Battery material supply putting EV revolution at risk

The following Bloomberg article highlights the supply shortages in the battery minerals space and the requirement for increased investment in new supply.

Read the full article here.

Below are our key takeaways:

• Electric vehicle (EV) adoption is increasing the demand for batteries while cutting costs to help EV's go mainstream.
• Downstream battery manufacturing capacity is being built faster than supply chains can keep up. The build out of manufacturing capacity is leading to shortages of specialist materials like copper foil and, more importantly, metals needed for battery chemicals.
• Factories can be built in about 18 months, whereas mines typically take seven years or longer to come online.
• Manufacturing capacity for lithium-ion batteries is expected to increase almost fivefold through 2025 if companies deliver on their existing plans.
• The article specifically focuses on the following minerals being in severe deficit: lithium, cobalt, nickel, and graphite.

We have previously touched on the difference in investment capital going into downstream (manufacturing) capacity versus upstream (mining) projects.

The main takeaway that keeps popping up when we look into this thematic is the difference in time to get a mine from exploration to production versus the building of a manufacturing plant.

Bloomberg highlights that it takes about 18 months to build a large-scale battery manufacturing plant but seven years or longer for a new discovery to reach production.

This is why we think the prices for these battery minerals are likely to remain elevated in the short-medium term.

We hold exploration and development exposures across several different battery metals, which you can view by clicking on the image below.