While the green energy transition undoubtably presents a myriad of challenges for the producers, consumers and users of critical raw materials and metals worldwide, for those that care to look, there are also opportunities aplenty.
According to the IEA, the market size of key energy transition minerals, driven by rising demand and high prices, has more than doubled over the past five years, reaching US$320 billion in 2022. This upward trend presents new revenue opportunities for the mining and metals industry and its partners, creates jobs for society, and can, in some cases, help to diversify economies that are dependent on coal.
Today, there is a growing realisation that the key to unlocking opportunities such as these lies, not only in decarbonising businesses and their operations, but in making the energy transition central to everything that companies do, say and stand for.
In short, it’s giving many organisations renewed vigour and a deeper purpose. Let’s look at some examples of how companies both large and small, new and well established are taking the energy transition, literally, to heart.
Financing future-critical mining projects
Without capital there would be no new mining and metals operations, so let’s start at the beginning…
Ecora Resources is a royalty and streaming company focused on investing in future-facing commodities that are critical to the energy transition along with the modern world more generally. Its Chief Executive Officer, Marc Bishop Lafleche, set the scene for us.
“There’s universal agreement that the mining industry will need to deliver a significant increase in the volume of commodities currently produced in order to supply the energy transition and help to tackle climate change,” he told me.
“The strong expected multi-decade demand trends for this basket of commodities are the reason we have repositioned our asset base to copper, nickel, uranium, and cobalt amongst others.”
He added that, while there will inevitably be bumps in the road, as recently seen with certain commodity prices dipping and slower than expected growth in electric vehicle sales, the medium to long-term direction of travel is only going one way.
“With our portfolio soon to be 100% exposed to future-focused commodities, we are excited at the scale of the opportunity presented to us as a company,” Bishop Lafleche said.
“We know that as capital provider, we sit at an important juncture in the mining lifecycle, especially with the lack of capital being deployed in global mining projects at the moment. As such, our opportunity is to help finance the development of the assets that will ultimately provide the commodities critical to the modern world, and of course to the energy transition.”
Historically, the majority of Ecora’s revenue was derived from a royalty on the Kestrel coal asset in Australia which materially runs off in 2026. The company’s board and management team recognised the need to address its overdependence on that one asset, while also diversifying its commodity exposure.
Bishop Lafleche explained: “As a royalty company with a multi-decade investment horizon, it made strategic sense to align our commodity exposure to structural demand trends spanning the same period and position our portfolio to benefit from the higher commodity price levels required to incentivise the construction of new sources of supply.
“Whereas the business was once almost entirely dependent on a single asset and steel making coal prices, over 85% of our net asset value now comes from future-facing commodities. In the medium term, these have the potential to generate in excess of US$100m of annual portfolio contribution, with copper as the primary source of commodity exposure.”
Ecora’s portfolio now includes a mix of investments, including in copper, cobalt, vanadium, nickel and uranium assets, located primarily in OECD jurisdictions and operated by partners such as Vale, BHP and Capstone Copper.
“The assets that we invest in, not only produce commodities directly required for the electrification of energy production, consumption and storage, but it’s also important that these projects are developed and operated in a sustainable way,” said Bishop Lafleche. “We undertake a rigorous due diligence process prior to making an investment decision.”
In line with this ethos, the company is also making good progress on its own net zero journey. In 2023, Ecora achieved the near-term science-based emissions target set out by SBTi to reduce its scope 1 and 2 emissions by 46%, and to measure and reduce its scope 3 emissions.
“These targets were originally set to be achieved by 2030 from a 2019 baseline, but we are fortunate that the company has now reported its zero scope 1 and 2 emissions, so we can focus entirely on our scope 3 emissions,” said Bishop Lafleche.
“While a significant portion of our scope 3 emissions stem from our investments and are, to a certain level, out of our control, we have increased our level of engagement on this issue with our operating partners. During 2023, we received a 100% response rate to requests for sustainability information. This was up by14% in 2022.”
Bishop Lafleche is confident that royalty and streaming companies will play a crucial role in the way the global economy is decarbonised.
