Candace MacGibbon is a Canadian mining executive.
With the attention on decarbonization, the world is shifting toward an acute shortage of critical minerals that are necessary for the clean-energy transition. Mining companies and their stock prices have been searching for a jolt, and much-needed capital investments from electric-vehicle manufacturers can provide it.
Investors from the automotive sector, new to mining, have strong motivation and deep pockets, but their help improving perceptions of mining and fast-tracking projects may be their biggest value-add. Big Tech companies, which also need critical minerals for their products, need to join the party soon, as the latecomers may not have a chair when the music stops. Meanwhile, miners should welcome them all.
The mining industry has many challenges, but at the top of the list is the length it takes for a mine to be permitted. There is no pipeline of near-permitted and fully financed deposits to respond to the decarbonization transformation. It typically takes around 15 years to bring a mine into production, and in Canada, up to 25 years. While governments have demonstrated high-level policy support for critical minerals, the necessary permits and social licences have yet to be fast-tracked, and development risk remains high.
Ontario’s recent announcement of red-tape reduction to speed up approvals for mining projects is welcome, and similar changes are warranted at the federal level. The heft of automotive investors commands the attention of governments and may inspire faster approvals, demonstrated by Volkswagen’s significant partnership with the federal and Ontario governments – worth billions – to build an electric-vehicle battery manufacturing plant in St. Thomas.
While auto manufacturers have had their own brand perception missteps, we trust them to keep us safe every day. The mining industry is no longer attracting talent, and students are not clamouring to enter geology or mining engineering programs. Universities are folding their programs after years of attrition. If clean-tech auto manufacturers make significant investments in mining, perhaps that will be a catalyst to attract young people once again.
Can we, in the mining industry, successfully rebrand our industry to our end customers, riding on the coattails of the auto manufacturers, in order to highlight that we foster people, safety and innovation? If we don’t, there won’t be enough workers to mine the critical minerals.
The mining industry has been struggling for investment capital. S&P Global reported a year-over-year decline of 43 per cent in funds raised by junior and intermediate companies, from US$21.6-billion in 2021, to just US$12.2-billion in 2022.
Despite significant buzz about critical minerals, the stark truth is that Canada’s exploration spending is forecast by Natural Resources Canada to decline 8 per cent this year to $3.7-billion from a forecast of $4.1-billion in 2022, and $3.8-billion in 2021. S&P Global forecasts world-wide exploration budgets to be down 10 per cent to 20 per cent from 2022 budget levels owing to global macroeconomic conditions, and trends still favouring mine-site and brownfield exploration as opposed to greenfield.
This year, downstream industry representatives of the auto manufacturers descended on mining investment conferences with the singular goal of securing the supply of critical minerals to vertically integrate. They have money, with record profits posted in the sector in 2022, despite lower sales. They have also learned the painful lesson of production delays owing to the chip shortage.
Big auto-industry players are looking far and wide to secure the supply of the raw materials required to support their manufacturing businesses. General Motors Co., for example, announced deals with mining giant Vale and lithium developer Lithium Americas (worth US$650-million) to ensure the offtake supply of battery-grade nickel and lithium, joining others who have entered into such agreements.
The mining industry will struggle to bring critical-minerals supply to market within the required timeframe to get to net-zero carbon emissions by 2050. Along with their chequebooks, the industry may need the full might of the auto manufacturers to ensure mines are permitted within an appropriate timeframe, and that there is a skilled work force to build and operate them.