{"id":15277,"date":"2025-02-24T08:53:23","date_gmt":"2025-02-24T08:53:23","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2025\/02\/24\/experts-battery-and-precious-metals-emerging-as-new-geopolitical-battleground\/"},"modified":"2025-02-24T08:53:23","modified_gmt":"2025-02-24T08:53:23","slug":"experts-battery-and-precious-metals-emerging-as-new-geopolitical-battleground","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2025\/02\/24\/experts-battery-and-precious-metals-emerging-as-new-geopolitical-battleground\/","title":{"rendered":"Experts: Battery and Precious Metals Emerging as New Geopolitical Battleground"},"content":{"rendered":"<\/p>\n

The rapidly changing metals <\/strong>landscape and where to invest were key themes addressed during the Commodities and Financial Markets session at this year\u2019s <\/strong>AME Roundup in Vancouver, BC. <\/strong><\/p>\n

Rowena Alavi-Gunn, senior analyst at Wood Mackenzie, started her presentation \u201cBattery Powerplay \u2014 Are Battery Metals Still Investable?\u201d by recounting the challenges battery metals faced in 2024.<\/p>\n

\u201cI\u2019ve picked this topic because battery metals have had a fairly rough 2024,\u2019 she said. <\/p>\n

\u2018We\u2019ve seen low prices, weak demand, increasing costs \u2014 and generally sentiment is maybe sour towards them. And then on top of that, there\u2019s geopolitical uncertainty,\u201d Alavi-Gunn noted. Recent election results and weaker-than-expected electric vehicle (EV) demand may also be deterring investors from entering the battery metals sector. <\/p>\n

Even so, the broad fundamentals remain positive for key metals like lithium, nickel, cobalt and graphite.<\/p>\n

\u201cI think there\u2019s an opportunity for countercyclical investment in battery metals,\u201d she explained.<\/p>\n

\n

Trump policies threaten US EV growth <\/h3>\n

Speaking about freshly inaugurated US President Donald Trump, Alavi-Gunn underscored that US EV proliferation could be hampered by the new administration. Trump could ease EV compliance rules, reduce subsidies and impose tariffs on Chinese batteries and Mexican auto imports, making EVs less competitive.<\/p>\n

As a result, US plug-in vehicle sales could drop from 30 percent to 20 percent penetration, with hybrids gaining market share. This shift could reduce US battery demand by 20 percent.<\/p>\n

However, outside the US the global EV outlook remains largely unchanged.<\/p>\n

\u201cOverall, we see very strong growth in EVs going forward,\u201d Alavi-Gunn said, using a chart to illustrate her point. \u201cPlug ins are growing at nearly 10 percent a year. Hybrids are growing at about 6 percent a year.\u201d<\/p>\n

While this steady increase in EV purchases is the largest contributing factor for the battery metals sector, each metal also has other end-use segments that offer support.<\/p>\n

\u201cWe\u2019re seeing very strong demand growth across all of the battery metals,\u201d the Wood Mackenzie analyst noted. \u201cLithium, obviously, is just crazy, but the other battery metals are still growing pretty strong.\u201d<\/p>\n<\/div>\n

\n

IRA decisions could impact graphite supply <\/h3>\n<\/p>\n

Although Trump\u2019s decisions around the Inflation Reduction Act\u2019s EV incentives \u2014 in particular the 30D tax credit for new clean vehicles \u2014 are expected to have little impact on global battery demand tallies, Alavi-Gunn noted that the graphite market could be impacted by the new administration\u2019s policies.<\/p>\n

\u201cWe think the US could have quite an impact if they keep the 30D credit in place, but they bring forward graphite inclusion,\u201d she said. She went on to explain that graphite is a crucial component for batteries, with China dominating its supply chain. Currently US sourcing rules don\u2019t require graphite to come from allied countries until 2027.<\/p>\n

However, if Trump moves that deadline up, far fewer EVs will qualify for tax credits due to limited compliant supply.<\/p>\n

