Volatile Markets & AI Surge, Resource Trade Tensions, and Cobalt’s Collapse Continues
MARKETS UPDATE
This week, markets turned to their financial bunkers as Crazy Vlad’s latest nuclear saber-rattling sent investors scrambling for gold, German Bunds, and safe-haven currencies like the Swiss Franc and Japanese Yen. Meanwhile, Chinese lithium stocks shrugged off the geopolitical theatrics, surging 10% in Shanghai and Shenzhen. Australian competitors weren't as lucky, sliding in step with broader market jitters. One must wonder if such punts prefigure the transmutation of Cold War II into WW3 and what it means for future winners and losers.
On the other side of the market mayhem, Nvidia stole the show with blockbuster guidance, putting AI back in the spotlight as investors look for their next post-election rally fix. Of course, none of this tech magic happens without metals—so let's hear it for the unsung heroes of semiconductors (no, not potato chips; even Idaho has more to offer). Meanwhile, US Treasury markets saw their gains vanish faster than promises of a soft landing as traders weighed Trump's comeback and slower Fed rate cuts. Over in Japan, BoJ Governor Kazuo Ueda remained coy about December rate hikes. Then again, why hurry when the rest of the world is already holding its breath? (1)
Our team will be taking a break this coming week to celebrate Thanksgiving here in the US, so look for the next edition of Critical Minerals Essentials in your inbox on December 6.
GEOPOLITICAL INSIGHTS
There is increasing weaponization of resource trade as global powers escalate economic and technological competition.
China plans to implement stricter export controls on crucial "dual-use" technologies and materials in two weeks, targeting metals integral to tech supply chains. The list includes tungsten, graphite, magnesium, and aluminum alloys used in both civilian and military applications. The restrictions are expected to take effect on December 1, following detailed specifications released by China’s Commerce Ministry. (2)
China dominates the global supply of these materials, controlling over 80% of tungsten extraction and processing and around 90% of magnesium production, per EU estimates. These metals are critical for electronics manufacturing and essential for defense equipment, weapons, aviation, and space technologies. The move aligns with China's broader strategy to counter US export restrictions on advanced semiconductor and AI technologies. It builds on earlier measures targeting critical materials such as gallium, germanium, rare earths, and antimony.
Simultaneously, geopolitical friction continues to shape commodity markets. Russia recently announced a temporary halt on enriched uranium exports to the US, directly responding to the August 2024 US ban on Russian uranium imports. This ban disrupted a critical supply chain, as Russian low-enriched uranium (LEU) previously accounted for approximately 25% of US reactor fuel.
Russia's move elicited mixed reactions from the market. Uranium equities initially spiked but closed slightly lower. Notably, Centrus Energy, a nuclear fuel broker with prior US import waivers, fell 12% following the news. Russian-enriched uranium previously destined for US utilities is now being redirected to BRICS+ nations and reactors built by Rosatom, Russia's state nuclear corporation.
SUPPLY CHAIN OBSERVATIONS
According to contract-for-difference (CFD) data, cobalt prices have dropped USD $4,835 per tonne—a 16.6% decline—since the beginning of 2024. This significant downturn reflects a persistent demand slump and structural shifts within the global cobalt market. Chinese cobalt sulfate prices, a key benchmark, have reached record lows. Producers report muted trading activity even with lower prices as the market struggles with excess supply and waning interest. Nickel sulfate prices are following a similar trajectory, with refiners operating at a loss in the sector.
The growing adoption of cobalt-free lithium iron phosphate (LFP) batteries in the EV sector is crucial to this decline. These batteries, which are more affordable to manufacture, have gained significant traction in recent years. The share of EV batteries in China containing cobalt is projected to fall to 31% in 2024, a sharp decline from 44% in 2022. This trend reflects a broader movement toward diversifying away from cobalt, especially as producers and manufacturers seek cost savings and greater supply chain stability. “Cobalt is far less important than imagined,” stated Zhou Xing, a spokesperson for China Molybdenum Co. (CMOC), the world’s largest cobalt miner. Zhou predicted that cobalt-containing batteries may eventually account for less than 10% of the market. The energy transition, once seen as a catalyst for cobalt demand, is rapidly reshaping expectations for the metal’s role in the battery supply chain. (3)
CMOC's rapid expansion of two massive copper-cobalt mines in the Democratic Republic of Congo (DRC) has exacerbated the current cobalt glut. The Chinese mining giant smashed its full-year output target within the first nine months of 2024. This surge in supply has pushed cobalt prices to their lowest levels since 2016, further compounding the downward pressure on the market.
Meanwhile, Glencore, previously the largest cobalt supplier, has taken a more cautious approach. The Swiss mining giant cut production at its Mutanda mine in the DRC, signaling its intent to stabilize supply rather than flood the market. In contrast, CMOC has focused on scaling up its copper production, viewing the red metal as a stronger long-term growth opportunity. As cobalt is often mined as a by-product of copper extraction, CMOC’s bullish stance on copper has inadvertently added to the cobalt oversupply.
