Industry questions investment in crucial minerals amid uncertainties

Industry Hesitancy Over Critical Minerals Investment Amid Energy Transition Doubts

During the World Materials Forum held in Paris, industry insiders voiced concerns over the hesitance to invest in critical minerals and energy transition projects, attributing it to uncertainties surrounding consumer demand for electric vehicles (EVs) and government commitments to zero-carbon goals.

Market Uncertainty and Its Repercussions

Despite the acknowledged long-term necessity for vast amounts of materials such as lithium, cobalt, and copper to facilitate a move away from fossil fuels, the immediate timeline remains in question. This reluctance stems partly from the uncertainty about whether governments will stick to their zero-carbon targets and if the consumer market for EVs will remain robust.

The European Union and twelve U.S. states have set a 2035 deadline for phasing out new petrol car sales. However, there is skepticism about whether these targets will be met. Mathias Miedreich, former CEO of Umicore, a Belgian recycling and battery materials company, expressed doubts about the feasibility of these goals during the conference. This skepticism has made companies wary of committing to significant investments.

Investment Challenges in a Shaky Market

According to industry experts, financing was not a major concern a few years ago. Currently, securing capital is possible, but it requires having the right project. Stephane Michel, president of TotalEnergies' Gas, Renewables & Power unit, remarked that while capital is available, the market landscape necessitates stringent project selection. TotalEnergies' ACC EV battery joint venture with Stellantis and Mercedes is an example of this cautious approach; the venture recently paused plans for plants in Germany and Italy.

A senior executive from a prominent European chemicals group that supplies battery materials suggested that the energy transition might face a delay of around two years, pushing 2030 projections to 2032. This perspective, albeit subject to change, highlights the fluidity of the current market scenario.

Geographic Disparities in Demand

Another unnamed executive from a global company involved in EV battery materials pointed out that the demand landscape varies by region. In China and Asia, the demand for critical materials remains stronger compared to Europe and the United States. This geographical disparity forces companies to be agile in their capacity planning to swiftly adapt to shifting market dynamics.

In summary, while the long-term vision for an energy transition remains, the industry's current hesitation reflects uncertainties in both policy adherence and market demand, creating a complex landscape for investment in critical minerals.