As Alavi-Gunn pointed out, long-term demand for battery metals is bullish, despite a current glut in key markets.<\/p>\n

The lithium and nickel markets are oversupplied, driven by surging production in China and Indonesia. This excess has kept prices low, but demand is expected to outpace supply by the 2030s, triggering shortages and price increases. <\/p>\n

Cobalt also faces a similar long-term oversupply, though recycling economics could be a risk.<\/p>\n

To fulfill the demand growth that Wood Mackenzie is projecting, Alavi-Gunn noted that billions of dollars in new investment will be required, particularly for lithium. She suggested that major mining firms, traditionally focused on iron ore and coal, may need to diversify into battery metals as these legacy commodities shrink in market size.<\/p>\n

While lithium and nickel mines generate slightly less revenue than copper, they remain attractive investment opportunities, especially for companies looking to future-proof their portfolios.<\/p>\n

This can be achieved through M&A or the development of new greenfield assets.<\/p>\n

As Alavi-Gunn explained, lithium and copper assets command high premiums, making new development more cost effective, while nickel is cheaper to acquire than build.<\/p>\n

However, greenfield projects come with risks like permitting delays.<\/p>\n

She also noted that miners face competing demands for capital, such as shareholder returns, sustainability and diversification. While battery metals offer long-term potential, firms must act now to avoid future shortages.<\/p>\n

The current downturn presents a countercyclical investment opportunity ahead of expected supply deficits and price surges in the 2030s, she said.<\/p>\n<\/div>\n

\n

Canada\u2019s pivotal place in global supply chains <\/h3>\n

Following Alavi-Gunn\u2019s presentation, Emil Kalinowski, director of metals market research at Wheaton Precious Metals (TSX:WPM,NYSE:WPM), took to the stage.<\/p>\n

His 20 minute presentation started with a brief overview of the geopolitical and economic forces shaping metals markets, highlighting a disconnect between analyst forecasts and historical trends.<\/p>\n

As Kalinowski explained, critical and in-demand resources have become a key front in geopolitical tensions, alongside artificial intelligence, space and strategic waterways like the Black and Red seas.<\/p>\n

\u201cThe metals and mining space has become a key battleground for the great powers in the world,\u201d he said.<\/p>\n

As metal supply chains become increasingly politicized, he believes Canada may be the most influential nation. <\/p>\n

\u201cCanada, in my mind, is one of the leaders on deciding who, what and where deals can take place,\u2019 Kalinowski said. \u2018With respect to national security and economic security, logistics, supply chains \u2014 Australia is leading the way when it comes to financing projects, but Canada is getting involved on a geopolitical basis very heavily.\u201d<\/p>\n

Although Kalinowski\u2019s comments came the day after Trump\u2019s inauguration, they appear to have been prophetic. Since taking office, the president has made numerous comments about the US absorbing Canada as the 51st state.<\/p>\n

Trump has cited poor trade negotiations and subsidies as his reasons, but many have questioned the motives behind the proposal, with some speculating that the president would like to access Canada\u2019s mineral wealth.<\/p>\n

More recently, the Trump administration has requested US$500 billion in rare earths from Ukraine.<\/p>\n<\/div>\n

\n

Analyst price predictions clash with supply realities <\/h3>\n

Switching his focus to gold, Kalinowski noted that despite bullish sentiment in the market and dramatic price increases for the precious metal, some analysts are making bearish projections. <\/p>\n

\u201cThey are forecasting that gold prices will fall,\u201d he told the audience. <\/p>\n

\u201cThis is completely off the charts compared to the market and to history. I think they\u2019re wrong.\u201d<\/p>\n

According to Kalinowski, analyst consensus predictions for gold don\u2019t align with supply projections.<\/p>\n

Forecasts suggest a slight annual decline in supply through 2030 \u2014 roughly 1 percent per year \u2014 putting future supply 2 to 3 percent below historical trends dating back to the Cold War, he explained.<\/p>\n

