Battery Metals

Australian shares are set to end 2022 as one of the region’s more resilient markets after eye-watering gains from mining firms offered shelter from a global rout.

The benchmark S&P/ASX 200 has fallen 4.5% so far in 2022, beating 19% declines across the S&P 500 and the MSCI Asia Pacific Index. The gauge is still poised for its worst annual performance since 2018.

Coal and oil stocks topped advancers on the index thanks to a global price surge sparked by the war in Ukraine. Technology and real estate shares languished near the bottom as rising interest rates and inflationary pressures weighed on the sectors.

Looking ahead, “resource stocks are set to benefit from the China re-opening theme in the early months of 2023,” said Jason Steed, head of Australian equity research at JPMorgan Chase & Co. “Further into the year, however, the fading of China re-opening impetus and wider global recession fears will drag on the miners.”

Here’s a look at some notable moves in 2022 (year-to-date share moves shown in brackets):

Energy surge

Whitehaven Coal Ltd. (+303%), New Hope Corp. Ltd (+194%) and Woodside Energy Group Ltd. (+64%)

Australian energy firms, one of the world’s biggest exporters of coal and natural gas, outperformed regional counterparts amid buoyant earnings and surging fuel prices. Local coal stocks also rallied as Russia’s invasion of Ukraine disrupted global energy supply.

Whitehaven Coal has gained more than 300% for the year to top the 200-member benchmark. Analysts see modest gains from here, with price targets compiled by Bloomberg suggesting a 9% advance over the next 12 months.

“Demand for coal usually peaks in January, so some of these shareholder returns could grow into the new year as the energy crisis continues,” said Jessica Amir, a strategist for Saxo Capital Markets based in Sydney. But coal prices may “lose heat before the mid year, as Europe and US head into summer and thus demand for coal will cool.”

Lithium rally

Core Lithium Ltd. (+66%), Sayona Mining Ltd. (+46%), Mineral Resources Ltd. (+43%)

Lithium miners also posted stellar gains, with Core Lithium leading the pack.

“2022 saw lithium stocks reach new highs as a higher-for-longer outlook took hold,” said Saul Kavonic, an energy analyst at Credit Suisse Group AG. 2023 could prove a pivotal year that tests the thesis “as more supply comes to market and the demand trajectory risks wobbling amid global economic slowdown,” he added.

Iron ore champions

BHP Group Ltd. (+25%), Rio Tinto Ltd. (+15%)

The country’s behemoth iron ore miners ended the year on a high as China’s abrupt Covid Zero reversal and a steady stream of supportive policies raised the outlook for demand.

But a bold push by China — the world’s biggest iron ore buyer — to centralize a large chunk of its buying under a new single state-owned company may shake pricing dynamics and affect Aussie suppliers.

Toyota and Tesla have expressed interest in the products that may be extracted at the Penco Module project in central Chile, which is owned by Aclara Resources, a rare earths spin-off of Hochschild Mining.

During a radio interview, the mining company’s general manager Rodrigo Ceballos said that although the carmakers are not directly investing in the project, they have been in talks with Aclara and see it as a potential supplier of the raw materials that are key to the electric car industry.

Ceballos pointed out that one of the main drivers of such interest is the need to reduce the reliance on China as a rare earths supplier. He said that this also means that the EV manufacturers are keen on having access to raw materials that have been produced following high environmental and community engagement standards.

The executive also mentioned that Aclara plans to resubmit Penco’s environmental impact assessment application, which had to be withdrawn in March following widespread community opposition. The application also had issues related to the protection of local flora and fauna, which were identified by Chilean authorities.

According to Ceballos, the company’s community engagement team has been strengthened since then, people’s concerns have been taken into consideration and the EIA application has been adjusted to account for the additional demands.

Penco Module, which covers 600 hectares, contains ionic clay deposits that are rich in heavy rare earth elements and are hard to find outside of China, a country that dominates the extraction and production of REEs. Aclara plans to produce rare earth concentrate through a processing plant that will be fed by clays from nearby deposits.

