Abstract

The Federal government recently released their Critical Mineral Strategy which in part referred to developing a supply of critical minerals required for battery electric vehicles (BEVs). Initially six critical minerals are prioritized -   lithium, graphite, nickel, cobalt, copper, and rare earth elements. The challenge though is not just about producing more of these battery minerals, its also about being able to sell specialized mineral products too, at a profit. What is actually sold as a product? It’s not just sheets of cobalt, lithium salts, or graphite powders. There’s a whole new market out there for battery minerals where there is more of a focus on the material’s form, purity, size, texture, type of processing, deleterious elements, and the compounds that the material might be incorporated within. There is a significant business risk to a new project if the battery mineral products that are produced, do not secure the price that was forecasted upon project’s approval. There is a lot of effort that goes into building a new project’s infrastructure, keeping it on budget, and on time but what happens when the mineral product can’t be sold at the forecasted price?

Many commodities like nickel, copper, and gold have publicly traded prices. Battery minerals are generally traded on private markets at prices that are not often publicly known. In fact, the prices between the battery material producer and the buyer can be considered confidential information subject to non-disclosure agreements. The “Field of Dreams” scenario that one can just build a mine, produce a battery product, and then sell it to the market just isn’t reality in the battery material world. It’s a buyer driven market. Battery material producers generally need to “qualify” their products with the battery material purchasers, well in advance of actually selling any quantity of their minerals to the purchasers. Without a qualified price, at an agreed upon volume of material, negotiated in advance, the producer could end up producing a product that receives a significant market discount to sell. The product’s specifications must suit the buyer’s needs, not what the seller is limited to deliver with the processing plan. Will the end product be sold as pencil grade graphite at $400/t, spherical purified graphite at $2,500/t, synthetic graphite at $10,000/t, or graphene at $200,000/t? The world of producing critical battery minerals might not be as simple as what you think it is.