“One of the biggest problems facing the mining sector at the moment, is how to finance all of the projects that are needed to meet the demands of the energy transition, in addition to well-established industrial end markets” he told me. “This is creating exciting opportunities for companies like Ecora’.
Responsibly mined, locally sourced lithium
A little further down the value chain are mining and metals providers for whom the provision of critical raw materials, and the creation of net-zero carbon economies, is central to their business plans.
One example is UK-headquartered junior miner, Savannah Resources. As the operator of the Barroso Lithium Project in Portugal (one of the most significant lithium spodumene resources in Europe), Savannah’s primary focus is the lithium-battery value chain feeding downstream users in the transport and energy storage sectors.
Transport is the second largest generator of emissions after the power sector, with the automotive industry producing 3.53 billion cubic tonnes of CO2 emissions from cars and vans in 2022.
Savannah’s CEO, Emanuel Proença, explained: “Reducing emissions from everyday travel is essential for meeting global carbon reduction targets. Electric vehicles (EV), powered by lithium-ion batteries, are at the forefront of this initiative, making lithium a critical material.
“I’m very proud of the work we’re doing, with Savannah poised to assist Europe in reaching its EV and transport sector emission goals by providing a local source of lithium.”
Savannah’s overarching strategy is to responsibly supply European lithium for Europe’s energy transition. Once in full production, Barroso is expected to produce enough lithium for approximately 0.5 million vehicle battery packs per annum. This will aid in accelerating the energy transition by facilitating the lithium battery supply chain in Europe.
In May 2023, the Portuguese environmental agency, APA, approved Savannah’s Environmental Impact Assessment, awarding the project its Declaration of Environmental Impact (DIA). This major milestone is essential to the project’s environmental licencing process (it’s located on a 30-year mining lease which was awarded in 2006).
Proença explained: “In line with international practice, the DIA has been issued with a set of conditions, measures and compensations which Savannah has agreed to, and should provide further assurance that the project will be developed and operated in a socially and environmentally responsible way, and that socio-economic benefits will be shared with stakeholders.”
At present Savannah is working on completing the compliance phase of the environmental licencing process and the project’s definitive feasibility study (DFS), as well as the building the commercial and financing framework for the project and engaging regularly with local stakeholders.
The company commenced its two-phase resource-upgrade drilling programme for the DFS in October 2023, with initial positive results received in February and March. Savannah expects to complete the DFS during H2 2024 and is targeting first production from the Barroso Lithium Plant in 2026.
To maximise the environmental benefit of the lithium it produces, in 2021, Savannah committed to working towards net zero scope 1 and 2 emissions from the project over its life.
“The first study phase of our decarbonisation strategy concluded that the project’s best option to reduce scope 1 emissions is the use of an electric mining fleet, and that there would be several options to reduce scope 2 emissions to zero by securing 100% renewable power for the project,” Proença told me.
“In this regard, Savannah is already greatly benefitted by the 70%+ mix of renewable power in the Portuguese electrical grid. We intend to work with our suppliers and customers to reduce scope 3 emissions as much as possible, which will likely be through the use of zero/low emissions haulage fleets.”
Many of the project’s features have also been designed with circular economy in mind. For instance, in addition to the c.200,000 tonnes per annum (ktpa) of spodumene concentrate that Barosso will produce, the mine will also generate a feldspar-quartz product for the local ceramics industry to minimise its waste streams.
The processing plant has been designed with a water treatment and recycling facility which will allow for 85% of the water used to be continually recycled.
“We’re also part of two European Horizon research projects which are focused on improving the recovery rates of lithium and other minerals from orebodies like Savannah’s, while also reducing the amount of water used in the various processing steps to produce lithium hydroxide and the amount of emissions produced,” said Proença.
The European Commission has estimated the bloc will need 12 times more lithium in 2030 than it consumed in 2020 and 21 times by 2050, meaning there is a critical need for an increase in projects producing lithium locally to secure the EU battery supply chain.
Europe is currently wholly reliant on imports of battery-grade lithium based on extended, international, supply chains, which carries supply risk and adds to the carbon footprint of the batteries being produced.