WHEN HANS ERIC Melin thinks of battery waste, he imagines American driveways filled with electric vehicles. They look much like the gas-powered cars of yesterday, large and handsome and well-equipped: family-haulers, boat-towers, off-road ready. They also do things that those cars didn’t do, like go from zero to 60 in three seconds and travel 400 miles without emitting any carbon. The trade-off is that they carry a burden: a massive battery pack that can push the vehicles’ weight to over 10,000 pounds. Most of the time that pack is parked, or is being used to a fraction of its capabilities on school pick-ups or runs to the grocery store. Unless those cars are flying hundreds of miles down the open highway, which they rarely are, the precious atoms of cobalt, lithium, and nickel inside of them have very little to do.

In the United States, fewer than 5 percent of trips are longer than 30 miles. For a gas engine, that represents a portion of a fuel tank. For an EV, range is the result of a more complicated set of decisions about how to best use expensive, hard-to-obtain metals. Melin, an expert in battery recycling, is often asked by governments and automakers how those resources can be stretched. It would be nice if he could tell them that recycling materials from old batteries would do the job. But it can’t. Batteries can power cars for a decade or more, and with EV adoption and the size of the average vehicle increasing every year, old batteries can contribute only so much. So Melin’s suggestion: Start off with less. Use smaller batteries in the first place.

That’s a tough sell, especially in the US, and especially at this moment of EV adoption. “The push has been for more: more power. More range. Faster zero-to-60,” says Gil Tal, a professor at the UC Davis who studies the choices of EV buyers. That’s partially driven by an effort to rescue the narrative about electric cars. For decades, the popular image of an EV was a golf cart that might maroon you on some stretch of godforsaken open road. But battery technology has improved immensely. Now automakers are eager to show off improved power and range—even if that’s more battery than most drivers can actually use. “The big issue is that we buy cars for the dream,” Tal says. “When we buy for a dream in the US, we buy bigger than what we need. We buy four-wheel drive. We buy towing capacity, dreaming that one day we’ll get a boat.”

Mostly, that’s the same fossil-fueled dream as before. For years, automakers have sold high-horsepower trucks and SUVs as “a paradigm of freedom,” says Thea Riofrancos, a political scientist at Providence College who studies resource extraction for low-carbon products. “Really, it’s a paradigm of choicelessness.” Now EVs are carrying the same message—one that’s visible in the proliferation of luxury SUV and truck lineups in the US, Melin adds. Automakers could stretch their materials into selling more cars—like many do in China—but treating EVs as a luxury good translates into higher profit margins per car.

To be sure, EVs of all kinds are lower-carbon than their gas-powered counterparts. But battery size matters. Horsepower has been replaced by variables like range and battery size, which is usually expressed in kilowatt-hours. Those numbers make a difference when it comes to the greenness of the vehicle. According to Minviro, a consultancy that studies lifecycle carbon emissions of products, a 30-kwH battery is about half as carbon intensive as a 60-kwH battery. As Melin notes, the amount of lithium in a Ford F-150 Lightning could have built four or five Nissan Leafs, which are 3,000 pounds lighter but travel half as far. New mines for lithium or cobalt mean more waters poisoned, more species endangered, more homelands scarred. The moral calculus is still in EVs’ favor, especially if it means taking gas-powered cars off the road. But that avoids a harder conversation about what we’re using their batteries for.

When a recent New York Times op-ed asked how often people actually used 300-mile battery range, readers responded with indignation. Each person, it seemed, had a routine long-range commitment that mooted the article’s point: an extensive work commute, season football tickets at their alma mater halfway across the state. A 20-minute recharge along the way simply was not within reason. “This is the kind of silly coastal stuff Republicans like to ridicule,” one wrote.

