Battery Metals

Electric vehicle naysayers often seem to visualize technological change proceeding at a slow and stately pace, ignoring the accelerating trends that are driving EV adoption. But as any mathematician will tell you, exponential growth is a powerful thing, and there are several reasons to believe that electrification is nearing the upward curve in the proverbial hockey stick.

Monthly EV sales have been increasing slowly but steadily for the past two years, and over the past few months, the growth rate has been accelerating. September plug-in vehicle sales in the US were more than double those of a year ago, thanks to mushrooming Model 3 deliveries. Model 3 is now the fourth-best-selling passenger car in the US. And every Tesla delivered increases the pressure on the legacy automakers to get serious about their own EV programs.

It’s easy to dismiss exponential growth in its early stages (especially if your company has a vested interest in dismissing it). Mainstream news outlets continue to insist that EVs make up less than 1% of the auto market. In fact, the global figure was around 1.7% in April, and it’s likely to crack 2% by the end of the year.

Once exponential growth gets rolling, things can happen at astounding speed. One water droplet in a football stadium doesn’t even dampen the Astroturf, but if the rate of precipitation doubles every minute, the stadium will be flooded in less than an hour.

A new infographic from Raconteur (via Visual Capitalist) illustrates eight ways in which the auto industry is already being transformed by electric vehicles. Projections from Morgan Stanley indicate that EV sales will surpass legacy vehicle sales by 2038, and the global fleet of EVs will number one billion by 2047 (many EV industry observers would call these predictions conservative).

The transition to electricity will be a game changer for carmakers. As Reuters recently pointed out, EVs are currently a money-loser for Big Auto, but Morgan Stanley expects the negative profit margins to peak in 2023, and turn positive by 2029.

While a supply shortage still looms in the lithium market next decade, the industry should brace for further volatility into next year, according to Wang Xiaoshen, vice chairman of Jiangxi Ganfeng Lithium Co., which is forecast to become the second-largest producer from this year.

The supplier to Tesla and BMW fell as much as 28 per cent on its debut on the Hong Kong Stock Exchange Thursday amid turbulence in the lithium and border markets. Its Shenzhen shares tumbled to their daily limit for a second day.

In anticipation of industry expansion, Ganfeng is developing its battery interests and sees challenges ahead for new entrants, Wang said in edited highlights of an interview on Oct. 9.

On lithium’s future

We think that the near future – until the middle of next year – will be volatile, for several reasons. On the supply side, there may be some new spodumene suppliers coming on in the next several months.

On the demand side, some of the new car projects could be delayed. However, Tesla is another important factor in near-term demand. It looks like the Model 3 is now ramping up steadily and we think their purchasing should be very strong – not like the start of this year.

On risks

The risk is that the market is overestimating the potential on the supply side. Of course there is room for newcomers, but they will likely have lots of problems with production. They (investors) are scared because they realize this industry still has lots of barriers, even in the upstream. You need the technology, you need of course the market — it’s very challenging for some new entrants to become qualified battery-materials suppliers.

On the prospect of a supply squeeze

Not in the near term, but in the longer term there is still the risk of a shortage. Especially 2023 and 2024 – that’s the period we’re a little bit concerned about. That will be the time when EV production will be ramping up quickly and that’s when most of the battery makers will be expanding their capacity.

The OEMs want to secure long-term supply. They probably share the same view that comes 2023-2024 there will be tight supply when everyone is ramping up the EV production. But in the short -term we have to fasten our seatbelts and be careful.

The imminent short squeeze gold bulls had been waiting for since late July, was triggered yesterday after U.S. equities were down over three percent the previous session. Just after the London Metals Exchange (LME) opened yesterday morning, gold spec shorts slowly began to cover as Dow Futures were showing more weakness before the opening bell. Once the U.S. CPI inflation data came in lower than expected on Wednesday morning, managed money speculators began aggressively covering gold.

The combination of safe haven buying and lower than expected inflation forced the gold price up nearly 3% to a six-week high, while back-testing its 18-week moving average. Gold had yet to test this strong technical resistance level since breaking down below it in mid-April. The lower than expected inflation from the CPI may influence the Fed to hint of a pause in its rate-hike dot plot at the next FOMC meeting on November 7-8, which induced some of the speculative shorts to take their profit.

