playing a strong role in electrifying transportation, including the US, China and India.

Under a scenario where 40% of vehicles are electric by 2050, the need for lithium globally will increase by 2,909% from the 2020 level. If 100% of vehicles are electric by 2050, the need for lithium more than doubles to 7,513%.

From the years 2010 to 2050, in a scenario where all vehicles are electric, the annual demand for lithium would increase globally from 747 metric tons to 2.2 million metric tons.

By mid-century, for example, the demand for nickel eclipses other critical metals, as the global need ranges from 2 million metric tons, where 40% of vehicles are electric, to 5.2 million metric tons where all vehicles are electric.

The paper also notes that the annual demand for cobalt (ranging from 0.3 to 0.8 million metric tons) and manganese (ranging from 0.2 to 0.5 million metric tons) is expected to rise by the same order of magnitude in 2050.

“The unstable supplies of critical metals and minerals can exacerbate supply risks under surging demand,” You said, pointing to World Bank data that show that currently, critical metals and minerals are centralized in politically unstable countries such as Chile, Congo, Indonesia, Brazil, Argentina and South Africa.

Given this forecast, the researchers urge caution on the electrification of heavy-duty vehicles, which require more critical metals than other vehicles. Although they account for only between 4% and 11% of the total road fleet in some countries, battery-related critical metals used in heavy-duty electric vehicles will account for 62% of the critical metal demand in the decades ahead.

In their view, building a circular economy would be indispensable if it achieved a closed-loop supply chain of critical metals in the future. Thus, a number of strategies should be considered to promote the recycling efficiency and recovery rate of end-of-life batteries at a proper pace.

They also suggest that countries should adopt policies that prioritize alternative designs for cathodes/anodes and fuel-cell systems to reduce the reliance on primary critical metals.

Finally, the Cornell group proposes that decarbonization targets for road transportation should consider not only electric vehicle deployment but also the timing of carbon peak and neutrality, and accurate emission budgets.

B2Gold begins phased closure of Namibia mine

MINING.COM Editor | April 18, 2023 

B2Gold gained access to the Otjikoto mine through its acquisition of Auryx Gold in 2011. (Image courtesy of B2Gold.)

B2Gold (TSX:BTO)(NYSE: BTG) said on Tuesday it had begun the phased closure of its Otjikoto gold mine in Namibia, once the country’s largest producer of the precious metal.


The mine, which began commercial production in March 2015, has reached the end of its open-pit gold resource, B2Gold said, adding it would gradually reduce its production until 2031, when it will cease operations completely.

Otjikoto’s production reached 161,614 ounces of gold last year, representing about 16% of B2Gold’s total output for 2022.

“B2Gold Namibia has commenced with the implementation of its Phased Mine Closure Plan at the Otjikoto mine. Phased downscaling of operations, in line with the closure plan, are only scheduled to commence during the first quarter of 2024,” a spokesperson told Reuters.

The last year of full open-pit mining production will be 2023, with output expected to be between 190,000 and 210,000 ounces of gold.

B2Gold noted it would continue to develop its underground mine at Otjikoto, which could extend the mine-life and replace some of the lost production from the open-pit operation.

The Canadian miner also has operations in Mali and the Philippines as well as exploration projects in Uzbekistan, Finland and Colombia.

It is also in the midst of acquiring Sabina Gold & Silver (TSX: BTO)(NYSE: BTG), a Canadian exploration and development company, which owns five high-grade gold projects in Nunavut.

One of these projects, Back River, is expected to start producing gold in 2025 at an annual rate of 300,000 ounces for 15 years.

Chile government says it will reach deal with copper producers before key mining tax vote

Bloomberg News | April 18, 2023 | 

Chile government. Credit: Wikimedia Commons

Chile’s government is confident it can smooth out differences with the country’s largest mining companies before a key vote in congress this week on a new mining royalty bill.


The administration of President Gabriel Boric is optimistic over an agreement between Tuesday and Wednesday, Mining Minister Marcela Hernando said at a seminar Tuesday in Santiago.

“We understand that several points of consensus have been reached,” Hernando said.

