Fortune Minerals : Cobalt News

Reuters - November 1, 2023

View shows Sigma Lithium Corp SGML.V production at the Grota do Cirilo mine in Itinga, in Minas Gerais state, Brazil April 18, 2023. ...

Mining companies in the West are facing two overarching challenges in trying to produce enough metals to enable the energy transition, and at the same time build alternative supply chains to lessen their dependence on China…The problem is that there is a vast gulf between the scale of the ambition and the reality of what's actually happening, and what's likely to happen in the next few years…The challenge is developing the resources, building new mines and perhaps developing downstream processing, rather than merely exporting ores as has happened in the past…The previous models for developing mines appear no longer effective, and even if some projects do progress, they are nowhere near enough to provide enough material for the energy transition…In the past junior miners raised equity capital, conducted exploration and proved up a resource. At this point they could try and raise more capital, seek big-pocketed partners or hope that a large mining company would buy them out…While this happens to some extent, the story at IMARC is largely one of dozens of small mining companies seeking financing, and most ending up with little to show for it…Raising equity capital is hard given the absence of deep pools of retail investor funds and the reluctance of institutional investors to fund risky, long-term projects…The major miners have pulled back on acquisitions in recent years, preferring to run operations leanly and return cash to shareholders, and if they do invest it's largely been brownfield expansions of existing operations…The irony is that in seeking cash to try and reduce reliance on China's dominant role in the energy transition supply chains, the mining industry in the West has been exposed as lacking capital and motivation to invest…Michael Willoughby, global head of metals, mining and transition materials at HSBC, told a forum at IMARC that there is capital available for mining, but it's located in developing countries such as China, Indonesia and Saudi Arabia…These countries also tend to have governments that are prepared to offer deeper support, such as 1% loans and tax holidays for mining and processing investments, Willoughby said…To put the funding in perspective, a junior mining company seeking to develop a cobalt mine in New South Wales will need about A$1 billion to build and commission a mine…Even the U.S. Inflation Reduction Act, which offers around $369 billion in support to de-carbonise the economy, is unlikely to be enough to build an entire supply chain for critical minerals that lessens dependence on China…It's likely that Western governments will have to increase support to develop new mines and processing industries, as well as reform policies so that private capital is encouraged to invest…In addition governments will have to improve on the time taken to approve new mines, while juggling the need to ensure that they are as environmentally friendly as possible…But if Western countries and companies are serious about building new mines and processing facilities and reducing their reliance on China, the total bill is likely to be measured in trillions of dollars, rather than the billions currently being committed….What's not being talked about is how all the new mines, mineral processing and renewable energy equipment is going to be funded.