Australia on cusp of new mining boom, driven by electric vehicles

Australia might be in the slow lane on electric vehicle uptake, but it is in pole position to capitalise on the new mining boom in lithium and other high value metals and minerals that is being driven by the global shift to EVs.

A new report from Bloomberg New Energy Finance has forecast that demand for copper, high-purity nickel, cobalt and lithium used in the manufacture of EV battery packs is forecast to rise 31 times, 42 times, 19 times and 29 times respectively to 2030, as sales of EVs soar to 30 million by 2030.

At current commodity prices, BNEF says, the supply of these materials for batteries would be worth $US75 billion in the year 2030.

“Global demand for EVs is expected to grow exponentially in the mid-to-late 2020s, when we expect electric vehicles will become cheaper than traditional cars powered by internal combustion engines,” said BNEF’s lead EV analyst for Australia, Ali Asghar.

“This raises the prospect of a mining boom in the high value metals used to make these cars.

“Australia sits on top of vast reserves of almost all these metals, so there is a huge opportunity for our resources sector.

But for a country as wedded to the economic prosperity of its mining industry as Australia, it’s arguable that not enough has been made of this huge EV driven opportunity.

A report published in January by the Association of Mining and Exploration Companies warned that Australia must act quickly and decisively to take advantage of its leading position in the global lithium resources market, or risk missing out on what could be a $2 trillion value supply chain.

And in October, ITK analyst and regular RE contributor David Leitch predicted that the new mining boom driven by EVs and energy storage would be bigger than LNG for Australia, even despite the fact that the federal government’s low-carbon policies remained a disgrace.

Certainly, there is no effort to push EV uptake on the domestic front – a federal policy black hole that BNEF acknowledges in its report.

“We expect EVs to account for 28 per cent of new vehicle sales in Australia by 2030 and 60 per cent by 2040,” Asghar said.

“The road up to 2022 however will be bumpy, as without policy support, electric vehicle sales are likely to stay below 2% per cent of new car sales, making Australia a bit slow on the uptake.”

Western Australia, at least, appears to be waking up to the opportunity the EV boom presents, with much of the nation’s vast lithium resource contained within that state’s borders.

Recent state budget forecasts show royalty income from non iron-ore commodities rising by $160 million to a record $724 million in 2017-18, led a $65 million jump in lithium royalties.

The non-iron ore commodities royalty forecast increases to $834 million in 2019, mainly due to Treasury factoring in a $41 million increase in lithium royalties to $131 million and a $36 million increase in gold royalties to $315 million, the AFR reports.

But it will need to get moving to get all of the key industry supports in place, particularly if it is to compete with other global powerhouses, like China.

“China will lead (the global EV transition), with sales there accounting for almost 50 per cent of the global EV market in 2025 and 39 per cent in 2030,” the BNEF report says.

“China is also expected to play a dominant role in lithium-ion battery manufacturing. It currently holds a 59 per cent share of global production capacity, and this is forecast to rise to 73 per cent by 2021.”

But Ashgar says there’s still room to Australia to take a big piece of the EV resources pie.

“If Australian miners play their cards right, they could have a pivotal role in the EV supply chain”, he said.