Miners are increasingly forming partnerships with Chinese companies to take advantage of their engineering and project delivery capabilities, which provide significant cost and speed benefits. This trend was highlighted during the panel discussion “Critical Minerals & the Future of the Battery” at the FT’s Mining Summit in London on September 27.
Geoff Streeton, chief development officer at French non-ferrous miner Eramet, emphasized that the Chinese engineering ecosystem can execute large, capital-intensive projects more efficiently than traditional models. Eramet, a major nickel producer, has already established several collaborations with Chinese firms, including a partnership with Tsingshan for nickel mining and refining in Weda Bay, Indonesia, as well as a joint venture for a lithium extraction plant in Argentina.
Ivan Vella, managing director and CEO of Australian miner IGO, discussed their collaboration with Tianqi Lithium in Australia, stressing its importance for gaining insights and strength within the battery and electric vehicle industry, particularly in relation to powerful Chinese companies like Ganfeng and Tianqi.
Indonesia serves as a prime example of how quickly and cost-effectively Chinese firms can develop nickel refining operations, effectively shifting the global supply-demand balance in the market. Streeton noted that Western companies contribute complementary skills to these partnerships, particularly in managing workforce dynamics, addressing ESG (environmental, social and governance) issues and fostering community development.
Experts at Fastmarkets’ European Battery Raw Material conference in Amsterdam called for Europe’s EV supply chain to enhance collaboration with Chinese technology firms to bridge technological gaps and lower costs in the battery supply chain.
However, the current price environment for battery metals such as lithium and nickel poses challenges for investment in new projects and exploration. Hanna Schweitz, director of battery materials at WMC Energy, warned that low prices could deter investment, making it difficult for companies to explore and secure high-quality deposits. The incentive price for lithium investment is generally considered to be around $20-25 per kg, while current lithium prices are significantly lower, with Fastmarkets reporting a spot price of $10.70-11.30 per kg on October 1.
The nickel market presents a more complex evaluation regarding incentive prices, influenced by the type of nickel produced and the technologies used. The benchmark price for nickel, as per the London Metal Exchange, was $17,002 per tonne on September 30, reflecting a decline of nearly 12% since June 1.
Panelists at the FT’s Mining Summit also discussed the implications of the Inflation Reduction Act (IRA) in the US on battery metal sourcing. Schweitz pointed out that original equipment manufacturers (OEMs) are wary of including non-compliant materials in their supply chains due to the risks involved. Streeton added that while the IRA represents policy interventions, they may not lead to permanent structural changes.
Vella expressed skepticism about the IRA’s effects on raw material suppliers, questioning how the EV subsidy would directly benefit them and the materiality of such benefits.