The comments come after the government presented amendments to the bill on Monday that would lower the maximum tax burden for copper producers to 48% of operating profit, from the 50% previously proposed. This would bring the average tax rate to 42.1% based on prices over the past 10 years, according to previous data presented by Finance Minister Mario Marcel.

Still, there are differences over calculations of the tax burden, with Juan Carlos Guajardo, who heads the consulting firm Plusmining, putting the average nearer 46%.

“The ideal for the mining industry in Chile would be to lower it a few more points,” Guajardo said in a message.

The Senate’s Finance committee will vote on the bill later Tuesday with a vote at the Senate floor scheduled for Wednesday. The bill will then head back to the lower house for a potential final vote.

(By Eduardo Thomson and James Attwood, with assistance from Valentina Fuentes)

Anglo American’s Los Bronces project granted environmental permit

Reuters | April 17, 2023 | 

Near the tailings facility for Los Bronces copper mine in Chile. 

(Image courtesy of Anglo American | Flickr.)

Chile’s ministry of environment on Monday said that a committee of government ministers approved an environmental permit for a $3 billion extension of Anglo American’s Los Bronces project in Chile.


Environmentalists and social groups have criticized the initiative located in the Andes Mountains, near the Chilean capital, for its long-term impact on a nearby glacier, as well as on the area’s water supply.

Last May, the global mining company said it would continue to seek approval for the Los Bronces copper mine after being initially rejected by the Environmental Assessment Service (SEA).

The committee – made up of the ministries of mining, agriculture, energy, economy, and health and chaired by the environment ministry – is not part of the Chilean EAS but has the power to hear and review environmental resolutions.

In a statement, the ministry of environment said the committee approved the permit on the grounds of a series of “demanding” environmental conditions proposed by the company.

The National Mining Society (Sonami) union said the approval would be a “powerful signal” to promote investment in the sector.

The Los Bronces extension seeks to sustain production levels and extend the mine’s life through to 2036, according to the company.

Anglo American said last year that it would supply half of its Los Bronces project with desalinated water from 2025, amid environmental criticism.

The project is part of Anglo American Sur, owned by Anglo American (50.1%), the Codelco-Mitsui consortium (29.5%) and Mitsubishi (20.4%).

Last year, Chilean authorities rejected a project that sought to extend the life of the small El Soldado copper mine, also owned by Anglo American.

(By Fabian Cambero and Isabel Woodford; Editing by Brendan O’Boyle and Sandra Maler)

Codelco sees new synergies after Anglo American project approval

Reuters | April 18, 2023 |

Andina mine, Chile. Image courtesy of Codelco.

Chile’s Codelco, the world’s largest copper producer, sees greater synergy with its Andina mine and Anglo American’s neighboring Los Bronces mine following an environmental permit approval, the state-owned company’s chief executive said on Tuesday.


A committee of Chilean ministers approved the Los Bronces Integrado environmental permit on Monday, paving the way for a $3.3 billion extension of the project.

“There are always new synergies, mining has dynamics that progress as projects advance,” Codelco’s CEO Andre Sougarret told reporters after a panel at the World Copper Conference in Santiago.

“We are confident that this will generate a positive future for both operations,” he added.

Codelco is a shareholder in Anglo American Sur, which owns Los Bronces.

Conditional measures for the approval of Los Bronces Integrado include a joint study with Codelco’s Andina mine on monitoring particulate matter emissions.

“We have been working on it,” Sougarret said in regards to the monitoring, but did not provide details.

(By Fabian Andrés Cambero and Alexander Villegas; Editing by Marguerita Choy)

Norwegian Crude Becomes Mainstay For EU Refiners As They Ditch Urals

By Tsvetana Paraskova - Apr 19, 2023

• The price cap on Russian crude has created an opportunity for Norwegian crude. 
• 
  
• Norway's Johan Sverdrup crude is now a top choice for European refineries.
• 
  
• So far this year, only 2 million barrels of Johan Sverdrup crude have made their way to Asia, compared to 100 million barrels in 2021

The continuous shift in oil trade flows following the EU embargo on Russian exports is a huge win for the crude from Western Europe's largest oilfield offshore Norway. 

Norway's Johan Sverdrup crude is now a top choice for European refineries that used to rely on Russia's flagship grade, Urals, before the Russian invasion of Ukraine.  