Attempts to hoard cobalt to stabilize prices are unlikely, given the significant costs associated with storage and logistics. Analysts believe that the market will continue to face challenges in the short term, with low-cost refining capacity coming online in China and Indonesia, which will keep cobalt prices under pressure. Prices are unlikely to recover in the near term, with the market needing several years to absorb the current surplus.
In an effort to navigate the challenging market, CMOC has deepened its relationship with Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest battery manufacturer. CATL became CMOC's second-largest shareholder in 2022 and has since leveraged its stake to secure cobalt supply agreements. These agreements have helped CATL maintain a competitive edge in an oversupplied market, even as the demand for cobalt-containing batteries continues to decline. “A secure and stable supply of cobalt enables us to better meet customer demand,” a CATL spokesperson explained. At the same time, the company emphasized its belief that the market share of LFP batteries will continue to rise in the years ahead.
Despite its aggressive output strategy, CMOC is beginning to feel the strain of lower cobalt prices. In August, the company expressed optimism that supply and demand would reach a “good balance” within two years. However, recent statements from Zhou Xing reveal growing frustration over the surplus of cobalt by-product, which has significantly eroded CMOC’s profits.
The bearish sentiment surrounding the cobalt market is not limited to CMOC. Analysts point to broader structural challenges, including the rapid scaling of cheap refining capacity in Asia and the shifting preferences of EV manufacturers. The energy transition’s accelerating shift toward alternative battery chemistries is expected to reshape demand dynamics further, potentially reducing cobalt's importance in the supply chain over the long term. The global cobalt market faces a difficult road ahead. Prices will likely remain subdued throughout 2024, with recovery contingent on the market's ability to absorb the current oversupply. Even if demand for EVs continues to grow, the declining reliance on cobalt in battery manufacturing suggests that the metal may never regain its previous significance. (4)
In local currency terms, year to date, Jervois Global is down 75%, Cobalt Blue has lost 70%, Sunrise Energy Metals has fallen 41%, Kuniko Ltd down 42%, Aeon Metals is negative 55% (suspended), Anson Resources is minus 51%.
MINING & EXPLORATION NEWS
ASX and US dual-listed Piedmont Lithium and ASX-listed Sayona Mining announced an all-stock merger this week, which should see the combined company owned equally by both companies' shareholders. The transaction is expected to close in the first half of 2025. To support the merger, the companies plan to raise USD $99 million in pre-completion equity and an additional USD $45 million via a conditional post-merger placement, leaving the combined company with USD $164 million in cash. Resource Capital Funds backed the financing component. Funds will address operating costs (USD $39 million), growth initiatives (USD $33 million), merger expenses (USD $22 million), and other strategic needs. Notably, USD $14 million will go toward land acquisition and design for the Ewoyaa project, which will be consolidated alongside the NAL, Authier, Moblan, and Carolina Lithium projects. The combined company’s lithium reserves are projected at 70.4 Mt at 1.15% Li₂O, and it will secure a 50% stake and long-term offtake rights for Ewoyaa, which Atlantic Lithium also owns.
UK-listed Bushveld Minerals has suspended trading on AIM and appointed a turnaround specialist due to persistent liquidity challenges and a weak vanadium market. Management cited unsuccessful negotiations with stakeholders to secure additional funds, compounded by prolonged weakness in vanadium prices. The company’s subsidiaries are now under business rescue initiatives, protecting them from legal actions while exploring restructuring options. The financial strain stems from operating losses, constrained maintenance budgets, and unfulfilled funding efforts. Management has engaged insolvency practitioners to explore the next steps while emphasizing the need for operational stability during this critical period.
UK-listed Alba Mineral Resources raised GBP £300,000 via share placements and launched a retail offer to raise an additional GBP £100,000 at 0.03p per share. Alba has secured an option on the Finnsbo Rare Earth Project in Sweden, known for its historical mining significance and promising assays of up to 3.5% TREO. Executive Chairman George Frangeskides affirmed the Swedish initiative would complement Alba’s primary focus on Welsh gold operations.
ASX-listed EQ Resources announced its acquisition of the Tungsten Metals Group, operator of the world’s largest non-Chinese ferrotungsten plant in Vietnam. This vertically integrates EQ Resources’ tungsten operations, including the Barruecopardo mine in Spain and the Mt. Carbine mine in Queensland. With a 4,000tpa capacity, the plant strengthens EQ Resources' market position by leveraging its low-cost structure in Vietnam. The transaction, valued at AUD $13.5 million, involves cash and share considerations and is expected to diversify revenue streams while aligning with the company's upstream tungsten production strategy.