“People just don’t want to get stuck,” Melin says. Understandable. And in that case, those people have plenty of options for long-range electric cars, if they’re willing to pay for it. But within the climate movement, fears of those kinds of reactions have grown intense. Some prefer to instead offer a message of low-carbon abundance—that clean energy technology can do everything we do now, and more. By that theory, the electrification of the Ford F-150, the best-selling automobile in America, stands above criticism. (One analyst, who did not want to be named, said he thinks the truck is “evil,” whether it’s electric or not.)

Yet even a truck could be much more efficient in terms of materials if it did not promise trips that went as far. Long trips are “drastically overrepresented in people’s minds,” says Tobias Brosch, a psychologist at the University of Geneva who has studied why people don’t buy EVs. The trick is how to convince them otherwise. Information about where and how to charge remains confusingly abstract to people who have only previously used a gas station. They just don’t quite believe it can be convenient. One solution is careful counseling tied to drivers’ individual behaviors—effectively simulating how an EV would work in their current lives.

The good news is that this year buyers started wising up. Tal, who conducts annual surveys of EV buyers, has noticed that as more people buy a second EV, or take a trip in their cousin’s car, they become savvier. They realize that, actually, those occasional trips aren’t deal breakers, that they can stop for a few minutes, use the bathroom, get some fro-yo, and it all feels quite normal. They have more confidence that few trips require extensive planning and that things will get easier in the future as charging infrastructure expands. They enter a new reality, one in which the rhythms of charge and discharge are regular, habitual.

At the same time, companies, pushed by government policies and supply chain pressures, are easing on the quest for “more.” Volkswagen and Tesla are bringing lithium-iron-phosphate, or LFP batteries, long popular in China, where cars tend to be smaller and charging stations are more plentiful, to the US. CATL, the world’s largest producer of batteries, has said it will soon bring sodium-based cells to cars alongside those made of lithium. Both involve reducing demand for some of the most scarce and destructive minerals—in the case of LFP, that’s cobalt, and for sodium batteries, it’s lithium—and translate into lower costs for consumers. But as a trade-off, they also typically promise shorter range.

Those developments are important, says Riofrancos. It’s a good thing if savvier EV buyers, watching their wallets, make the choice to go for the smaller battery option. That will reduce demand for materials. And it’s also a strong signal “that consumer preferences are not set in stone,” she says—that tropes like “range anxiety” are surmountable, or maybe not such a problem after all. It gets us away from that “choiceless” paradigm.

There’s a long way to go, though. There’s much more that Americans could do to get more out of each EV battery, like sharing cars or adopting new technologies that let drivers swap different-sized batteries based on their needs. Both are popular approaches in China, Melin notes. And choosing a smaller battery is less of a big deal than swapping a truck for a car, or giving up car ownership entirely in favor of a bus or ebike—options that would get us to a decarbonized future much faster. Despite localized experiments like fare-free mass transit or tax incentives to go car-free, this year of climate investments has still ultimately tipped in the favor of private vehicles, even as urban sprawl expands and major public systems are trapped in a pandemic-induced death spiral. Is it possible to have more electric cars on the road and fewer cars at the same time? “This will be much harder to change,” Tal says. “We are losing the fight.”

A company soon to settle in West Virginia has developed a battery that offers four days of full discharge using some of the cheapest, most available elements on earth.

“They are now building and will soon deliver a next generation battery. It’s based on iron, water and oxygen. You couldn’t imagine a simpler supply chain,” said George Crabtree, a senior scientist at Argonne National Laboratory and leader of the national labs’ efforts to develop next-generation batteries. “It’s sort of universally available everywhere, and get this—it makes a battery that can discharge at full power for four days. Lithium-ion can discharge for four hours.”

Form Energy spun off in 2017 from the Joint Center for Energy Storage Research (JCESR), the government’s 5-year program (now in its tenth year) to build next-generation batteries for power and transportation.

On Thursday, West Virginia Governor Jim Justice revealed that Form Energy will build a factory for the batteries in the city of Wierton, a former steel-producing town in West Virginia’s northern panhandle about 35 miles from Pittsburgh.

Form Energy’s battery operates on the principle of “reversible rusting.”