The Johan Sverdrup crude from the same-name field, which came online in 2019, is similar in quality to Russia's Urals and has been increasingly flowing to European customers over the past year at the expense of Asian destinations. Urals, for its part, is now flowing east to Asia and no longer to Europe after the EU embargo on imports of Russian oil, according to traders and tanker-tracking data cited by Reuters.   

So far this year, only 2 million barrels of Johan Sverdrup crude have made their way to Asia, compared to 100 million barrels in 2021, the year before the Russian invasion of Ukraine in February 2022, per Refinitiv Eikon reported in the Reuters analysis. 

Urals, on the other hand, is selling in India and China and reportedly above the $60 price cap in recent weeks. India is estimated to account for over 70% of the Urals shipments in April, and China is receiving 20% of those shipments so far this month, according to Reuters estimates. 

China and India haven't joined the so-called Price Cap Coalition of mostly Western nations that imposed a price cap on Russia's crude oil if the cargoes are using Western insurance, shipping, and financing.

Since the OPEC+ announcement of additional cuts through the end of this year, the price of Urals has moved higher, threatening the price cap imposed in a bid to hurt Russia's oil revenues. 

The Johan Sverdrup and Urals grades, similar in content and gravity, have now switched their previously top destinations, highlighting the major shift in global crude oil flows since the West imposed sanctions on Russia's oil. 

Johan Sverdrup has medium density and medium sulfur content, lower than the sulfur content of Urals, which is also a medium sour crude. Both grades have high diesel yields. 

Johan Sverdrup flows to Asia have fallen off a cliff, but hit a record high to Poland, according to Refinitiv Eikon data. Poland stopped importing Russian crude via pipeline in February this year. In the following month of March, imports of the Johan Sverdrup crude at the Polish port of Gdansk soared to a record-high of more than 8 million barrels, the data showed. 

Johan Sverdrup also accounted for at least 50% of Finland's crude oil imports and is also heading to Lithuania, according to Refinitiv Eikon. 

With the major trade shift, most voyages of Johan Sverdrup cargoes are now much shorter than the time spent on shipments to Asia, while Russia pays for longer trips of Urals from its Baltic Sea ports to India and China. 

Johan Sverdrup is estimated to be able to meet up to 7% of European oil demand, the operator of the oilfield, Equinor, says. 

The Johan Sverdrup oilfield, Western Europe's biggest oilfield, which came online in 2019, produced 535,000 barrels per day (bpd) of crude oil, and with Johan Sverdrup phase 2 started up at the end of last year, the giant oilfield is now pumping around 720,000 bpd.

Johan Sverdrup alone can meet 6-7% of the daily oil demand in Europe. Recoverable volumes in the Johan Sverdrup field total 2.7 billion barrels of oil equivalent, Equinor says.                     

"Johan Sverdrup accounts for large and important energy deliveries, and in the current market situation, most of the volumes will go to Europe," Geir Tungesvik, Equinor's executive vice president for Projects, Drilling & Procurement, said in December 2022.  

By Tsvetana Paraskova for Oilprice.com

Why Biden Needs To Relax Sanctions Against Venezuela

By Matthew Smith - Apr 19, 2023

• Biden administration has loosened sanctions on Venezuela's petroleum industry to alleviate the US's dependency on foreign oil.
• 
  
• U.S. sanctions and mismanagement of Venezuela's petroleum industry have led to a drastic decline in production, with the country now only producing 716,000 barrels per day.
• 
  
• Chevron has been authorized to resume lifting petroleum from Venezuela provided that PDVSA does not profit, but it still only represents a small fraction of the oil and derivative petroleum products imported from Russia, prior to White House restrictions.

The recent shock OPEC+ production cut of nearly 1.2 million barrels per day caught the world by surprise and caused the price of oil to spiral higher, with Brent soaring 7% over the last two weeks to $85 per barrel. The cartel made this substantial production cut despite the considerable displeasure voiced by U.S. President Joe Biden and the potential it has of sparking a global recession at a time when inflation is rampant. The decision confirms Saudi Arabia’s return to being a global geopolitical powerbroker and the Biden White House’s inability to influence a key Middle Eastern ally. This forced the White House to consider other means of boosting domestic oil supply as the summer driving season looms and pressure grows to refill the Strategic Petroleum Reserve. It is the pariah state of Venezuela, the world’s second-largest oil exporter in 1998, which Washington views as a potential solution.