Furthermore, after the Dow Jones Industrial Average (DJIA) was down 830 points on Wednesday, President Trump began to publicly criticize the Fed for the third time this year. During a Fox News interview earlier this week he said, “I don’t know what their problem is that they are raising interest rates, and it’s ridiculous”. Trump is attempting to politicize the Fed, while influencing the U.S. dollar lower. This jawboning has assisted in weakening the world’s reserve currency and benefits his economic policies. Since gold’s six-month weakness has been largely attributed to the recent continued strength in the dollar, Trump’s comments also contributed to the short squeeze in the futures market.

Although both the GDX and GDXJ soared over 6% yesterday along with the gold price, most junior resource stocks barely moved, as tax-loss selling along with investor indifference towards the tiny sector continues to take its toll. Since the so called “Junior Miner ETF” completed a highly publicized GDXJ re-structure last year, most of the Van Eck ETF’s holdings contain major and mid-tier miners, so it is no longer a junior sector barometer. Over the past year, the TSX Venture Exchange has become less skewed toward resource sector stocks in favor of highly volatile cryptocurrency and cannabis companies, so the TSX-V is no longer a miner barometer either.

The GDX gapped up and ran towards strong resistance at $21 yesterday and the major miner ETF closed solidly above its 50-day moving average for the first time since early July. Last week, I mentioned the possibility of a Head & Shoulders bottom being formed in both the GDX and the GDX/GLD ratio which has now taken place.

However, the noticeable under-performance of both silver and the Global Silver Miner’s ETF (SIL) is troubling. Silver lagged the gold move yesterday, while SIL moved up just 4% and was unable to close above its 50-day moving average. Historically, both silver and SIL lead gold higher with much stronger moves in the early stages of a trend change in the sector. This was indeed the case in early 2016, when the gold complex moved higher from a major bottom.

We will need to see some follow through today in the sector, or the short squeeze will run the risk of being a one-day affair. This past June, we had a one-day silver short squeeze and the SIL did not show relative strength either. The precious metal moved sharply towards strong resistance at $17.50, then traded sideways for a few sessions before proceeding to move much lower for the next four months.

Technically, once we get a weekly close in December Gold today above $1211, a medium-term bottom has been struck. And a weekly close above $1310 on this move would favor a long-term bottom being in place. However, the magic number for gold bulls to focus on is a monthly close above $1375, which would technically signal a major bottom in the gold complex being firmly in place.

For confirmation of a gold stock long-term bottom being in place, we need to see a weekly close above $21 on the GDX. Until we see this, along with participation by most of the junior resource stocks and both silver and its miners outperforming gold in the short-term, I feel there is no need to chase gold stocks. However, beginning to accumulate your favorite juniors on weakness is now recommended.

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Cabot Corp. has been selected by the U.S. Department of Energy (DOE) to participate in an $80-million investment in advanced vehicle technologies research. Cabot will leverage its novel process technology to contribute to the research and development of low-cobalt active cathode formulations for next-generation lithium-ion batteries.

Cobalt is an expensive, foreign sourced critical material that could pose a supply risk in the future. Research projects such as Cabot’s are designed to explore more sustainable, affordable options, and ultimately improve access to electric vehicle technology.

“We are honored to be selected to participate in this important initiative,” said Patricia Hubbard, chief technology officer, Cabot Corporation. “We are excited to leverage our battery materials manufacturing expertise to expand our existing presence in the batteries and energy materials market. This project will help drive sustainability, innovation and new technologies, which are all crucial elements of our long-term strategy and vision.”

The DOE is investing in a total of 42 projects to support advanced vehicle technologies that can enable more affordable mobility, strengthen domestic energy security, reduce dependence on foreign sources of critical materials, and enhance U.S. economic growth. Of the $80 million, nearly $32 million has been allocated for battery and electrification initiatives, including $2.9 million for Cabot’s research in aerosol manufacturing technology for low-cobalt lithium-ion battery cathodes.

“Cabot already has an established presence in batteries through our conductive additive formulations and aluminas for cathodes and separators,” explained Miodrag Oljaca, technology director, Cabot Energy Materials. “We are eager to leverage our novel process technologies and battery materials expertise to drive further innovation for next generation batteries, with the goal of enabling low-cobalt or no-cobalt cathode formulations. This work will also help enable the production of low-cost, sustainable batteries for electric vehicles, energy storage and other applications.”

Cabot will partner with researchers at Argonne National Lab and SAFT for this project. Argonne will assist in the synthesis of low-Cobalt cathode compositions, while SAFT will assist in the manufacture of batteries to validate performance of novel low-Cobalt cathode formulations.

When Henrik Fisker joined First Cobalt’s board of directors in September, it was like a marriage of the minds between the global automotive design entrepreneur and the company’s president and CEO, Trent Mell.

