Battery Metals

Chile’s government on Tuesday amended a proposed mining royalty bill that drew criticism from miners, removing provisions that assessed higher rates for larger miners and linked payments to copper prices, while implementing a flat 1% ad valorem tax rate for large producers.

The original bill, introduced in July, was criticized by global miners BHP and Antofagasta who said it would affect competitiveness and investment in Chile, the world’s largest copper producing nation.

The amended proposal, announced by the finance and mining ministers, would impose a flat-rate ad valorem tax of 1% on large-scale copper miners that extract more than 50,000 tonnes per year. The ad valorem tax would not be assessed if operating margins are negative.

Additional royalties would be assessed at rates fluctuating from 8% to 26% based on miners’ operating margin, rather than being adjusted according to the price of copper as was originally proposed.

Depreciation, as well as supply and work costs, would be taken into consideration in calculating operating margins.

The mining and energy committee of Chile’s congress will meet on Wednesday to review the government’s amendments before continuing with the legislative process.

“Considering these changes, it is estimated that the mining royalty would collect an additional 0.6% of GDP, of which 0.46% of GDP would be the product of the new structure and the remaining 0.15% the result of growth in production and costs,” the Finance Ministry said in a statement.

The original bill proposed in July established two components for royalty payments.

The first was an ad valorem tax ranging from 1% to 2% for producers of between 50,000 and 200,000 metric tonnes of fine copper, and from 1% to 4% for those over that range.

The other component was royalty rates between 2% and 32% on profits for copper prices between $2 and $5.

Both components were to have varied based on the copper price.

Canada must build a resilient critical minerals supply chain with like-minded partners, Ottawa said on Friday, as it outlined rules meant to protect the country’s critical minerals sectors from foreign state-owned companies.

“While we continue to welcome foreign direct investment that supports this goal, Canada will act decisively when investments threaten our national security and our critical minerals supply chains,” Industry Minister Francois-Philippe Champagne and Natural Resources Minister Jonathan Wilkinson said in a joint statement.

Significant transactions by foreign state-owned companies in Canada’s critical minerals sectors would only be approved on an exceptional basis starting Friday, the ministers said.

Should a foreign state-owned company participate in significant transactions, it could constitute “reasonable grounds to believe that the investment could be injurious to Canada’s national security, regardless of the value of the transaction,” according to the statement.

Canada has large deposits of critical minerals like nickel and cobalt, which are essential for cleaner energy and other technologies. Demand for the minerals is projected to expand significantly in the coming decades.

Earlier this year, Canada, the United States, UK and a few other countries established a new partnership aimed at securing the supply of critical minerals as global demand for them rises.

Tianqi Lithium’s shares declined even though the Chinese mining giant reported a net profit increase of almost 1,200% in the third quarter due to strong product demand.

Tianqi Lithium’s Shenzhen-listed stock [SHE: 002466] slid 3.4 percent to close at CNY92.44 (USD12.70). The equity is 8 percent down this year.

Its Hong Kong-listed shares [HK:9696] fell by 4.5 percent to HKD63.85 (USD8.10), resulting in a more than 20 percent decrease so far this year.

The lithium supplier’s net profit jumped nearly 13 times to CNY5.7 billion (USD780 million) in the third quarter from a year ago, the Chengdu-based company said in its earnings report yesterday. From January to September, its net profit soared by 29 times to CNY16 billion (USD2.2 billion) from a year earlier.

The company had revealed some of its key performance factors in its third-quarter forecast earlier. Lithium-ion battery manufacturers expanded their capacity quicker over the quarter, and downstream cathode material orders picked up while sales volumes and prices rose significantly, the firm said.

From July to September, Tianqi Lithium’s asset-liability ratio decreased by 25.5 percent from a year earlier while the gross profit margin was as high as 85.5 percent. The reason is that the company could use proceeds from its July listing in Hong Kong to repay an HKD9.7 billion (USD1.2 billion) bank loan allocated to acquire a Chilean lithium mine.

The firm is still actively exploring its layout of lithium resources and expanding its output of lithium salts, it said.

In China, prices of lithium salts have reached new record highs this month. The price of battery-grade lithium carbonate rose by CNY3,000 (USD413) to an average of CNY551,000 (USD75,873) per ton today, according to data from the Shanghai Metals Market. That of industrial lithium carbonate increased by CNY2,000 to CNY526,000 per ton, another record high.