Strict U.S. sanctions, along with decades of mismanagement, malfeasance and corruption, have crippled Venezuela’s economic backbone, the country’s once monumental petroleum industry. From a peak of pumping over three million barrels per day in 1998, production has collapsed since Hugo Chavez took office in February 1999 to be only 716,000 barrels per day during 2022. Crippling U.S. sanctions, particularly those imposed by President Donald Trump in January 2019, coupled with endemic corruption and a dearth of skilled labor as well as an investment are responsible for the swift implosion of Venezuela’s oil industry. 

Since taking office in January 2021, President Biden has progressively loosened sanctions against Venezuela as part of a strategy to ease the humanitarian crisis engulfing the country, which has been described as the worst to occur outside of war. The push to ease sanctions accelerated after Moscow invaded Ukraine and Washington, along with European allies, imposed restrictions on Russia’s oil exports, causing energy prices to soar. The international Brent benchmark surged to over $130 per barrel, which along with spiraling natural gas prices because of Russia cutting crucial gas supplies to Western Europe, caused inflation to surge and precipitated an energy crisis. This added to the sense of urgency for Washington and its allies to find alternative sources of oil and natural gas. 

By March 2022, the White House had sent an envoy to Caracas to initiate discussions with the autocratic Maduro regime, the first diplomatic contact since Trump ratcheted up sanctions in early January 2019. In June 2022, the Biden administration authorized Italy’s Eni and Spain’s Repsol to ship Venezuelan crude oil to Europe in exchange for reducing debt owed by PDVSA, although Maduro eventually blocked those shipments. In a somewhat surprising move, Biden further eased sanctions in November 2022 after Maduro agreed to recommence negotiations with Venezuela’s opposition. The U.S. Treasury authorized Chevron to recommence lifting petroleum in Venezuela on the condition that PDVSA doesn’t profit from the petroleum extracted and all oil produced is only exported to the U.S.

While this is a significant political event, it has done little if anything to provide material relief from the constraints impacting U.S. oil supply. The four joint projects in which Chevron participates with PDVSA are pumping an estimated 90,000 barrels per day. Shipping documents show that Chevron was shipping the equivalent of around 100,000 barrels per day of Venezuelan crude oil to the U.S. during February 2023. Those volumes are significantly less than the 209,000 barrels per day of crude and 500,000 barrels daily of derivative petroleum products imported from Russia by the U.S. during 2021, prior to White House restrictions. Those numbers pale in comparison to the 12 million barrels per day pumped by the U.S. oil industry during 2022 and the 20 million barrels per day consumed last year.

When it is considered that Venezuelan production growth has stalled, with the embattled OPEC member only pumping 700,000 barrels per day for February 2023, it is difficult to see how lifting sanctions will materially boost the global oil supply. This is further emphasized by the fact that it will take a massive amount of capital estimated to be between $110 billion and $250 billion, invested over a decade to materially boost production. Venezuela’s petroleum industry infrastructure is so heavily corroded from decades of under-investment in critical maintenance, malfeasance and a lack of crucial parts as well as skilled labor it will take a decade or longer to restore output to over two million barrels per day.

It is only Western energy companies such as Chevron which possess the deep pockets, skilled labor and technical know-how required to rebuild Venezuela’s shattered oil industry. International energy companies will not commence making the required investment until they can operate in Venezuela profitability without impediment from either strict U.S. sanctions or the authoritarian Maduro regime. For these reasons that it makes little sense for the Biden White House to ease sanctions solely in response to global petroleum supply constraints. More so, when it is considered that Venezuela is a member of OPEC and even if capable of significantly bolstering production, the country will be bound by the production quotes and restrictions imposed by the OPEC+ consortium.

