- The mining sector is undergoing a significant overhaul with the adoption of clean energy
- 125 million EVs could be on the road worldwide by 2030
- Cobalt, lithium, copper and nickel are important for EV growth
Investors, take note: clean energy investment is growing, and coupled with the rising popularity of electric vehicles, solar power, and others, there is potential for an energy overhaul in our lifetime.
According to Bloomberg NEF, public market investment in clean energy jumped 120% to $3.1 billion in Q3 2018, whereas venture capital and private equity investment increased even more sharply, by 378% to $2.4 billion, showcasing the eager attitude towards a more sustainable future.
Along with the conscious investment sentiment, the mining sector has responded with many energy metals picking up in demand including cobalt, copper, nickel, lithium, and more.
The electric vehicle market
In 2017, the global sale of electric vehicles (EVs) passed one million units. One of the major spearheads of the EV movement has been Elon Musk’s Tesla brand which gained popularity over a decade ago. Now, other automakers such as Volkswagen, Ford, Audi, and more are jumping on the electric bandwagon in order to keep pace with the growing demand for sustainable responses to climate change.
Right now, pure electric vehicles make up 66% of the global EV market, with sales growing faster than that of plug-in hybrids. China is also leading the surge for electric vehicle growth — its market is now larger than Europe and the United States combined.
While considering production and sale is important for the electric vehicle market, looking at the metals that facilitate this production is equally integral. Cobalt, copper, lithium, and nickel are the key elements that go into creating the right car battery, and their demand has been largely affected by society’s desire to replace combustion engines.
The metals behind the car
Cobalt is one of the most popular metals used in batteries, alongside lithium-ion. Fastmarkets projects an average price of US$28 for the metal in 2019, with the first half above the US$30 level. The major factors affecting cobalt, however, are centered around its ethical and environmental uses.
In terms of lithium-ion, the metal could reach a value of US$ 47 billion by 2023, with a CAGR of roughly 11% between now and 2023. Copper is also in a relatively good position to see a major boost in demand as a result of more electric vehicles.
Nickel is seeing bullish sentiment from investors even though trade tensions are weighing the metal down. The base metal could see higher prices this year, with the spot price challenging US$8 per pound.
For producers to meet growing demands, it’s a two way street. Increased investment and funding is going to be necessary if more countries are to introduce electric vehicles into the mainstream.
Although countries seem to be excited about the prospect of switching to electric vehicles, there are many things to consider for these cars to take off including metal supply, production, cost, and mass adoption.
The burgeoning EV sector not only represents a historical shift that will impact our planet for years to come, but an exciting realm for new and seasoned investors. Those who gravitate towards more traditional mining and metal investments would be wise to stay ahead of the curve, as the sector becomes disrupted by green energy initiatives such as EVs.
Moving forward, this space is worth monitoring both as a crucial social development and a highly lucrative investment opportunity, given proper education and planning. For investors, it is important to consider the various materials and industries that are set for growth on the back of rising EV numbers, to make the most of the opportunity a shift to clean energy presents.