Top Commodities: 2019 and beyond

Signs of recovery in the global commodities market have been evident since mid-2016, and investors are ‘cautiously optimistic’ about the long-term forecast of commodities.

Many analysts, among them Goldman Sachs, believe we are entering the best investment environment for commodities seen over the last 10 to 15 years.

Indeed, in the last 2 years, the price of vanadium has surged over 450%, while cobalt has grown over 270% – two metals seen as critical materials in the rapidly developing renewables industries.

In addition to metals required in electrification such as copper (46% increase), aluminium (70%) and nickel (72%), it’s commodities like lithium, cobalt, rare earth minerals and graphite, tied to such green technologies from lithium-ion and vanadium flow batteries to components in wind turbines, where strong growth is forecast.

A major portion of the development of these technologies is being driven by the electric vehicle market. With governments around the world focusing on reducing emissions, many have already initiated the migration to an electric car future: Germany is aiming for a total ban on internal combustion engines by 2030 (specific diesel engines were banned in some streets in Hamburg last year); the U.K. and France by 2040; China; amongst others.

The demand for battery metals from the electric automotive industry alone will need to meet the requirements for an estimated 125 million vehicles by 2030 (though with even greater policy support, this could be closer to 220 million). Elsewhere, a 100 MW lithium ion battery built by Tesla, currently the world’s biggest, has been added to the state of South Australia’s bulk power supply. It receives electricity generated via a wind farm, and can supply up to 30 000 people with power in the event of a prolonged outage.

With demand being driven by these industries, the lithium-ion battery market is estimated to reach a value of US$ 77.4 billion by 2024. That’s big news for producers of lithium, graphite, cobalt and nickel.

There could be as many as 220 million electric vehicles on the road by 2030.

Strong growth for battery metals

We began to see significant demand for lithium starting to pick up around 2014, with the price of the metal climbing consistently at a minimum of 13% per annum. Demand for lithium is expected to hit 350 000 tons by 2020; and by 2025, this number is expected to hit 600 000 tons – 70% of which will be used in the lithium-ion battery industry.

Zimbabwe holds one of the world’s largest known lithium deposits, at over 11 Mt, and as the fifth largest producer of lithium, supplies about 1 000 Mt per year to the global lithium market. In addition to Bikita mine in the Masvingo Province and Prospect Resources’ Arcadia lithium project, two other lithium projects are currently finalising feasibility studies, with two other companies exploring for the metal.

Most of the world’s cobalt is mined in Africa, with the Democratic Republic of Congo alone contributing more than half of the world’s annual supply of the mineral at approximately 70 000 Mt. Smaller deposits of cobalt are also found elsewhere in Africa in Madagascar (3 800 Mt/year) and Zambia (2 900 Mt/year), as well as in the Central African Republic and South Africa.

Lithium-ion batteries also require significant quantities of a very high purity nickel. A critical mineral, battery manufacturers are using eight times more nickel than cobalt and manganese, where previously the metals were used in equal quantities. Its lower prices and easy availability has seen predicted demand for nickel to surge as much as 400 000 tons by 2025.

South Africa remains among the top ten nickel producers in the world, with a 2018 production forecast of almost 50 000 tons. One of the largest mines, the Nkomati mine in Mpumalanga, has an estimated 408.6-Mt of nickel reserves. Uru Metals is also spearheading two new nickel mining projects, the Zebediela nickel sulphide project, in Limpopo, and the Burgersfort nickel project in Mpumalanga.

As core materials in lithium ion battery technology and other green technologies, strong growth is likely to remain and increase as more and more governments move away from fossil fuels-based energy infrastructures, making developments in these metals an increasingly favourable long-term investment strategy.

Ina King

Managing Director, Projects IQ

If you want to get the latest in detailed project information, analysis and charting on mining projects on these key metals in Africa, head over to Africa Mining IQ, Africa’s largest online mining information service with over 1 900 projects on record.