Energy crunch hastening demand for transition metals

The energy shortage hitting the UK and Europe will fuel demand for a quicker green transition and the metals required to build it, according to speakers at the second Investing in Cornish Mining conference in Falmouth today.

Fuel and energy shortages have highlighted the urgency of moving away from fossil fuel dependence towards electric vehicles (EVs) and renewable energy sources, delegates heard.

"2021 has seen the switch to electric vehicles step up a gear, and the pace of change is accelerating much faster than anyone expected. The recent fuel shortage here in the UK proved yet another boost for electric vehicle ownership and online searches for EVs since the shortage have risen by 1,600pc," Cornish Lithium chief executive Jeremy Wrathall said.

Local, sustainable supply chains vital

Rising prices for commodities globally have also highlighted the growing need for regional supply chains. Lithium, tin and copper prices are all at record highs amid severe supply chain bottlenecks as economies fight back from Covid-19 restrictions and shipping networks come under particular strain.

"Supply chains are being re-examined in light of current geopolitics. Metals are already in short supply and most easily accessible deposits around the world have already been discovered and exploited," Wrathall told delegates. "The world can no longer rely on traditional supply chains, Covid-19 has taught us that […] all the metals needed for the transition to renewable energy have been found in Cornwall in the past, including copper, nickel, cobalt, tin and even lithium."

In the UK specifically, rules of origin laws that came into force as the UK left the EU specify that by 2027, 55pc of all EV components must originate in the UK in order to be exported to the EU tariff free – creating a particularly urgent need for a local raw material supply chain.

"The opportunity to source materials in the UK has to be attractive not only to Cornwall, but also to the UK government up in Westminster," said Richard Williams, president of Cornish Metals. "Also, there is a growing demand from end users to ensure products are sourced responsibly and ethically," he said, pointing to tin projects in Myanmar with questionable links to conflict, and to Indonesia's environmental safety difficulties.

"Western Australia is producing two thirds of the world's lithium, so we're behind in the UK and we need to catch up, but we need to do it cost effectively and in a more sustainable way to compete with the Australians," British Lithium chief executive Andrew Smith said.

Smith pointed out that while lithium production in Cornwall is unable to compete in terms of volume and grade, it can be more sustainable than in Australia, which powers much of the country with thermal coal, while South American projects use excessive amounts of water in arid regions.

Prices for lithium hydroxide have risen to $27.00-27.50/kg fob China from $8.50-10.00/kg at the start of 2021 on strong demand from the EV sectors in China and Europe.

By Thomas Kavanagh