UK-listed Empire Metals released positive metallurgical results from its Pitfield project in Western Australia, advancing its anatase titanium resource. Preliminary gravity separation and flotation tests achieved up to 80% TiO₂ recovery, with further optimization planned. Empire emphasized the deposit's favorable leaching characteristics, which are linked to lower energy and acid consumption, and is progressing flowsheet studies toward a lower-cost operational model. There are ongoing discussions with Australian government-backed funding sources, recognizing the status of titanium's critical minerals. Concurrently, high-grade zones like Cosgrove (12.2% TiO₂ over 4.6m) promise further resource potential.
London and Perth-based Sovereign Metals completed mining trials at its Kasiya rutile and graphite project in Malawi, demonstrating efficient extraction through both dry and hydraulic methods. The trials included rehabilitation efforts, with backfilling completed for a test pit to assess agricultural restoration potential. These efforts are central to Sovereign’s Environmental and Social Impact Assessment (EIA), guided by a technical committee involving Rio Tinto. Sovereign’s partnership with local farmers also addresses Malawi’s food insecurity challenges, reflecting its commitment to sustainable development alongside resource extraction.
Nasdaq-listed Sigma Lithium reported Q3 2024 results, with revenues impacted by a $31.6 million negative provisional pricing adjustment. Operationally, Sigma achieved strong production and sales (60.2kt and 57.5kt, respectively), and cost efficiency improved despite temporary mobile crusher expenses. Looking ahead, the Phase 2 expansion remains on track for Q3 2025 commissioning, nearly doubling production capacity to 520ktpa at a low capital cost. Sigma is also advancing studies for Phase 3 and 4 expansions, targeting intermediate lithium chemical production to solidify its position in the global lithium market.
ASX-listed Evion Group announced its first graphite production from its small Indian plant, with initial shipments to Europe expected in Q3 2024. The JV operation achieved prices between AUD $3,000 and $3,300 per tonne, with production costs ranging from AUD $1,500 to $1,750 per tonne. Evion plans to double its capacity to meet the growing demand for expandable graphite, supported by partnerships like Technografit GmbH. The company projects significant revenue growth as it scales operations to target larger markets.
UK-listed Blencowe Resources has launched a 6,700m drilling campaign at its Orom Cross graphite deposit in Uganda, aiming to expand resources and reserves for its Definitive Feasibility Study (DFS). The campaign focuses on higher-grade zones and resource extensions, with results expected to strengthen the project's long-term economics. Executive Chairman Cameron Pearce expressed optimism about the campaign's potential to increase production volumes and improve project valuation, reinforcing Orom Cross’s standing as a world-class graphite deposit.
Neometals reported successful pilot results from its Eli process, which converts lithium chloride into lithium hydroxide using electrolysis rather than chemical precipitation. This innovative approach reduces reagent costs and enhances environmental sustainability. Testing confirmed commercial scalability, with high-purity lithium hydroxide samples meeting specifications. Neometals is now seeking industrial partners to advance the technology through demonstration plant trials, potentially revolutionizing lithium refining methods.
Ionic Rare Earths published a feasibility study for its planned magnet recycling plant in Belfast, highlighting substantial financial and environmental benefits. The plant, with a 400 mt/year capacity of rare earth oxides, promises a sustainable supply of critical materials for the clean energy sector. The 20-year project underscores Ionic’s commitment to circular economy principles, leveraging its expertise to meet the growing demand for recycled rare earths.
SOURCES: (1) Market Data from Bloomberg as of 1:00 PM ET, November 22, 2024, in the local currency. (2) Li, Lauly, and Cheng Ting-Fang. “China to Tighten Export Curbs on Critical Metals Ahead of Trump’s Return.” Nikkei Asia, November 15, 2024. (3) Lee, Annie. “World’s Biggest Cobalt Miner CMOC Is Gloomy on the EV Metal’s Future.” Bloomberg.com, November 6, 2024. (4) Lee, Annie. “China’s Cobalt King CMOC Hits Output Goal Months Ahead of Schedule.” Bloomberg.com, October 29, 2024. (5) Additional data courtesy of Aeon Metals Ltd (AML AU), Alba Mineral Resources (ALBA LN), Anson Resources (ASN AU), Atlantic Lithium (ALL LN), Blencowe Resources PLC (BRES LN), Bushveld Minerals (BMN LN), Centrus Energy Corp (LEU US), China Molybdenum Co. (603993 CN), Cobalt Blue Holding (COB AU), Contemporary Amperex Technology Co. Ltd. (300750 CN), Empire Metals (EEE LN), EQ Resources (EQR AU), Evion Group (EVG AU), Glencore PLC (GLEN LN), Ionic Rare Earths (IXR AU), Jervois Global Ltd. (JRV AU), Kuniko Ltd (KNI AU), Neometals Ltd (NMT AU), Nvidia Corp (NVDA US), Piedmont Lithium (PLL US & AU), Rio Tinto (RIO LN US AU), Rosatom State Corporation (private), Sayona Mining (SYA AU), Sigma Lithium (SGML US CN), Sovereign Metals (SVM LN & AU), Sunrise Energy Metals Limited (SRL AU), and Tungsten Metals Group (private).
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