News 1: The race for "green" metal supplies
Countries such as the UK, Japan, EU and US have signed cooperation agreements with countries such as Zambia, Namibia, Chile and Congo, aiming to find the supply of needed minerals for decarbonization and "green" metal production.
"Green" metals are divided into three main groups: aluminum and steel, used in batteries and turbines, copper for cables and cars production, and electric vehicle batteries including cobalt, lithium and nickel. Lastly, magnetic rare earth such as neodymium are used in electric vehicle motors and turbine generators.
According to the consulting organization Energy Transitions Commission (ETC), 72 countries have committed to carbon neutrality by 2050, accounting for four-fifths of global emissions. To achieve this goal, wind power capacity must increase 15 times, solar power must increase 25 times, grid infrastructure scale must increase 3 times and the number of electric vehicles must increase 60 times compared to the present.
By 2030, it is estimated that the demand for copper and nickel will increase by approximately 50-70%, cobalt and neodymium by 150%, and lead and lithium by six to seven times. In total, to achieve carbon neutrality by 2050, the world will require 35 million tons of "green" metals annually, in addition to the demand for 6.5 billion tons of traditional metals like aluminum and steel.
The global mineral supply shortages have raised concerns for many countries. By 2030 ETC estimates 10-15% of copper and nickel, and 30-45% of other metals used in batteries will be in short supply
The supply of these metal groups is facing some challenges. Economic experts' forecasts from The Economist predict a copper shortage of about 2-4 million tons (equivalent to 6-15% of demand), and a lithium shortage ranging from 50,000 to 100,000 tons (equivalent to 2-4% of demand) by 2030. Nickel and graphite are also available, but they require high purity to be used in making batteries. The shortage also persists in the fields of refining bauxite into aluminum and producing neodymium outside of China.
Economists identify three main solutions to address these challenges. First, producers can augment extraction from existing mines, although the incremental yield is limited. Second, the opening of new mines could solve the issue but necessitates time for implementation.
The third solution becomes the most important: removing "green bottlenecks". This includes recycling more materials, especially aluminum, copper, and nickel. The recycling industry still has potential for development, especially if the final product is priced higher. There are efforts such as mining company HP sponsoring a new nickel recycling company in Tanzania.
Economic analysts estimate that scrap could account for 50% of total copper supply in a decade, up from the current 35%. Companies like Rio Tinto are also investing in aluminum recycling centers. Metal battery recycling startups raised $500 million in funding last year.
A more expansive approach involves reactivating dormant mines, particularly those for aluminum. The increase in energy costs has caused the closure of 1.4 million tons of annual aluminum smelting capacity (2% of global production) in Europe. A 25% increase in aluminum prices would incentivize the reopening of more mines.
The greatest hope lies in technological advancements that maximize the utilization of scarce resources. Companies are researching processes like "tail leaching" to extract copper from low-grade ores. Deploying this technology at scale could yield an additional one million tons of copper annually at minimal costs.
In Indonesia, nickel mining companies are using “high-pressure acid leaching” to convert low-grade ore into raw materials for electric cars. Three plants have been built and a nearly $20 billion project has been announced. According to Daria Efanova, Head of Research at financial company Sucden, Indonesia could produce around 400,000 metric tons of high-grade nickel by 2030, filling part of the expected shortfall.
However, this new technique is still uncertain and can cause pollution. Opening new mines can bring greater profits, although it takes time. Worldwide, there are 382 cobalt, copper, lithium and nickel mining projects underway or in pre-feasibility studies. If these projects are operational by 2030, demand will be balanced, according to consulting firm McKinsey.
Currently, there are about 500 cobalt, copper, lithium, and nickel mines being exploited globally. To open 382 new mines on time, there will be many difficulties. Lack of funds is the first issue. According to McKinsey, to meet the supply shortage by 2030, annual capital costs in mining need to double to $300 billion. CRU consultancy estimates that copper mining costs will have to reach $22 billion per year by 2027.
