Battery electric vehicle penetration rates will probably be lower than most forecast in the medium to long term due to consequences of the Russia-Ukraine crisis, Neal Froneman, CEO of South African-based platinum group metals and gold producer Sibanye-Stillwater said March 17.
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Internal combustion engine vehicles are going to be around for a lot longer than many people anticipate, and may even grow their market, as sanctions and supply disruptions impact the car industry and an economic downturn looms, Froneman said in an interview with S&P Global Commodity Insights.
"In the short to medium term we are going to see some negative impacts of what's happened in Ukraine," Froneman said. "Western companies have closed car manufacturing plants in Russia. Disruption in the supply of car components out of Ukraine is disrupting production lines in Europe... this could lead to production and capacity cuts... and I think demand from civil society will be lower."
"Just when we thought we were getting over the chip shortage we now have these impacts, which are going to have a similar dampening effect to the chip shortages we had last year," he said.
Froneman's comments follow a spurt in EVs uptake around the world.
Global light-duty plug-in electric vehicle sales exceeded expectations last year, more than doubling on the year to a record 6.2 million units, according to S&P Global Commodity Insights' EV Essentials. China saw PEV sales rise 151% on the year to 3.1 million units in 2021.
In its latest forecast, S&P Global sees global plug-in light duty EV sales rising to 9.1 million units in 2022, 13.7 million in 2025 and 26.8 million in 2030.
Bearish on the economy
Europe was already in a "sensitive" economic situation before the crisis and this is now compounded by very high energy prices and rampant inflation, the Sibanye-Stillwater CEO continued. "This indicates we're heading for a bit of an economic downturn as an impact... of sanctions and that's going to create a reduction in demand. And that's going to have a much bigger impact than supply disruptions in the long term.
"!'m bearish on the next year to 18 months," Froneman said. "We're moving from economic prosperity into economic difficulties, and I'm talking globally... inflation is hurting everyone, fuel costs, electricity, steel and all commodity prices are up... that means EVs are not going to be as competitive and that may underpin ICE vehicles."
Long term fundamentals for PGMs remain good irrespective of events in Ukraine, as they evolve predominantly from use in catalytic converters to a role underpinning the hydrogen economy, the Sibanye-Stillwater CEO said.
"The changes in price in PGMs that we've seen is speculation which creates volatility," said Froneman, adding that no changes had so far been seen in palladium and platinum supply out of Russia.
The recent kind of price increase trend seen in battery metals is not sustainable because if prices continue to rise in the same manner, batteries and EVs will become too expensive, added Sibanye-Stillwater chief regional officer – Europe, Mika Seitovirta.
Sibanye-Stillwater is expanding to battery metals with recent acquisitions in the areas of lithium and nickel in Europe.
Premiums for recycled metals
Sibanye-Stillwater is also moving into recycling. Recycled metals will command a premium in the future as they should have a much lower carbon footprint than primary metals, which is what automotive customers will seek, Seitovirta said.
"There will be a premium for these type of low-carbon footprint metals, which are not available today," Seitovirta said. "The whole value chain will be calibrated on the CO2 footprint and this needs to be the lowest possible."
Regionalization will play an important part in recycling and supply chains, the executives said. The company is a major PGMs recycler in North America and will shortly expand its PGMs recycling business to Europe, they said.