Japan’s Sumitomo Metal Mining Co. wants to start making materials for a cheaper type of electric-vehicle battery — containing no nickel — that’s poised for global popularity after storming the world’s top EV market, China.

Iron-based batteries known as LFP have rapidly expanded their role in China as a lower-cost rival to varieties with nickel, especially in smaller and low-range vehicles. They could grab more than half of the global battery market this decade, according to Katsuya Tanaka, an executive officer at Sumitomo, which already makes nickel-bearing materials for Tesla Inc. and Toyota Motor Corp. cars.

“Carmakers won’t be able to procure enough batteries if only sticking to nickel-based types,” Tanaka, who heads the firm’s battery materials division, said in recent interview. “We will expand our line-up to meet customers’ need as we expect the market will be polarized into the two.”

Sumitomo already specializes in certain types of nickel-based battery cathodes. Earlier this year it bought LFP capacity geared for non-auto applications, and is studying how to convert that technology for vehicles. LFP is shorthand for lithium-iron-phosphate.

The move highlights how EV supply chains are still in their infancy, as the industry grapples with everything from technological changes to geopolitical shifts. Western nations are trying to reduce their reliance on China, which has a stranglehold over most of production, including LFP cathodes.

Tesla uses LFP for its standard-range Model 3 and Model Y cars produced in China, which are exported globally. Volkswagen AG and Ford Motor Co. are among auto giants that have pledged to use the formula in future, while BloombergNEF predicts a shortage of LFP capacity in the US a decade from now.

Small vehicles

Tanaka said LFP varieties might be well-suited to Japan’s popular mini-vehicles known locally as “kei”.

The small and affordable kei are especially popular outside major cities, where roads are narrow and public transportation is sparse. Last year the kei made up more than a third of new passenger-car registrations in Japan.

Drivers of battery-powered kei should get enough power by charging their cars at home — without going to EV charging stations — because they don’t typically use their cars much each day, Takana said.

Tanaka said Sumitomo will talk with one of its battery-manufacturing customers about supplying LFP cathodes. His firm could build a new plant in Japan or utilize a manufacturing site it has acquired in Vietnam, he said.

Sumitomo plans to triple output of battery materials to 15,000 tons a month by 2030 to tap into growing demand for EVs. That volume could be bigger if LFP materials will be included, Tanaka said.

Seattle-based digital transparency company Everledger announced Tuesday the launch of a world-first battery passport pilot with Ford to ensure responsible recycling of EV batteries.

The pilot leverages Everledger’s technology platform to track electric vehicle (EV) batteries throughout their lifecycle to ensure responsible management during use and recycling at the end of their useful life.

This will allow Ford to gain visibility on out-of-warranty batteries, validate responsible end of life recycling, and gain access to data such as recycled critical minerals produced and associated CO2 savings, Everledger said in a media release.

Everledger and Ford will use the battery passport solution to track batteries in various late and newer EV models for six months, working together with US lithium-ion battery recyclers Cirba Solutions and Li-Cycle.

To track the battery lifecycle Everledger uses a range of technologies including types of auto ID, blockchain and artificial intelligence.

During manufacture Ford batteries and their inner modules are tagged with 2-D data matrix codes, which are then scanned with a cell phone by each organization as the battery changes hands. These scans allow otherwise separated links in the value chain to report on and access information about a battery’s location, chemistry and other attributes and activities taking place, for example transportation, disassembly and recycling.

The battery passport concept was coordinated by Everledger, along with other industry experts, as part of an industry-led group known as the Global Battery Alliance (GBA). The GBA was founded in 2017 at the annual World Economic Forum and was established to create a sustainable and responsible battery value chain.

The battery passport is the digital identity of a battery which includes information about its materials and components and ultimately the battery itself. It can provide transparency of the battery supply chain as well as the lifecycle of the finished product.

The Everledger-Ford pilot comes ahead of the new European Battery Regulation that will come into force in late 2022/early 2023 and require manufacturers to report on their extended producer responsibility for proper battery recycling.

This pilot, conducted in the North American market, demonstrates how combinations of advanced technologies can streamline regulatory compliance and add efficiencies across the value chain, the company said.

After six months of testing Everledger will release the battery passport commercially.