Investment from mining companies is increasing, but not fast enough. Digging new mines also takes a long time, from 4-7 years for lithium and an average of 17 years for copper. Licensing may also be delayed due to intervention by activists, governments and regulatory agencies for environmental reasons. Between 2017 and 2021, it took an average of 311 days to approve new mines in Chile, compared to 139 days between 2002 and 2006.
The metal content of copper ore in favorable countries is decreasing, forcing companies to look to harsher locations. Two-thirds of the new supply expected by 2030 is in countries ranking below 50 on the World Bank's "ease of doing business" index.
All of these factors indicate that new supply can only be a long-term solution. Therefore, in the coming decade, adjustments will mainly depend on conserving existing supply.
Electric vehicle and battery manufacturers are making progress in using less metal. The weight of copper in electric car batteries has decreased from 80 kg to 69 kg in 2020, and is expected to require only 21-50 kg by 2035. Lithium demand in batteries is also expected to halve by 2027 .
"The new technologies such as NMC 721 and 811 batteries, which contain less cobalt but more nickel, are replacing NMC 111 batteries. Additionally, the lithium-iron phosphate (LFP) blend, which is cheaper and energy-efficient, is becoming popular in China.
Other new technologies include using silicon to blend with graphite anodes, and sodium-ion replacing lithium with sodium. Customer preferences also have an influence, with demand for electric vehicles with shorter ranges. This could help reduce battery size and use less lithium.
The main challenge is copper supply, but changing consumer behavior could help reduce demand. It is expected that copper demand for "green" purposes will increase from 7% to 21% by 2030. However, local unrest and other factors such as political conflicts and bad weather could have an impact. affecting the supply of "green" metals. However, with buyer flexibility, stable governments, and luck, rising demand for "green" metals may not cause major conflicts.
News 2: Yen strengthens as Japan may stop negative interest rates
The Japanese currency has risen against the USD this morning after Japanese officials mentioned the possibility of ending the negative interest rate policy.
The Japanese Yen has increased by nearly 0.8% against the USD, reaching 146.6 yen per US dollar.
Bank of Japan Governor Kazuo Ueda made comments over the weekend indicating that the central bank may end the negative interest rate policy if the 2% inflation target is close to being achieved.
These statements are seen as preparations for the end of the negative interest rate policy. Some experts predict that this policy will end in the first quarter of 2024.
However, with US government bond yields still above 4%, predictions of a revision in Japan's interest rate policy are unlikely to reverse the yen's trend.
In the international market, the USD has decreased in value compared to many other currencies, while the euro and British pound have increased in value compared to the USD. The greenback measured by the Dollar Index is currently only 104.8 points, after recording the 8th consecutive week of increase, the longest chain of increases since 2014.
News 3: Oil price may exceed 100 USD
According to Goldman Sachs, if Russia and Saudi Arabia continue to tighten oil supply, oil prices could surpass $100 per barrel. Both countries have announced extensions of their supply tightening measures until the end of this year, leading to Brent crude oil prices reaching over $91 per barrel, the highest in 10 months.
Goldman Sachs bank has forecast that Brent oil price in December this year will be 86 USD and by the end of next year, it will be 93 USD per barrel. However, after the announcements by Russia and Saudi Arabia, the bank said there was a risk of price increases. If Saudi Arabia's supply decreases by another 500,000 barrels a day, Brent oil prices could increase by 2 USD. In addition, the possibility of OPEC+ continuing to cut production could also push up oil prices.
Rising oil prices could support Saudi Arabia in balancing its budget and generate revenue for Russia. However, high oil prices could lead to an increase in production from U.S. shale oil companies, resulting in price reductions. Additionally, high oil prices may also encourage investments in clean energy.
The United States does not want oil prices to exceed $100 per barrel due to the political importance of gasoline prices. President Joe Biden is focusing on reducing gasoline prices for consumers and ultimately ensuring stable and efficient energy supply worldwide.