Nevertheless, the humanitarian situation in Venezuela is dire. A combination of endemic long-standing corruption, gross economic mismanagement, the collectivization of the means of production and harsh U.S. sanctions caused Venezuela’s economy to collapse, especially after the oil industry crumbled. This triggered an immense economic implosion, described as the worst to ever occur during modern times outside of war, 

which has left at least 77% of Venezuelans living in extreme poverty. The crisis is so severe that an estimated seven million Venezuelans have fled their country since 2015. It is for these reasons that Fernando Blasi, the latest Venezuelan opposition representative to the U.S., recently urged Biden to relax harsh U.S. sanctions against the pariah state. Blasi went on to state that if sanctions aren’t relaxed, Washington risks becoming a scapegoat for Venezuela’s economic and humanitarian hardships, which will only strengthen the position of Maduro’s dictatorial regime.

This is in stark contrast to the previous hardline approach taken by Venezuela’s opposition, where many members were in favor of the maximum pressure approach taken by the Trump administration. That pivot has occurred because there is unmistakable evidence that the policy of maximum pressure has failed. Despite the Trump White House’s attempts to unseat Maduro, the socialist autocrat’s power has strengthened, and he has solidified his control of the levers of power while eliminating most of his opponents along the way. This includes the White House’s handpicked interim Venezuelan President Juan Guaido, who lost his seat as president of the National Assembly, which destroyed his legitimacy. For that reason, Guaido not only lost the backing of many governments internationally, such as the European Union, but the former lawmaker was ousted from his role within the opposition.

Despite strict U.S. sanctions blocking sales of Venezuelan crude oil, which is the petrostate’s primary export, the crisis-riven country’s economy returned to growth during 2021, with gross domestic product growing 0.5% and then by another 8% in 2022. That somewhat surprising development has further cemented Maduro’s grip on power and is providing handy anti-U.S. and anti-opposition propaganda for the authoritarian socialist regime. For these reasons, AP quoted Blasi as stating: “If we continue down this path, Venezuela is destined to be another Cuba,”. While Venezuela, despite possessing the world's largest reserves of 304 billion barrels, is incapable of materially boosting global oil supplies, and there are pressing geopolitical and humanitarian reasons for the Biden White House to substantially relax sanctions. For those reasons, the White House must act urgently if another brewing Latin American political crisis is to be averted.

By Matthew Smith for Oilprice.com

Nuclear Troubles Send French Winter Power Prices Soaring

By Michael Kern - Apr 19, 2023

France’s power prices for early 2024 are double the German prices for next winter as the huge French nuclear fleet continues to show signs of weak output and availability.  

The French power price for the first quarter of 2024 was at $455 (416 euros) per megawatt-hour (MWh) on Wednesday. That’s more than double the price for the same period in Germany, where the power price was at $185 (169 euros) per MWh for early 2024, according to data compiled by Bloomberg.

France has had troubles at many of its nuclear reactors, half of which have been shut down for repairs and maintenance at several times over the past year.

Germany, meanwhile, took its last three nuclear power plants offline on Saturday, ending more than six decades of commercial nuclear energy use. Germany ended the nuclear power era despite continued concerns about energy security and energy supply after the Russian invasion of Ukraine and the end of pipeline natural gas deliveries from Russia, which was the largest gas supplier to Europe’s biggest economy before the war.

In France, concerns about the operations at France’s large nuclear power fleet resurfaced last month after the French nuclear safety authority, ASN, told energy giant and large nuclear reactor operator EDF to review its program of reactor checks, following the finding of another crack at a nuclear power plant.

This led to an 8% one-day surge in French power prices for next year, the biggest jump since the end of January.  

For much of last year, France’s nuclear power generation was well below capacity, as more than half of the country’s reactors were offline at one point in the autumn due to repairs or maintenance.  

At the moment, French nuclear power plants are producing 17.5% less than the average output rate for 2020 and 2021. That’s down from 23% last year, so there is some progress, but concerns remain.  

Wind Power Has A Profitability Problem

By Felicity Bradstock - Apr 19, 2023

• Despite the sharp growth over the last decade, companies are realising that it is difficult to translate wind power into profits.
• 
  
• Some of the world’s biggest wind energy companies are making huge losses despite their economies of scale.
• 
  
• Many companies remain optimistic about the growth prospects for wind energy because of generous government support.

