Green Rush

Manufacturers may try to skimp on critical minerals, but scale and complexity will eventually drive demand higher, said Mike Walden, senior director at TECHCET.

Last week Walden recorded an episode of Green Rush with Matt Watson, founder of Precious Metals Commodity Management LLC. 

Electrification and AI are going to need a lot of critical minerals and precious metals, noted the two guests. AI is going to require massive data centers, which will be very power hungry. Solar power has also been making big strides. 

"Solar photo-voltaic on its own is a massive market," noted Watson.  

Walden said that there is a lot of AI hype. The build out for the power-hungry data centers will take time. Thrifting and substitution will dent demand, but more metals will still be needed. 

"Designs are becoming extremely sophisticated," said Walden, discussing the new generations of semiconductors. "AI is a self-feeding monster. AI could counter some of the current use of metals. But, generally speaking, the complexity is just driving material consumption further and further."

Electrification and AI will favor precious metals, said Peter Thomas, an independent consultant. 

This week, Thomas recorded an episode of Green Rush with Matt Watson, founder of Precious Metals Commodity Management.  

Gold has broken several all-time highs this year, and silver is up about one-third year-to-date. Looking at the chart for gold prices, Thomas said the price patterns look great. 

"If you're a technician, it doesn't get better than that," said Thomas. 

The two noted later in the interview that industrial demand for both metals will be growing sharply due to electrification and AI. Watson and Thomas also discussed the World Gold Council's latest central bank survey. 

On Tuesday, the council published the results of its annual Central Bank Gold Reserves survey. Of the 70 responses, 29% said they expect to increase their gold reserves in the next 12 months. The WGC said this was the highest level it has seen since it started the annual survey in 2018.

Challenges with mine supply in South Africa, by far the world’s largest platinum producer, should support prices for the auto catalyst metal, says Matt Watson, founder of Precious Metals Commodity Management LLC. 

On June 5 Watson recorded an episode of Green Rush with guest Edward Sterck, director of research, World Platinum Investment Council (WPIC). 

Watson referenced a chart showing platinum supply decreasing to 2030, as operational expenditures rise and miners close unproductive shafts. “We’re heading into a zone where we’re going to be in a structural deficit going forward,” he said. 

Sterck agreed, stating that “it's just fundamentally the combination of mine and recycling supply continuing to run short of demand.” The WPIC projects a negative 1.2 percent CAGR for ICE (internal combustion engine) auto catalyst demand between now and 2028. Continuing into the 2030s, hydrogen vehicles will become the biggest end source of platinum demand. 

Events like “Diesel-gate” have stunted the demand for diesel vehicles. Sterck noted diesel’s market share has declined from 50 percent in 2015 to around 17 percent today. Higher emissions standards have increased PGM loadings per vehicle. 

Watson said he worries there won’t be enough platinum to meet the demand for the hydrogen economy, forecasting 3.5 to 4 million ounces of platinum available, against 13 million ounces of PGMs that currently go into the automotive market. 

Sterck put the number of available ounces higher due to recycling, mostly from end-of-life auto catalysts and jewellery made from platinum. The WPIC sees hydrogen demand for platinum growing to 900,000 ounces from 100,000 oz currently. 

Sterck noted that with subsidies, heavy-duty hydrogen vehicles reach cost parity with diesel-fueled heavy-duty vehicles by 2030. However, US subsidies are lower, therefore, “we don't really have a huge amount of hydrogen demand for platinum in our base-case forecasts coming from North America. It's really a China and a Europe story.” 

Listen to Kitco Mining's Green Rush to understand and profit from a once-in-a-century event: the clean energy transition.

Each week, host Matt Watson, founder of Precious Metals Commodity Management, will take a deep dive into a metal that will underpin our new electrified world. Green Rush explores the vital role of nickel, copper, lithium, cobalt, silver, platinum group metals, rare earth elements and other metals that power the batteries driving our sustainable future.

Ambitious energy transition policies are running into mining constraints, noted Matt Watson, founder of Precious Metals Commodity Management. 

This week Matt Watson recorded Green Rush and looked at lithium with guest Chris Williams, an analyst at Adamas Intelligence. 

The two discussed 'base case' and 'high case' adoption scenarios and the impact on lithium demand. 

The two reviewed historical lithium prices and the factors influencing the recent spike. Water consumption is impacting production. Direct lithium extraction is making in-roads, but the technology still requires significant development. Supply is challenged due to long development times for mining. 

Last week Matt Watson and Andrew Miller of Benchmark Mineral Intelligence recorded an episode of Green Rush to dissect the challenges facing the clean energy revolution, particularly in the realm of lithium-ion batteries for electric vehicles. 

While policymakers target aggressive timelines for zero-emission vehicle adoption, the industry faces significant hurdles in scaling the battery supply chain. The biggest obstacle is the lengthy development process for new mines, which can take up to 17 years. This directly impacts the availability of lithium, nickel, cobalt, and other crucial metals. Benchmark's analysis reveals that to meet lithium demand alone by 2035, the equivalent of 74 new large-scale mines would be needed – a questionable feat.