“While discharging, the battery breathes in oxygen from the air and converts iron metal to rust,” according to Form’s technology page. “While charging, the application of an electrical current converts the rust back to iron, and the battery breathes out oxygen.”

The iron-air battery would be much too large and heavy for mobile uses like a phone or automobile, which is why those are better suited to lithium ion. But size and weight are not such handicaps when it comes to grid storage.

“The problem that we’re trying to solve is this multi-day energy storage problem, and what you care about most is cost,” Form Energy CEO Mateo Jaramillo told Time recently. “We don’t care so much about how much it weighs, or how much space it takes up. That’s why we have selected an entirely different chemistry.”

Form’s battery represents a significant step in the government’s effort to find a battery that can discharge over 10 days—a long enough period to cover cloudy and windless periods that bring renewables to a halt, Crabtree said. But JCESR continues to search for one that will hold a charge even longer than Form’s iron-air battery.

“It’s not 10 days. We’re only halfway there, 40% there,” Crabtree said during a recent lecture at Argonne. “I would say, I think most would agree that among the commercial battery contenders for long duration storage, that Form Energy is the leading one at the moment. They began operations in 2017 and within what, six years, seven years, 2024, they’re gonna be delivering the battery. So, although this is history, these long-time scales, it is possible to do it on a much faster time scale and that’s what we’re looking for.”

Form expects to begin construction on its West Virginia factory next year and begin manufacturing batteries in 2024. The new plant is expected to create a minimum of 750 new full-time jobs and will represent a total investment of up to $760 million.

West Virginia is concluding the year by announcing yet another major employer plans to grow roots in the state, a cutting-edge battery manufacturer bound for the traditional steel town of Weirton.

“Another great day in the state of West Virginia,” said Economic Development Secretary Mitch Carmichael in an announcement today at the state Culture Center.

The company is Form Energy, which develops energy storage systems. Among its financial backers is Breakthrough Energy Ventures, which includes celebrity investors like Bill Gates, Jeff Bezos and Richard Branson. Gates has touted the company’s work “creating a new class of batteries that would provide long-duration storage at a lower cost than lithium ion batteries.”

In October, the company announced it was then engaged in a robust site selection process for its first full scale battery manufacturing facility. Starting with identifying more than 100 initial sites across 16 states, Form narrowed the site selection to three states. At the time, Form Energy expected to make an announcement before the end of the year.

That time is now, and the state is West Virginia.

“This is as good of an announcement as could ever possibly be made,” Gov. Jim Justice  said at the announcement.

This is the latest in a series of big economic development announcements in West Virginia, including Nucor Steel in Mason County, Commercial Metals in Berkeley County, Berkshire Hathaway companies in Jackson County, GreenPower Motor Company in Kanawha County and Pure Watercraft in Brooke County.

“Opportunity will flash in front of you,” Governor Justice said during today’s announcement.

To lay the groundwork for Form Energy, the West Virginia Economic Development Authority passed a resolution authorizing up to $75 million in economic incentives for the “high impact development project” in Hancock County.

In a meeting led by Governor Justice, the economic development authority approved the incentives on a vote of six yes, two no and one abstention.

Carmichael, the economic development secretary, said the development is in line to produce 750 jobs.

State officials said the total investment is up to $760 million. The governor said his administration plans on working with the Legislature and federal partners to obtain an additional $215 million needed to finalize the agreement.

Hancock County’s largest city is Weirton, long the headquarters of Weirton Steel, which was one of the world’s largest producers of tin plate products and a major West Virginia employer. Production there required more than 10,000 workers at the steel plant’s peak.

“That is the foundation that still exists, those people who made Weirton what it was — that ethos, that work ethic is still in Weirton, and that is the foundation that Form Energy is going to be built on,” said state Senator Ryan Weld, R-Brooke, who represents the district.

“This will be the day when we think back and say that’s where the tide turned for Weirton. All the steps in Weirton’s comeback have led to this, and it’s only the beginning of the story.”

State officials said the battery manufacturer will take shape on 55 acres of the old steel mill site.

