November 20, 2023

Global Metal Industry Evolves with New Technologies and Market Shifts

The global metal industry is witnessing notable changes, driven by emerging technologies and strategic business decisions. Developments range from innovative copper foil production in Chile to Exxon Mobil's entry into lithium production, alongside efforts to produce low carbon aluminum in India. These advancements are reshaping the industry amidst growing demands for metals like copper, challenges in European metal supply, and significant corporate agreements such as Vale Indonesia's recent divestment. This evolving landscape reflects the dynamic nature of the global metal market.

Innovative Copper Foil Technology Emerges in Chile

Researchers at the Universidad de Concepción, in collaboration with Atacama Copper Foils, have developed a groundbreaking technology for producing copper foil. This method focuses on extracting copper from unconventional solutions containing low concentrations of copper and other metals, significantly reducing production costs by at least a quarter. Currently, copper foil is manufactured from high-purity solutions obtained by dissolving copper cathodes in acid, a costly process, albeit capable of producing ultrafine foils (15-100 microns) used in batteries and various 5G devices. The new approach allows for the utilization of residual solutions from hydrometallurgical plants, potentially fulfilling the growing global demand for copper foil, which is expected to increase by an average of 90 thousand tons annually.

Exxon Mobil Ventures into Lithium Production

American oil and gas giant Exxon Mobil is venturing into lithium production, targeting commercial extraction from hydrocarbon field formation waters in Arkansas by 2027. This initiative aligns with Exxon Mobil's goal to become a leading lithium supplier by 2030, potentially catering to over 1 million electric vehicles annually and generating an estimated $800 million in yearly revenue. This move reflects a broader trend among major oil and gas players, like Russia’s Gazprom and Irkutsk Oil Company, who are exploring lithium mining amid growing support for electric vehicles and reduced fossil fuel use in the U.S. and European Union. Interestingly, Exxon Mobil pioneered a lithium-ion battery design fifty years ago, although it never reached mass production.

Vedanta Aluminium Launches Low Carbon Aluminum Shipments

India's largest primary aluminum producer, Vedanta Aluminium, has commenced shipments of primary aluminum with a reduced carbon footprint. A pilot shipment of 300 tons was delivered to Global Aluminium for use in aluminum profiles in construction applications. Employing renewable energy sources in its production process, Vedanta Aluminium achieves a greenhouse gas emission rate of 4 tons of CO2 equivalent per ton of primary aluminum. The company's annual production nears 2.3 million tons. Other industry players, such as Rio Tinto, are also venturing into low-carbon aluminum, with plans to supply German automotive manufacturer BMW starting next year.

Copper Demand Surges Due to Electric Vehicles and Renewable Energy

According to ResearchAndMarkets, copper ore production (in terms of pure metal) is projected to increase by 4.5% to 24.5 million tons by the end of this year, while refined copper production is expected to grow by 4% to 28 million tons. However, demand is set to expand more dramatically by 23% to 27.6 million tons. The surge in copper consumption is driven primarily by the rapid development of industries such as wind and solar power plant construction, which require significant quantities of copper. Another key factor is the burgeoning electric vehicle market, with motor windings demanding considerable copper volumes. Additionally, the ongoing depletion of mined deposits and the declining average copper grade, currently at approximately 0.62%, pose challenges for smelters who face increasing costs and the need to find richer deposits.

Europe Confronts Shortages of Gallium and Germanium

The European Union is grappling with a shortage of rare metals like gallium and germanium due to China's export restrictions implemented in August. These metals are essential in producing various electronics, including TVs, smartphones, and laptops. Currently, few European manufacturers, such as Belgian Umicore, can produce these metals, leading to a dependency on Chinese supplies. The European Commission's efforts to stimulate local production of these metals reveal a challenging path ahead, compounded by high energy costs and regulatory hurdles in the aluminum, copper, and zinc industries. Despite the possibility of sourcing gallium and germanium from Russia, European companies are cautious due to potential sanctions, making them reliant on imports from China.

Forecast: Europe's Continued Dependence on Chinese Metal Imports

Attempts by the European Union authorities to establish their own production of germanium and gallium, as well as other metals imported in significant quantities from China, may face significant difficulties.

For example, European aluminium companies can in principle extract gallium from bauxite in the alumina refining cycle. However, the aluminium industry in the European Union suffers from high electricity and natural gas prices, not to mention various taxes that have a negative impact on its financial situation (which is why primary aluminium production in the European Union is stagnating). The same can be said of copper and zinc smelters, which are in a similar situation.

In addition, the implementation of projects to create germanium and gallium production may take a long time (at least two years in the best case), not to mention the need to invest significant amounts of money.

The European Union law on the extraction of critical raw materials, which is expected to be adopted in the coming months, will not be able to change the situation quickly and radically.

Under the current circumstances, European companies would be better off buying gallium and germanium in Russia, but they may be afraid of sanctions, even though the European Union authorities have not imposed any embargoes or restrictions on the export of these metals.

As a result, European consumers of germanium and gallium (especially electronics companies) will continue to rely on their imports from China.

Weekend recap

Vale Indonesia Signs Key Divestment Agreement

PT Vale Indonesia (INCO) has finalized a significant divestment agreement in San Francisco, USA, on November 17, 2023, involving its shareholders Vale Canada Limited (VCL) and Sumitomo Metal Mining Co., Ltd (SMM). This strategic move, witnessed by high-ranking Indonesian officials including President Joko Widodo, entails VCL and Sumitomo divesting around 14% of their shares in PT Vale to PT Mineral Industri Indonesia (MIND ID), making MIND ID the largest shareholder in INCO. The agreement, a crucial step for INCO in fulfilling its divestment obligations, is vital for securing a Special Mining Business License (IUPK), offering legal certainty for INCO's operations and investments. The completion of the transaction is anticipated by 2024.

YLB Initiates Lithium Carbonate Production Tests in Bolivia

Yacimientos de Litio Bolivianos (YLB) has commenced production tests at its Lithium Carbonate Industrial Plant in Colcha K, Potosí, marking a significant step in Bolivia's entry into the lithium ion battery market. The plant, currently in a stabilization phase, is undergoing operational tests and adjustments to ensure optimal performance. This phase involves deliberately triggering errors to identify and rectify potential technical issues. The plant, located in the YLB Industrial Complex near Salar de Uyuni, began construction in 2019 and aims to produce 15,000 tons of lithium carbonate annually. After initial operational challenges and a restructuring process, the plant is expected to progressively increase production, starting with 20% capacity and eventually reaching full capacity. This development is set to position Bolivia as a significant player in the international lithium market.