The mining sector is pinning its hopes on the burgeoning demand for electric vehicles. Understandably so, considering one in five cars hitting the road this year is set to be electric, implying a surge in demand for the minerals essential for battery production.While this may all sound promising for commodity markets, the truth is that it presents a volatile and uncertain landscape, where success or failure hangs in the balance.Benedikt Sobotka, CEO of Eurasian Resources Group, says that for many of the minerals currently in high demand, market prices are lower than the incentive prices needed to justify new investments. This holds true for commodities like lithium, cobalt, and nickel.“If lithium prices continue at their current level, it's reasonable to expect that at leasthalf of the planned new mine developments will not proceed due to insufficient return on investment," he said. "Operating in this market is challenging because the energy chemistry of these batteries remains uncertain, making it difficult to predict which minerals and metals will be in demand a c c u rat ely."The use of cobalt in batteries has already significantly declined as manufacturers seek more cost-effective alternatives. "What we do know is that the only universally essential metal needed across the spectrum is copper," Sobotka stated. "However, copper is notoriously challenging to locate, and developing projects for its extraction is no easy task."Sobotka said with battery chemistry not only dynamic but also fast-changing, it presented an increasing conundrum for miners. "The materials chosen for batteries significantly impact our mining strategies, especially in remote jurisdictions with limited infrastructure," he noted. This underscored the importance of staying abreast of evolving technologies to make informed decisions about resource extraction.Sobotka pointed out that mining companies seemed to be at a disadvantage; while they bore the costs of extracting minerals essential for various industries, they often found themselves excluded from the dialogue concerning which minerals would be in demand at any given time.He framed it by illustrating how a global manufacturing giant like Apple relied heavily on mining companies for its existence, yet the collective worth of the world's top 50 mining firms fell short of Apple's value. "Investors often struggle to comprehend the intricacies of the mining sector, which has led to a lack of appreciation for its critical role in the energy transition," he explained. "This undervaluation is evident in market prices."At present, the majority of critical raw materials essential for electric vehicle production originates from Africa. The continent is responsible for nearly half of the world's cobalt and manganese reserves.
