Material Opportunities in Electrification Webinar: Stonegate Research Note

DALLAS, TX -- December 20th, 2022 -- Stonegate Capital Partners On December 14th, 2022, Stonegate Capital Partners held its Material Opportunities in Electrification Webinar. The panelists included Alberto Arias from Largo (NasdaqGS:LGO), Eduardo Covarrubias from Los Andes Copper (TSXV:LA), Ali Haji from Ion Energy (TSXV:ION), Trent Mell from Electra Battery Materials (TSXV:ELBM), Steven Turner from Pivotal Metals (ASX:PVT), and Paul Atherly from Pensana PLC (LSE:PRE). Each of these speakers focused on a key material used in the electrification of vehicles and the grid. The speakers interact with their materials at different points in the supply chain and in a variety of geographic region. It is this cross section of materials, processes, and locations that make each panelist a thought leader in their respective areas.

Key Takeaways

• Growth in EV sales will drive demand: The main driver of the demand for these materials is the growing demand for electric vehicles (EVs) and thus the demand for the batteries and motors used in EVs. With sales increases forecasted to be at 30% CAGR over the next four years, it is no surprise that battery demand is expected to increase more than 2,000% by 2040. Considering that EVs use approximately three times as much copper as internal combustion engines, copper is expected to have a 8.5 million ton deficit by 2030 compared to the approximate current copper supply of 25 million tons. This trend of extreme supply shortages is expected to repeat itself across all the metals we discussed on the webinar in varying degrees.
• Current operations will not meet future supply needs: As discussed above, the supply shortages are forecasted to require more sources for and increased production of these critical materials. For example, the amount of copper mining that is need to meet projected demand is equal to 84 new mines by 2030. The world will need another 74 lithium mines by 2035 in order to meet the lithium shortfall. Some of this will be propelled by regulatory tailwinds as the Inflation Reduction Act in the United States incentivizes companies to decouple reliance on Chinese and Russian supply chains further increasing demand on companies that operate outside of those jurisdictions. It is notable that scrapping and recycling alone will not be enough to overcome the supply shortages.
• Location and quality are key: Whether it is centrality to a strong labor force and abundant infrastructure for mining or being within accommodative borders for permitting and security of operations, the jurisdiction that these companies have chosen is as important as the materials they are working with. One of the best examples of this are the Vizcachitas mine in Chile being central to infrastructure and located at a lower elevation than many of its competitors in the region. Another notable example is the Electra Battery Materials company that already has permitting secured in their jurisdiction, which gives them a 3-5 year competitive advantage on any other companies that would try to achieve the same. While the location of the lithium brine operation ran by Ion Energy is certainly important, the quality of the mine (above 300ppm) is arguable more important to economic viability when compared to other lithium brine operations.

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View webinar replay, click here.