EV Batteries Won’t Be Enough to Save the Mining Industry – by David Fickling (Bloomberg News – July 30, 2021)


(Bloomberg Opinion) — Rio Tinto Group’s decision to push the button on a project in Serbia to produce lithium for electric vehicle batteries is a sign of how the mining industry is working to embrace the transition to net-zero emissions.

It’s also emblematic of just how difficult that transition is going to be. The company said Tuesday it will commit $2.4 billion to the Jadar project, which will produce lithium carbonate as well as boric acid, a material used in cockroach poison and high-strength magnets, with an aim to produce 58,000 metric tons of lithium a year starting in 2026.

Lithium is undoubtedly a boom market. Demand will increase from around 400,000 tons last year to around 2 million in 2030 as electric cars start to take over from gasoline, according to BloombergNEF.

While right now the metal costs about half its 2017 peak, it’s likely that demand will start outstripping supply just as Jadar is getting up and running. That would pressure prices and drive up miners’ revenues even faster than the fivefold increase in volume.

The trouble is, that still represents a drop in the ocean. Even at 2017’s record prices, a 58,000 ton-a-year lithium business will struggle to crack $1.5 billion in revenue, and Rio Tinto turns over more than $45 billion every 12 months.

For the rest of this column: https://www.bloombergquint.com/gadfly/rio-tinto-s-lithium-project-is-a-step-toward-net-zero-but-it-s-a-tough-road