Despite rising EV sales, miners are unable to finance projects for battery metals.

Amidst a green tech boom, fierce global competition is pushing down company margins, and a surprising number of mining industry leaders, like Albemarle, First Quantum Minerals, Glencore, and BHP, are cutting budgets, lowering dividends, and laying off workers. In the U.S., where the Biden administration is pushing to develop a domestic mineral supply but has halted many projects that would meet that goal, Alaskan representatives are fighting red tape stalling multiple mining operations, and Piedmont Lithium is letting go of 25% of its staff.

According to the International Energy Agency (IEA), global electric vehicle sales are still going strong and may reach 17 million this year. Despite the early days of significant EV sales volume and predominantly high mineral prices, many miners are unable to secure the financing to continue existing projects or start new ones.

In the IEA's recent Global EV Outlook 2024, the agency emphasized the need for external sources to step in and support large-scale capital expenditure in mining projects.

"After several years of important cash flows as a result of high prices and increasing volumes, many companies are now starting to struggle to finance both existing and new projects with their own revenues, suggesting external sources will be needed for largescale capital expenditure," the report said.

Investor concerns have arisen regarding tight profit margins, fluctuating battery metal prices, ongoing inflation, and the difficulty in qualifying for – or discontinuation of – purchase incentives in various countries.

How it happened

Some miners were slow to take initial advantage of the critical minerals rush, with potential investors attracted by the promise of new green technologies. The energy transition needs to be built upon reliable and sustainable supplies of minerals, and demand is already expected to outstrip supply in the coming decades.

"Geopolitical tensions, supply chain disruptions, high energy prices, and rising inflation and interest rates limit the availability of higher-risk capital. We also observe a cooldown following the post-COVID-19 boom of 2021-2022, which was fuelled by investment restraint during the pandemic and the expectation of significant economic recovery packages afterwards," the IEA report said.

Investors have shied away from the resource sector in favor of quick-turnaround startup money, which is outstripping commodities like gold. The tech stocks known as the Magnificent 7 – Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla – represent $13.1 trillion in market cap, close to the estimated $15 trillion in gold.

Funding for the resource sector has been on the decline for nearly 20 years. U.S. mining industry education and training offerings have dwindled, and high inflation and interest rates have only made it more difficult for companies in the sector to get the money they need.

Changing the game

One of the more surprising funding developments is original equipment manufacturers (OEMs) taking direct action to move up the supply chain and secure their own minerals, some even going so far as to join the ranks of mining and mineral processing.

"Mining and refining will need to continue growing quickly to meet future demand, to avoid supply chain bottlenecks and make supply chains more resilient to potential disruptions," the IEA concluded.

There are still options: green-tech government and research grants, academic collaborations and commercialization, vertically integrated industry partnerships and corporate R&D, international collaboration programs and more.

Alternative technologies that reduce the need for critical minerals may help, but they will still need feedstock to help the next generation of high-flying advancements get off the ground. Best practices are rapidly changing for the mining industry, and with continued adaptation, it can be revitalized and made stronger.