The 2023 Critical Raw Materials Act from the European Commission called for at least 10% of domestic demand for critical raw materials to be met from local supply.
“Not only does Europe need local lithium production, but it also needs infrastructure such as processing facilities in order to complete the battery supply chain,” added Proença.
“I take pride in the work that we at Savannah are accomplishing to become an integral part of the battery supply chain in Europe, as well as the overall decarbonisation initiatives laid out by the EU.”
Closing the loop on European battery materials
Supply chain pressure felt as a consequence of COVID-19 and geopolitics has given rise to a greater focus on critical material security, resilience, domestic value chains, ally-shoring and de-globalisation in recent years.
Reducing pressure on primary metals supplies will be key in mitigating future shortfalls and, as such, a host of technology and metallurgy specialists are working to tap materials streams that were previously considered waste.
One example is Australia-based Neometals. The company is commercialising a portfolio of sustainable processing solutions that recycle and recover critical materials from high-value waste streams.
“The energy transition is crucial to Neometals and our team,” Christopher Reed, Neometals’ CEO, told me. “We have a unique approach having come from mining roots and recognise the opportunity to leverage sustainable technology. We champion the principles of a circular economy, focusing on recycling and recovery. Our approach minimises waste and promotes resource efficiency.”
Neometals’ core focus is on the commercialisation of its patented, Lithium-ion Battery (LiB) Recycling technology through a plant supply and technology licensing business model. The company has formed a 50:50 incorporated joint venture called Primobius GmbH with German plant builder, SMS group GmbH, that is commercialising the technology.
Primobius is currently building a 2,500 t/y recycling plant for automotive giant Mercedes-Benz under a long-term cooperation agreement. It also operates its own LiB disposal service in Germany and plans to offer its first commercial 21,000 t/y plant to North American licensee, Stelco, in Q2 2025.
Additionally, Neometals is developing two advanced battery materials technologies for commercialisation under low-risk, low-capex technology licensing business models. The ELi electrolysis process, which is co-owned 30% by Mineral Resources Ltd, targets lithium chemicals.
The process produces battery-quality lithium hydroxide from brines and/or hard-rock feedstocks. Pilot scale test work and engineering cost study updates will be completed later this year. The company also has a patent-pending hydrometallurgical process to produce high-purity vanadium pentoxide from steelmaking by-products.
Reed said: “Our lithium chemicals business, through our joint venture company, Reed Advanced Materials, is entering the final stage of pilot test work and we’re hoping to commercialise the proprietary ELi process, which comprises an extensive patented technology package, through a licensing business model.”
He added that lithium is the key non-substitutional battery ingredient, and Europe currently has a very small domestic supply of these chemicals with demand growing rapidly. ELi technology offers many potential advantages over conventional processes including lower operating expenditures, higher product purity and a smaller CO2 footprint.
“Our vanadium recovery technology also enables sustainable production of critical battery materials from waste without mining risk,” explained Reed. “We’re in the process of evaluating licensing opportunities with potential partners and have a memorandum of understanding with H2 Green Steel for potential operations in Sweden.”
Battery metals remain a big focus for Neometals. However, the company also sees strategic opportunities to broaden its market share to critical materials that may not be part of the battery metals ecosystem.
“We’re still motivated to support the energy transition and circular economics via recovery processes from high-value waste streams, but we’re mindful that critical materials represent a larger pool that also benefits from circular economics,” Reed said.
In keeping with this, Neometals is researching and developing new technologies to recover critical materials from high-value waste and non-conventional feedstocks.
Today, the company is evaluating the hydrometallurgical recovery of precious metals from industrial waste streams in the US, and Reed said that the third-party technology is currently being tested in a pilot plant utilising commercially available feedstocks.
“The energy transition is permanently evolving and our role in decarbonising the supply of critical materials cannot be understated,” he told me. “We’re supporting the energy transition and critical material resilience through our various business units and supporting our customers to deliver materials through recycling and recovery rather than virgin extraction.
“The landscape for producing critical materials will only continue to shift, with less reliance on traditional mining and more demand for ethical sources.”
0 comments on “Putting the energy transition at the heart of mining and metals supplies”