Alternative supply sources like scrap and recycling are also shrinking. <\/p>\n

Unlike past decades, when investors and central banks sold off gold, projections for 2030 show these entities will be accumulating instead, reducing available supply and challenging traditional market assumptions.<\/p>\n

\u201cSo supply is not really explaining why analysts are so bearish,\u201d he said. \u201cMight it be demand? I don\u2019t think so.\u201d<\/p>\n

In fact, global gold demand surged to an all-time high of 4,974 metric tons in 2024, fueled by strong central bank purchases and rising investment interest, according to the World Gold Council. The combination of record prices and high volumes pushed the total market value of demand to a historic US$382 billion.<\/p>\n

Ultimately, Kalinowski attributed analysts\u2019 bearish stance on the gold price to their failure to fully account for the supply constraints, the nuanced nature of gold demand and the geopolitical factors that could drive increased buying.<\/p>\n<\/div>\n

\n

Diverging paths for silver, platinum and palladium <\/h3>\n

For sister metal silver, the consensus was more optimistic, with analysts predicting long-term price growth.<\/p>\n

As Kalinowski pointed out, historical trends suggest the silver price rises over any six year period, but forecasting remains complex. Unlike gold, silver lacks a single price-driving factor, earning its reputation as the \u201cdevil\u2019s metal.\u201d<\/p>\n

Silver\u2019s extreme financialization \u2014 where paper trades vastly outsize physical supply \u2014 makes short-term price moves unpredictable. However, long-term demand shifts are clear. Industrial use, especially in solar panels, is set to grow, while speculative demand is expected to decline \u2014 though its correlation to gold raises doubts.<\/p>\n

Kalinowski added that a key geopolitical wildcard is government stockpiling of silver. Russia recently began adding silver to its reserves, sparking speculation that other nations may follow.<\/p>\n

Even a tiny shift in global FOREX reserves into silver could absorb an entire year\u2019s supply.<\/p>\n

For Kalinowski, that raises the question: \u201cCould silver become a strategic asset alongside gold?\u201d<\/p>\n

He spent the remainder of his time highlighting the seismic shifts occurring in the platinum and palladium markets. With so many supportive fundamentals, analysts are bullish on platinum long term, and the numbers support it.<\/p>\n

While total mine supply is expected remain stable, platinum demand is being reshaped, moving away from internal combustion engines and into the hydrogen economy. According to Kalinowski, this transition is expected to drive ongoing supply deficits, with platinum stores reaching a 47 year low.<\/p>\n

Palladium, on the other hand, faces a different story. While analysts remain optimistic in the short term, long-term fundamentals for the metal look shaky. A flood of recycled palladium from scrapped gasoline-powered cars \u2014 peaking in the mid-2030s \u2014 will add massive supply, just as demand declines by 15 percent.<\/p>\n

Unlike platinum, palladium has no clear role in the energy transition, raising price concerns long term.<\/p>\n

\u201cThere is no hydrogen rescue coming for the palladium market; (there is also a) tremendous amount of supply, falling demand (and) price (is) very concerning,\u201d Kalinowski said.<\/p>\n

With supply tightening for one and surging for the other, the two metals appear to be on diverging paths \u2014 platinum poised for strength, palladium facing pressure.<\/p>\n<\/div>\n

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.<\/strong><\/p>\n<\/p>\n

This post appeared first on investingnews.com<\/div>\n","protected":false},"excerpt":{"rendered":"

The rapidly changing metals landscape and where to invest were key themes addressed during the Commodities and Financial Markets session at this year\u2019s AME Roundup in Vancouver, BC. Rowena Alavi-Gunn, senior analyst at Wood Mackenzie, started her presentation \u201cBattery Powerplay \u2014 Are Battery Metals Still Investable?\u201d by recounting the challenges battery metals faced in 2024. […]<\/p>\n","protected":false},"author":0,"featured_media":15278,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-15277","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/15277","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=15277"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/15277\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/15278"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=15277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=15277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=15277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}