| Lithium, like that extracted from the Silver Peak mine in Nevada, plays a major role in energy transition technologies. However, it is just one of many metals needed by the sector and mining companies fret that permitting is not happening fast enough to keep up with demand for several commodities. Source: simonkr/E+ via Getty Images. |
Several materials key to the energy transition, including lithium, cobalt and refined copper, are forecast to enter a supply deficit in 2027, according to S&P Global Market Intelligence. While a surplus of copper is expected for 2023, copper production fell short of demand last year.
In response, major world economies are rolling out policies to invigorate the supply chains that make computer chips, solar panels and electric vehicle batteries. While cobalt, copper and lithium have garnered a lot of attention because they are vital to the energy transition, miners have warned about potential challenges in meeting demand for a variety of other minerals, including rare earths, nickel, graphite and a host of lesser-hyped materials. As battery chemistries change, miners must also watch for shifts in demand, such as how battery-makers have increasingly turned away from cobalt-heavy batteries.
Miners said slow permitting processes, local opposition to new projects and a shortage of investment in exploration for new resources hamstring the sector's ability to respond to global goals of reaching net-zero emissions by 2050.
"I'm worried about the green energy transition not happening in time because we can't get our act together for permitting for critical minerals required for that transition," said Nolan Watson, president and CEO of Sandstorm Gold Ltd. — a Canadian streaming company with investments in gold, silver, copper, zinc, platinum, nickel and other projects — in an interview during the Denver Gold Forum in September. "That does keep you up at night, being a mining guy. ... That transition is not happening in time unless permit acceleration happens, and I don't see it unless politicians can get out of their own way."
Locals fear mining damage
The mining industry has "garnered a bad reputation, and certainly, some of that is understandable," according to "The State of Critical Minerals Report 2023," released by the Colorado School of Mines' Payne Institute for Public Policy on Sept. 26. Mining can pose a significant risk to the environment and people nearby, particularly at large-scale operations. In just the past few years, mining operations around the world have been associated with fatal environmental disasters, the use of child labor, the destruction of ancient heritage sites, and other social and ecological problems.
While the sector works to clean up its image, its past contributes to hefty opposition to new projects, slowing down an already sluggish process for finding and exploiting mineral resources that most people do not want to see in their backyard.
"It seems we mostly agree on the need for critical minerals," wrote Morgan Bazillian, director of the Payne Institute and a professor of public policy at the Colorado School of Mines, in a foreword to the report. "But the mines needed to produce them? Not so much."
Northern Dynasty Minerals Ltd.'s proposed Pebble mine in Alaska has faced heavy opposition, with nonprofit environmental group Earthjustice warning that the mine would directly affect the region's sockeye salmon run. That could in turn jeopardize local jobs, a cultural tradition of subsistence fishing, and a robust tourism and sportfishing economy. The Environment Protection Agency recently vetoed the project, and the company plans to appeal.
In January, the US Interior Department issued a 20-year mining moratorium on a slice of northern Minnesota that included the site of the copper-nickel Maturi project proposed by Twin Metals Minnesota LLC, a unit of Antofagasta PLC. And the US Army Corps of Engineers recently revoked the permit for the NorthMet copper-nickel project in Minnesota due to concerns over compliance with water quality requirements of the Fond du Lac Band, one of six bands of the Minnesota Chippewa tribe.
Environmental nonprofits have pushed for reduced consumption and greater recycling of materials as a solution. Some, such as the World Wildlife Fund, have also proposed moving toward more responsible mining that "includes applying the mitigation hierarchy for nature conservation and preventing negative environmental and social impacts."
Nickel, used in electric vehicle batteries, is another material some believe to be a potential bottleneck that will slow the pace of the energy transition. Gregory Beischer, a geologist and CEO and president of Alaska Energy Metals Corp., said the company is advancing a sulfide nickel project with a multibillion-pound nickel potential in central Alaska.
"No one's asking to relapse any regulations," Beischer said in an interview. "We need quick decisions on whether or not you're getting [a permit]. It shouldn't drag on for years."
The Colorado School of Mines report said getting permitting approvals takes seven to 10 years in the US — about five times longer than in countries such as Canada and Australia.
"We're totally bottlenecking or heading towards that [on several metals]," said Mitchell Krebs, president and CEO of Chicago-based precious metals producer Coeur Mining Inc., during a recent interview. "It's a cold, hard truth that we're going to end up with a shortage of these minerals and metals that we all need."
In September, the Biden administration's Interagency Working Group on Mining Laws, Regulations, and Permitting released a final report with over 60 recommendations on reforming and improving how mining is conducted on US public lands. However, implementing the recommendations would likely need the support of a US Congress divided on the issue.
Watson worries that politicians are only offering platitudes when it comes to mine development in a bid to get reelected.
"The problem with that fundamental factor of politics is that any decision that they may make with respect to mining or permitting or anything that is not popular, if it backfires on them, they [lose their position], so it's always in their interest to delay the decision," Watson said.
Government funding bolsters certain projects
Governments around the world have amped up support for mining to accelerate the energy transition.
Even though the Biden administration blocked some mines over environmental concerns, it has taken action to help other mining projects get off the ground and even supplied funding for assorted metals and mining projects. For example, the Defense Department has been proactive about strengthening domestic production for some materials and signing new contracts with mining operations in the US, according to the Colorado School of Mines report. And the Inflation Reduction Act, signed in 2022, will pump billions of dollars into developing a US supply chain for batteries.
Lithium Americas Corp. is reportedly getting a $1 billion loan from the Energy Department to bring its Nevada project into production, and Perpetua Resources Corp. has been a beneficiary of the government's interest in antimony, a material with military applications. In August, the company was awarded $15.5 million in DOD funding to demonstrate a fully domestic antimony trisulfide chain from its Stibnite mine in Idaho, which will also produce gold.
"I think that it is a definite target, a definite priority for this administration as they look at supply chain needs, particularly for the military and the DOD," said Laurel Sayer, Perpetua's president and CEO, in another interview. "But DOE also has their list for clean energy."
However, the mining industry itself has invested little in the exploration and drilling that many say is needed to find the resources to meet demand projections. Drilling activity at exploration projects has been dropping in recent months as miners find it difficult to obtain funding for new projects, according to Market Intelligence data.
"A lot of stakeholder demands have pushed management teams and boards toward short-term decision-making around returning cash flow back in the way of dividends, buybacks, debt reduction," Coeur Mining's Krebs said. "Those short-term decisions, which shareholders like, might be great for that stakeholder group. But in terms of reinvesting in itself, our industry, that's going to be another theme [complicating the ability to meet future demand]."
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