Tag: zinc

The Role of Critical Minerals in Clean Energy Transitions (IEA March 2021)

The Role of Critical Minerals in Clean Energy Transitions (IEA March 2021)

Today, the global energy system is in the midst of a major transition to clean energy. The efforts of an ever-expanding number of countries and companies to reduce their greenhouse gas emissions to net zero call for the massive deployment of a wide range of clean energy technologies, many of which in turn rely on critical minerals such as copper, lithium, nickel, cobalt and rare earth elements. This World Energy Outlook special report on The Role of Critical Minerals in Clean Energy Transitions identifies risks to key minerals and metals that – left unaddressed – could make global progress towards a clean energy future slower or more costly, and therefore hamper international efforts to tackle climate change.

This paper, The Role of Critical Minerals in Clean Energy Transitions, by the IEA is a detailed look at the critical minerals and metals required for the perceived (forecast) growth in demand. It includes a host of references in its appendix as well.

It is very worth reading.

However it is Matau Advisory’s view that the report pays little attention to, and simply assumes the ability or capacity of the resources industry to supply the required raw materials (minerals & metals) at the proposed growth rates. On average it takes 6-10 years from discovery drill hole through evaluation, feasibility studies, permitting, environmental & heritage studies (often conducted in parallel), Financial Investment Decision, construction & development, commissioning, to production at name-plate rates. Many of the key commodities are currently in short supply (at current prices) even at the relatively low demand growth rates of the current time.

The supply of the key minerals and metals (Cu, Ni, Li, Mn, Co, graphite, Cr, Mo, Zn, REE, Si, and some others) will be critical to achieve those growth rates.

The Role of Critical Minerals in Clean Energy Transitions (IEA March 2021)

Commodity Review 20191004 by Andrew Pedler – Now Available

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

  • OPEC+ participants are girding their loins for potentially more production cut commitments.
  • The USA – China tariff talks & trade wars continue to stunt trade oriented decisions.  Some unexpected consequences (see tin).
  • Base metal inventories continue to remain tight.  In a broad sense not much has changed.  Base metal prices are struggling to cope with the negative fears driven largely by the USA-China trade tensions.  Low base metal inventories are getting more attention in the media than previously. 

 SUMMARY  

*Copper  Trade wars continue to deter activity.  Outlook for future supply remains tight.

Cobalt  Co inventory from the previously failed Fanya Metal Exchange to be auctioned on Oct 5th.

*Nickel  Ni prices responding to low refined Ni stocks and looming ban on ore exports.

*Zinc & Lead  Northern Canadian infrastructure proposed to deliver remote new mine production.   IBG Citronen.

*Tin  A bad vegetable harvest stings tariff affected USA steel makers.

Aluminium  Vietnam imposes anti-dumping tariffs on Chinee products.

*Gold  “Global policy uncertainty is at an all-time high”.

Platinum & Palladium  Pd prices have run to record highs, on demand growth and supply deficit.

*Oil  Nigeria prepared to make cuts to meet its OPEC+ commitments.

Coal  Chinese buying of low price met coal imports continues.

*Iron Ore  India to auction mining leases.  May disrupt local supply and require imports to balance demand.

Shipping  Cape & Panamax rates reduced this week, on easier grain & iron ore demand.

General 

*Port of Singapore Shipping Traffic:  Bulk Carriers & Tankers +ve growth.

*USA – Construction Spending:  public non-residential spending +ve, but private residential is -ve.

*USA – PMI:  Still indicating a contracting manufacturing economy.

*Japan – Industrial Production:  Overall modest contraction in IP.

The Role of Critical Minerals in Clean Energy Transitions (IEA March 2021)

Some markets are capitulating … too much uncertainty to make decisions.

Contango is when forward prices (3mo fwd) are higher than cash (spot) prices, i.e. the market is more confident of supply now than into the future.  Backwardation is the reverse, when cash prices > fwd prices, i.e. markets are more worried about (prepared to pay more for) near term supply than future supply.

