‘Huge problem’ – Andrew Leyland says mining sector can’t attract enough investment

Automakers, not the mining industry, are going to ensure that the supply of battery minerals is enough to meet electrification goals, said Andrew Leyland, managing director, Supply Chain Insights.

Leyland spoke to Kitco mid-November at the 2023 Precious Metals Summit Zurich event.

“The industry itself won’t be able to meet those targets, or it will do it in a very bumpy way,” said Leyland. “We work in these boom-and-bust cycles in the commodity markets, so it’s going to be tricky. I think it will be the end user who steps in.

“A lot of the automakers had to stop production, because they had a shortage of semiconductors. They can see that they’re moving to a supply chain that they need to encourage to be built. They need to sign these long-term off-take contracts.”

Automakers are staffing up, putting people in place to work on minerals acquisition.

“They’re not going to start operating mines. It’s not in their wheelhouse, it doesn’t make sense for them, but investing in those operations’ long-term off-takes, which helps with financing, particularly for debt capital, is the way to go,” he said.

While lithium prices have come off the boil, Leyland said at $22,000 per tonne, miners should be profitable.

“Everybody makes money at that level. If you can’t make money, you probably shouldn’t be in this game.”

More cash is being deployed to the energy transition sector, but a lot of the funding would rather focus on the manufacturing side.

“It’s a huge problem,” said Leyland. “A lot of the money isn’t interested in [mining], but they are interested in deploying parts of the supply chain that can be built quicker. You can put a factory up in two to three years, whereas you’re looking at seven years realistically for bringing a mine onto the market.”

Asked whether governments can help by easing permitting, Leyland said the issue is not so much permitting but legal challenges to operations, which can delay a project for months to years.

He said 2024 is likely to bring some negativity around investments in the energy transition, as the issue becomes politicized in the United States and the UK.

“The one thing that we have relative certainty on is that the demand story is still there,” he concluded.

Special coverage of the 2023 Precious Metals Summit Zurich is brought to you by Vizsla Copper Corp. (TSXV:VCU).

0:00 What is Supply Chain Insights?
1:25 Battery metals recap
2:33 2023 vs 2018
3:55 Incentives
9:50 Are there enough minerals?
13:11 Lithium
17:07 Graphite
19:11 2024
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