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Rare earths biggest blind spot in battery metals supply chain

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Rare earths biggest blind spot in battery metals supply chain

As the demand for battery metals increases, driven by the growing electric vehicle sector, the mining industry is becoming increasingly concerned about whether it will be able to meet expectations over the coming years.

Paul Gait, senior European analyst for metals and mining at Bernstein Research, believes that the supply of copper, nickel and cobalt is not at risk of bottlenecking in the near term but lithium could be under threat.

"There's enough of it, but can you have enough of it at today's price? What does the price have to be to deliver the acceleration in the supply that we're going to need to meet that demand expectation?" he asked Nov. 30 during a panel discussion at the Mines and Money conference in London.

Gait went on to suggest that to ensure prices remain under control, price incentives need to be implemented so mining the resources remains attractive to companies.

Despite the electric vehicle industry remaining relatively small at the moment, the panel agreed that in the near future, at least 10% of the cars on the road will be electric, the majority of which will be sold in China.

Ryan Castilloux, founder of Adamas Intelligence, said the only foreseeable hitch on the commodities side for battery technology was the supply of rare earths.

"Rare earths are inseparable from the electric vehicle revolution as we see it," Castilloux said. "I see them as being the biggest blind spot in the battery metals supply chain."

Castilloux said that while resources of rare earths are abundantly available, they are very capital intensive to mine and process. China possesses the largest deposits of rare earths, and it will hold all the cards when it comes to supplying the electric-vehicles sector with the commodity, the analyst said.

Rare earths are predominantly used in the magnets in the motors that are sold in most electric vehicles today. Castilloux said the addition of these magnets makes these motors 15% to 20% more efficient than an alternative induction motor, "meaning you would have to throw 15% to 20% fewer volts at that motor to get you a mile of distance than you would with an induction motor."

As a result, if the rare elements used in these motors go into short supply, automobile makers would be forced to revert to an inferior motor that would go 15% to 20% fewer miles on a single charge.

"That's an unrealistic future," Castilloux said. "I think we all recognize that, second to price, vehicle range is perhaps the most important consideration for somebody looking to purchase an electric vehicle."