Last Friday, after Trump’s decision to tax / tariff all imports from China, markets appear to have capitulated in frustration, at trying to determine what direction the market(s) will move next.  We have seen previously that when a base metal (Cu, Zn, Pb, Ni, Sn, Al) market cannot figure out the direction of the market, that the prices (cash & 3mo fwd) move to parity (cash = 3mo fwd).   I cannot recall seeing all six base metals markets heading so close to parity as they have last Friday.  Such convergence is very unusual.

For some further detail see this week’s commodity review Commodity Review – 02 August 2019  .

The Role of Critical Minerals in Clean Energy Transitions (IEA March 2021)

Commodity Review 20190315 by Andrew Pedler – Now Available

China

Comments of particular interest are noted with ‘*’. 

SUMMARY  

*Copper  Pakistan’s military to take a key role in development of Reko Diq.

*Cobalt  Sector investors may not appreciate how quickly EVs are being adopted.

*Nickel  Nickel Sulphate:  demand growth to be driven by the auto and chemicals industries.

*Zinc & Lead  Namibian Zn refinery suspends operations.  Global Pb markets to be in ‘sizable’ deficit for 2019.

Tin  Reduced Chinese consumption in 2018 was offset by consumption in the rest of the world.

Aluminium  Venezuela:  no power, no aluminium.

Gold  USD gold price fell against others, so at least USD gold price increased.

Platinum & Palladium  Pd price at record levels.  Russia considered export bans for Pd.

*Oil  Price gains limited by concerns of rising USA production.  OPEC meeting this (16-17th) weekend.

Coal  Australian HCC exports continue to be stable.  Outlook on China ports still uncertain.

Iron Ore  India’s iron ore imports up significantly in 9mo to Dec18.  Exports also decreased markedly.

Shipping  Capesize rates recovered.

General 

*Japan LNG prices :  prices may be about to bottom, though perhaps not just yet.

*USA & Australia – bond yields:  curves approaching inversion.

*China Industrial and Energy Output:  Strong growth in electricity, gas, batteries, glass.

The Role of Critical Minerals in Clean Energy Transitions (IEA March 2021)

CommodityReview 20190215 by Andrew Pedler – Now Available

Venezuela

Comments of particular interest are noted with ‘*’.

Supply issues continue to abound, keeping some tension in most metals markets.  However as China’ ShFE resumed trading, seasonal factors are reported to have led to significant increases in Cu and Zn stock on that exchange.

Geopolitical factors continue to daunt and disrupt global investment and industrial markets.

SUMMARY  

*Copper  Outlook improved on: Chinese funding stimuli, & USA  China trade talks, & dearth of new projects.

*Cobalt  Outlook for ample Co supply, (DRC and others) for the next few years.  Low cash costs needed.

Nickel  PAN restarts Savannah.  KGHM Sudbury shutters Morrison.  Importance of Ni in Li batteries.

*Zinc & Lead  Qld floods disrupt transport for at least a month.  MYR reports world-largest primary Pb Resource.

Tin  Potential demand surge from Li batteries from ~ 2020, though surpluses forecast this year.

Aluminium  China’s Al exports at record high.  Iranian Al output increasing.

Gold  Investors awaiting further developments before making big moves.

Platinum & Palladium  Pd market in deficit.  Pt market in oversupply.

*Oil  Asian oil refineries stuck between OPEC production cuts and USA sanctions.

Coal  Spot met-coal buying by Chinese resumed.  Australian total coal exports up in 2018.

*Iron Ore  Chinese iron ore mines not likely assist supply, instead may cut output due to grades and costs.

Shipping  Asian freight markets returned strongly post Lunar New Year.

General 

Port of Singapore – ship traffic:  Tanker & Bulks traffic strong in January ahead of Lunar NY.

Baker Hughes Rig Counts – World & North America:  rigs widely increasing (lagging oil price).

Japan – LNG prices:  tracking (lagging) oil price movements.