Both Fisker and Mell are focused on providing cobalt to the American EV market efficiently, and also on maintaining stringent ethical mining practices.

First Cobalt is operating domestically within a global supply chain that has been so rife with concerns over child labour in the Congo that cobalt has been dubbed the ‘blood diamonds’ of the mining industry. But cobalt is on the US critical minerals list – and is a key component in next-generation batteries.

Fisker is also Chairman and CEO of Fisker Inc., and in the automotive sector he has provided leadership in premium electric vehicle development. Fisker Inc. holds pending patents on the Fisker Solid-State Battery, which the company says delivers 2.5 times the energy density of lithium-ion batteries. This is a potential game changer in charging electric vehicles and consumer electronics.

“When we started Fisker Inc. in 2016, one of my goals was not only to redo the business model for a car company, but also to really get involved in what is essentially the most important and most expensive part of an electric vehicle, which is the battery.” Fisker said. “What is so important to this technology is, it not only has a much higher efficiency [but] a much longer range.”

Cobalt is the mineral that brings stability to the battery technology, Fisker said.

“That is why everybody wants to make sure they have access to it…as we have this rise in demand for batteries over the next seven to ten years. I want to make sure we have access, but that it is ethically mined.”

On the safety side, the technology has the capability to cool batteries more efficiently, and it is also carries a lower cost, Fisker said.

Fisker said joining the board at First Cobalt was a good fit because he felt the company’s values are in line with his in terms of ethical practices.

First Cobalt has three North American assets: the Iron Creek project in Idaho, with inferred mineral resources of 29.6 million tons grading 0.11% cobalt equivalent; the Canadian Cobalt Camp, and the only permitted cobalt refinery in North America capable of producing battery materials.

Fisker also said it is exciting that the market can get cobalt from North America, when a majority of the material and mines are owned by foreign interests.

Trent Mell said First Cobalt walks its talk by ensuring every worker at the company’s mine sites is outfitted with personal protective equipment, and that the local environments are protected.

“Where Henrik and I are aligned, it starts in the Congo. What people forget is that we are trying to clean up the supply chain,” Mell said. “The whole supply chain of cobalt, in my opinion, is somewhat broken right now, so we are trying to develop a network of cobalt that would be mined in America, processed in America, and sold in America that is completely removed from all of the issues in the supply chain that bigger players than us are going to have to fix.”

Drill testing is ongoing at Iron Creek, and Fisker Inc. Solid-State Batteries are entering the testing phase.

Fisker said the company is already solving some of the issues of getting into higher volume manufacturing. He said the goal for next year is to get the battery technology on a small-scale pilot line and start producing repeatable quality batteries. By 2020, Fisker aims to bring Solid-State Batteries to market.

Not what anyone really expected…

Ford has just announced it will be the first major automaker to incorporate graphene technology into its vehicles when it integrates the material into the Mustang and F-150 before the end of 2018.

Originally, and still, perhaps, graphene was hailed as the be-all-end-all for electric vehicle technology. Graphene, a one-atom-thick slice of graphite is a remarkable conductor, so instead of holding electricity in a chemical state, like a battery, graphene can be used to create a supercapacitor, which stores energy in an electrical field. Graphene supercapacitors won’t degrade like lithium-ion batteries, meaning there’s the potential for longer life, but crucially, they are also capable of ultrarapid charging. Like five minutes rapid.

Graphene supercapacitors aren’t quite ready for the mainstream as they’re currently less power dense than conventional batteries, but Ford has found another use. Turns out, along with being 200 times stronger than steel, and extremely thin and flexible, graphene also acts as an incredible sound barrier. As a result, Ford, in collaboration with Eagle Industries and XG Sciences, has found a way to use small amounts of the material in fuel rail covers, pump covers, and front engine covers to silence the mechanical noises emitting from those parts.

“The breakthrough here is not in the material, but in how we are using it,” said Debbie Mielewski, Ford senior technical leader, sustainability and emerging materials. “We are able to use a very small amount, less than a half percent, to help us achieve significant enhancements in durability, sound resistance and weight reduction – applications that others have not focused on.”

Ford has been working with the material since 2014 studying its capabilities and how to use them. Generally, reducing noise inside vehicle cabins means adding more material, but graphene solves that. The graphene is mixed in with foam carriers, and reportedly yields a 17 percent reduction in noise, a 20 percent improvement in mechanical properties and a 30 percent improvement in heat resistance properties, compared to the same foam used without graphene.