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INTERVIEW: Mood for mineral partnerships sours, 2023 may see upturn: Cloudbreak Discovery CEO


Upturn in investment climate seen within six months

Mid-to-long term supply/demand metrics continue unbalanced

  • Author
  • Diana Kinch
  • Editor
  • Alisdair Bowles
  • Commodity
  • Electric Power Metals

The mood for striking new partnerships to develop critical and base mineral deposits has become muted in the current economic climate but investments may pick up slightly next year, according to Kyler Hardy, CEO of Canada-based project generator and incubator Cloudbreak Discovery.

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"Metals prices falling is a kneejerk reaction of [economies] moving into recession," Hardy told S&P Global Commodity Insights in an interview this week. "The overall market has softened. However, demand for minerals for the energy transition means that the resource sector will ultimately be quite buoyant in the coming year."

"I am still optimistic going into 2023 for the natural resource sector. We hope that within the next six months things may have improved a bit, that the capital market may be more receptive, people will be starting to explore again and seeking early-stage exploration projects," the mine project incubator said.

"Prices of critical minerals will escalate again in the current decade with significant increases because supply doesn't meet demand: lithium and other critical minerals will be needed in batteries as a store of energy."

Mid- and long-term supply/demand metrics continue unbalanced, even though the near term supply constraints seem to have been eased by way of global recession, Hardy noted.

Meanwhile, governments in various parts of the world continue to build their strategic minerals supplies and reserves, he said.

Lithium prices more than doubled this year as the market feared supply shocks just after Russia's Feb. 24 invasion of Ukraine, before stabilizing in Q3 after broader recessionary economic tendencies set in.

Platts assessed lithium hydroxide at $76,300/mt on Sept. 27, unchanged on the day but up $800/mt on the week. Lithium carbonate was also steady on the day and up $300/mt on the week at $72,300/mt. Market sources described the increases as "shy" amid poor market liquidity.

Platts is part of S&P Global Commodity Insights..

'Supercycle' seen intact

"Recession notwithstanding, the mineral sector faces a longer-term structural issue," Hardy said. "The energy transition is speeding up in some areas and the number of mines needed to be brought online to produced lithium, cobalt, nickel, uranium and copper is astronomical: we're trying to contribute to this."

The energy transition may have hit a few roadblocks, Hardy said. "Overall, we definitely agree [with other industry representatives] that the mining supercycle is very much intact. Currently, we could say we're in a mini-cycle within the larger cycle," he said.

Cloudbreak Discovery said in March it had signed non-disclosure agreements with about six potential partners with a view to developing its North American Lithium Initiative, a lithium brine project in the eastern US.

"There's no strategic partner on the lithium project yet: the market is slowing down a little bit, unfortunately," Hardy said. "But we're talking to some large potential partners and it continues to be a core project."

The scope of the lithium project has recently been expanded, although its potential production is still unquantified. The project involves a group of brine reservoirs to produce the mineral essential for use in batteries for electric vehicles.

A roadshow organized by the company earlier this month in London didn't aim to raise money, but to catch up with shareholders, he said.

The company is actively working on 18 mineral partnerships in the base, bulk and speciality metals areas, including in the Americas and Africa, with others under incubation.