Form Energy was founded in 2017 by a team that included Mateo Jaramillo, who had been the head of battery development for Tesla. Jaramillo spoke at today’s announcement at the state Culture Center.

“We’re so pleased to be here and celebrate this moment with you,” Jaramillo said.

The company says that it is “developing, manufacturing, and commercializing a new class of cost-effective, multi-day energy storage systems that will enable a reliable and fully renewable electric grid year-round.”

The company’s battery technology operates through a “reversible rusting” process. The battery breathes in oxygen from the air and converts iron metal to rust. When the battery charges, the reverse happens. An electrical current converts the rust back to iron, and the battery breathes out oxygen.

Form Energy says its first commercial product, an iron air battery, is capable of storing electricity for 100 hours at system costs competitive with legacy power plants.

Form Energy expects to start construction of its Weirton factory in 2023 and begin manufacturing iron-air battery systems in 2024 for broad commercialization.

“We look forward to working with Weirton community leaders in the coming months to determine how we can best support the needs of local residents in the area through lasting community partnership and engagement,” Jaramillo said.

With ample reserves, the US has a number of uncommitted mining projects that would support COPxx climate change targets and the Biden administration’s lofty green energy transition and electric vehicle ambitions under the Inflation Reduction Act (IRA).

A top contender is the Resolution project in Arizona, near the town of Superior in the area known as the Copper Triangle, where mining activity dates back to the 1870s.

The deposit was discovered in 1995 and contained copper tops 10 million tonnes worth nearly $90 billion at today’s prices. The sixth-largest measured copper orebody in the world, it’s a deep underground, high-grade mine using block cave technology that shrinks its environmental footprint.

The world’s number one and two mining companies, BHP and majority shareholder in the project Rio Tinto, have already spent $2 billion on it, including reclamation of a historical mine.

Resolution Copper has enjoyed bipartisan support in the past and in 2014 former president Obama signed into law a Pentagon bill that included a clause inserted by then Arizona Senator John McCain allowing for a land swap so that the project can advance.

Trump, five days before leaving office, published a pivotal report – the Final Environmental Impact Statement – on the project, clearing the last major hurdle for construction to begin, which would take another decade to the start of commercial production.

The thousands of jobs and billions in state and federal revenue the mine will create over its 40+ year life  makes Resolution the perfect candidate for fast tracking and government support under the IRA.

Right?

Wrong.

Biden rescinded the FEIS two months after its publication and Democrats also added specific wording to the infrastructure bill that would block the project.

And so 28 years after discovery, Resolution remains stuck in development hell.

Last month Resolution came before the House Natural Resources committee.

Under discussion was resolution 1378, which is so modest in its ambition, that it’s hard to imagine that the meeting went on for nearly an hour-and-a-half:

“Of inquiry requesting the President and directing the Secretary of Agriculture to transmit, respectively, certain documents to the House of Representatives relating to Resolution Copper mine.”

So in short, in the interest of transparency and oversight, show us the documents you used to throw out a 6-volume, nearly 3,000 page study.

The narrow ambit of the resolution did not stop committee members from airing their views on January 6, the Ukraine war, the “Gestapo tactics” of the Biden administration and at one point the Chair even accused another member of calling him a “copper thief”.

Among the submissions at the meeting was that of Congressman Tom McClintock representing the 4th District of California. Around the 17:00 min mark McClintock perfectly sums up what’s wrong with US mining policy:

“Mr Chairman I simply want to implore you and your democratic colleagues to reconsider the policies you have been pursuing.

“On the one hand you want to mandate not only electric cars but industrial scale backup batteries for wind and solar farms all in the name of saving the planet.

“Yet on the other hand you want to radically restrict mining; also in the name of saving the planet.

“Well you can’t do both.”

The resolution, which again, does nothing but request documents, was adopted by a 22 to 21 vote.

Its worth watching McClintock’s full comments which includes choice phrases like “childish fantasies” and “absurdities” in this clip. Or gluttons for punishment can watch the entire proceeding here.