The world’s biggest mining companies have more or less recovered from the commodity boom and bust of the past decade. At the same time, they’ve been left with an existential crisis: What minerals are going to drive their growth in the decades to come?
Aluminum was white-hot in 2007 when Rio Tinto Group paid $38 billion for Alcan Inc., but it’s since been sunk by a wave of Chinese oversupply. Coal and iron ore helped drive the Bloomberg Commodity Index to its most recent peak in 2011, but have fallen on harder times due to fears of climate-related demand weakness and a plateau in steel production. Even copper faces surpluses through to 2020, according to Bloomberg Intelligence’s supply model, which would tend to weigh on prices.
Thank goodness, then, for Saint Elon Musk. Demand for battery materials to feed the nascent electric-vehicle and electricity-storage industries has made a group of hitherto obscure minerals — principally cobalt, lithium and graphite — the next big thing in the mining industry.
Two Chinese groups spent $3.8 billion over the past year buying Freeport McMoRan Inc. and Lundin Mining Corp. out of Tenke Fungurume, a Congolese mine with some of the world’s richest cobalt deposits. Glencore Plc, the largest cobalt producer, plans to double output by 2018.
Rio Tinto has called out a lithium deposit discovered in Serbia as a potential top-three source of the element, and there have been numerous reports of bids for Sociedad Quimica y Minera de Chile SA, or SQM, one of the current largest producers. Shares in Graphite India Ltd., an electrodes manufacturer, have more than doubled this year; those of graphite developer Syrah Resources Ltd. rose 50 percent in the first half of 2016.
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