Despite the strong push to shift to green by installing more renewable energy capacity, many are asking whether the wind energy industry will be able to bounce back quickly from huge losses last year to develop the wind power needed to fuel the green transition. In 2022, several major wind energy firms reported billions in losses due to a plethora of challenges that have made it harder to develop new wind farms worldwide. Now the fear is that companies around the globe may be unwilling to invest in the wind projects needed to accelerate the movement away from fossil fuels to green alternatives if they cannot see the potential for profits. 

Wind energy has grown exponentially in recent years thanks to a huge amount of funding in research and development and the rollout of several large-scale onshore and offshore wind farms around the globe. Innovations in turbine technology have led to the development of giant power generators that are much safer, more reliable, and quieter than their predecessors. 

In 2021, electricity generation from wind power grew by a record 273?TWh, a 17 percent increase from the previous year. This rise was around 55 percent higher than that of 2020 and was the highest of all renewable energy technologies. The reason for such rapid growth was the huge investment seen in the development of wind energy projects worldwide, with capacity additions reaching 113?GW in 2020 compared to 59?GW in 2019. The global wind power capacity stood at around 1,870 TWh in 2021, compared to 343 TWh in 2010. Although this figure will have to increase substantially more to meet net-zero goals, to 7,900?TWh in 2030.                

Despite the sharp growth over the last decade, companies are realising that it is difficult to translate wind power into profits. There is no problem when it comes to the global demand for wind power, which continues to grow year after year as countries attempt to curb their reliance on fossil fuels. But wind power research and development, as well as the construction of enormous wind farms, don’t come cheap and the return so far is not what many companies expected. 

In June last year, there were reports that some of the world’s biggest wind energy companies were battling heavy losses. Vestas Wind Systems, General Electric Co., and Siemens Gamesa Renewable Energy all faced extremely high raw material and logistics costs following the pandemic when supply chains were disrupted. This came after an arms race in which wind majors were competing to build the tallest, most powerful wind turbines at whatever cost would put them ahead of the rest. Ben Backwell, CEO of the trade group Global Wind Energy Council, stated “What I’m seeing is a colossal market failure.” Backwell added, “The risk is we’re not on track for net zero [emissions] -- and the other risk is the supply chain contracts, instead of expanding.” 

By November 2022, GE was predicting $2 billion in losses in its renewable energy division, largely due to inflation and supply chain challenges. This has led the company to make cuts, with plans to reduce its global headcount at onshore facilities by 20 percent over a year. Many wind companies have felt the triple whammy of inflation, reduced tax incentives, and rising interest rates of the last year, adding to the supply chain disruptions of the pandemic. Vestas, the world's biggest wind turbine maker, reported its first annual loss in almost a decade in 2022, of around $1.68 billion. The firm said that its sales last year fell by around 7 percent, and it faced rising costs across several areas. The company stated in its annual report “Vestas and the wind industry were ready to provide solutions to address the energy crisis, but were constrained by cost increases, logistical challenges, outdated market designs and permitting processes.” Meanwhile, Siemens Energy reported a net loss of more than $943.48 million. 

Experts are now questioning whether companies will be able to bounce back from these losses to produce the 250-GW a year growth required to meet global 2030 wind capacity targets. Luckily, despite the losses, many companies remain optimistic about their prospects. In the U.S., this has partly been driven by the new tax credits and subsidies expected to arrive from Biden’s 2022 Inflation Reduction Act. Further, with demand for wind power expected to continue growing for decades to come, the challenges faced now are seen as a temporary blip on an overall positive trajectory. 

Aaron Barr, an industry analyst at Wood Mackenzie, stated “The wind energy market is stuck in this very strange paradox right now… We have the best long-term climate policy certainty ever, across all the largest markets, but we’re struggling through a period where the whole industry, particularly the supply chain, has been hit by issues that have culminated in destroying profit margins and running many of the top OEMs [original equipment manufacturers] and their component vendors into negative profitability territory.” 

The promise of high demand and new grants and subsidies are keeping the wind energy industry’s spirits high, and we can expect more incentives for new wind capacity worldwide as other countries and regions introduce their own climate policies. But governments around the globe must continue to provide incentives to encourage greater development to ensure that companies are not deterred by major recent losses from rolling out new wind projects. 

By Felicity Bradstock for Oilprice.com