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Sept. 1, 2021, 7:55 a.m. EDT

Major miners are missing energy-transition boat, industry veteran warns

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By Jaime Llinares Taboada

As much of the world aims to move toward a greener economy, some companies are trying to position themselves to deliver the resources needed for such energy transition.

Among those is TechMet, a U.S. government-backed company that invests in resources such as cobalt, lithium, nickel, tin, tungsten, vanadium and rare-earth metals.

TechMet’s Founder and CEO is Brian Menell, a South African executive with more than 25 years of experience in the mining industry. In an interview with Dow Jones Newswires, Mr. Menell warned that the world is on the verge of a massive metals supply-demand imbalance and that the major mining houses aren’t doing their part to make sure soaring consumption is met.

The world will need to multiply production of resources such as cobalt, lithium and nickel, but major miners are missing the boat, Mr. Menell says.

“We’re not looking to have a problem in five to 10 years. We are looking to have a big problem in two or three years,” he said.

Here are some edited excerpts from the conversation:

Dow Jones: What is TechMet doing? What is its mission?

Menell: We are busy expanding our tin and tungsten mines in Rwanda. We’re building the first phase of a substantial nickel-cobalt project in Brazil. We have a vanadium specialty chemicals business in Arkansas. We have been the primary funders of what has become the biggest lithium-ion battery recycling company in North America, Li-Cycle. And we have Techmet Ventures, which invests in rare earths processing technologies and other early-stage projects.

In my view, the scale of the metals supply-demand dislocation is still radically underappreciated by the investing community and by the end-users of these metals.

For instance, even in a very conservative base-case scenario, we could see electric vehicles going from 8 or 9 million in the world today to 100 million in 10 years’ time. This forecast has now become inconceivably pessimistic, but say that it comes true and we only reach 100 million EVs. That would still require three times the present total global annual supply of cobalt, five times the present annual global supply of lithium, and 12 times the present annual global supply of class-1 nickel.

That’s a dislocation that we haven’t seen for any set of natural resources since the impact of the industrial revolution on demand for coal and iron. It’s really epic and very, very daunting.

And our industry is very ill-prepared to meet that challenge, particularly with high ESG [environmental, social, and governance] standards and low carbon footprint–which the Volkswagens /zigman2/quotes/203434344/delayed XE:VOW3 +2.67% , or the Teslas /zigman2/quotes/203558040/composite TSLA +3.26% , or the General Motors /zigman2/quotes/205226835/composite GM +1.28% of this world will be judged on and will require.

So we have a massive challenge which does not only require a total transformation from our side in the metals industry, but a massively enhanced level of government engagement.

If the U.S. is going to be at the forefront of the energy transition–relative to China who has had a 15-year ahead start, because they’ve seen this coming–the U.S. government is going to have to become much more active in the metals and mining space.

We received direct equity investment a year and a bit ago from the DFC [the U.S. development finance institution], who are now a major shareholder of TechMet. That remains the only time in history that the U.S. government has taken a direct equity interest in a metals and mining company. In the context of how our industry has to transform, that’s tiny, but at least it’s a start. But we need that times 500.

How that’s going to happen remains to be seen. I think the government’s agencies have got all the data and analysis. They know what the scale of this challenge is, how essential it is for the next phase of America’s technological and industrial revolution. They know how important it is in order not to have a next generation of energy and mobility dominated or controlled by China. But there’s still a long way to go before there is an understanding of what to do about that and how to engage in a way that defines that landscape.

Dow Jones: When will we start to see that metals supply-demand imbalance?

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