Automakers, including Tesla, are placing increasing emphasis on responsible mining and minimizing the environmental impact of battery production. This means choosing less polluting extraction methods, reducing cobalt content in batteries, and addressing water scarcity and pollution concerns associated with lithium production. The clean energy transition hinges on the industry's ability to balance ambitious growth targets with environmental and social responsibility.

The industrial demand for iridium and ruthenium is outstripping mined supply, pushing the need for recycling, says Green Rush host Matt Watson.

On April 24, Watson recorded an episode of Green Rush with Steven Hazelbaker, COO of Furuya Metals America, a PGM manufacturer and recycler. The topic was the platinum group metals - iridium and ruthenium - and the hydrogen economy.

Watson kicked off the discussion with a chart showing that iridium and ruthenium represent a relatively small part of the PGM basket, around 11%. Iridium is worth USD$1.7 billion, and ruthenium is just over $1 billion, out of a total precious metals value of $395 billion. However, the two so-called "minor" PGM metals are essential to the hydrogen economy. 

Ruthenium's catalytic properties make it effective in proton-exchange membrane (PEM) fuel cells, along with platinum. Iridium acts as a catalyst in a PEM electrolyzer. 

Furuya Metals specializes in ruthenium and iridium manufacturing/ recycling. It dominates the hard-drive sector and manufactures ruthenium sputtering targets and iridium crucibles, which are utilized, for example, in medical lasers used to remove tattoos.  

Furuya refines much of the world's iridium and ruthenium. Only 8.5 to 10 tonnes of iridium are mined yearly, yet Furuya recycles 10 tonnes yearly. "Your recycle rate is more than is being mined," said Watson. Furuya recycles about three times as much ruthenium as is mined, 60 tonnes a year versus 20-22 tonnes. 

Hazelbaker noted that prices drive high recycling rates. "[Iridium is] $5,000 per troy ounce, $465 per troy ounce for ruthenium. It's a key component for our customers to be competitive in their markets," he said. 

Watson pulled up a chart showing around 750,000 ounces of ruthenium are mined per year, yet the demand is more than 2 million ounces. 

"The gross demands are much higher than people realize," he said, adding, "I think both these secondary recycle markets are going to be pressed to grow further over time." 

Listen to Kitco Mining's Green Rush to understand and profit from a once-in-a-century event: the clean energy transition. Each week, host Matt Watson, founder of Precious Metals Commodity Management, will take a deep dive into a metal that will underpin our new electrified world. Green Rush explores the vital role of nickel, copper, lithium, cobalt, silver, platinum group metals, rare earth elements and other metals that power the batteries driving our sustainable future.

Green Rush host Matt Watson says "an awesome amount" of material will be needed for clean hydrogen applications, but guest Phillip Walter believes technology will provide solutions. 

On April 17, Watson recorded an episode of Green Rush with Walter, Executive VP of Business Line Hydrogen Systems for Heraeus, a major precious metals processor. The topic was the hydrogen economy and platinum group metals (PGMs). 

Walter said PGMs and hydrogen belong together because they have a unique position in geochemistry. Applications include electrocatalysts to produce hydrogen, Proton Exchange Membrane (PEM) electrolysis, electrocatalysts for electrolysis, the coating of bipolar plates or porous transfer layers to protect against corrosion, and removing oxygen from a hydrogen stream. 

One of the biggest future applications of hydrogen is in fuel cells, where platinum on carbon-type catalysts are used for synthesizing water out of hydrogen and oxygen, thus releasing energy. 

Watson clarified the difference between PEM electrolyzers, used for producing "green" hydrogen, and PEM fuel cells, which take hydrogen gas and convert it to power, mostly to drive transportation systems. 

Iridium and platinum are used in PEM electrolysis, while platinum is essential for fuel cells, along with iridium as a cell reversal additive. 

The rarity of iridium has necessitated thrifting; Walter said a lot less iridium per gigawatt is used now, about 400 kilograms per GW versus a tonne per GW two years ago. The total electrolyzer capacity is around 70 GW. It is estimated that about 28 tonnes will be needed by 2030 versus about 12 tonnes available for new applications, leaving a shortfall. 

Eight to 10 tonnes of iridium are produced annually as a by-product of platinum mining. 
"This is a minor subset of the platinum group metals, very small and yet so crucial," Watson said. "That's why you hear so much discussion about iridium. How are we going to design-thrift this to get it to be scalable?"

The Hydrogen Council is eyeing 600-900 million tonnes of clean hydrogen by 2050, including for fuel cell vehicles, "green" steel, green methane, and green ammonia, used as a fuel feedstock in maritime shipping. "This is an ominous task. How much clean hydrogen are we gonna need? It's an awesome amount of material," Watson said. 

Environmental, social, governance (ESG) initiatives are further delaying mining projects while critical metals are in high demand, creating tension within the mining industry, says Matt Watson, founder of Precious Metals Commodity Management LLC. 

The other problem is that metals necessary for the green transition are difficult to process, namely nickel, cobalt and rare earths. 

On April 3, Watson recorded an episode of Green Rush with guests James Gavilan, principal of Gavilan Commodities, and Lyle Trytten, president of Trytten Consulting Services. The subject was ESG in the context of scaling responsibly mined minerals. 

Watson pulled up a chart from the U.S. Geological Survey showing we will use all our nickel and cobalt reserves by 2050. It takes up to 17 years to develop a mine, longer if ESG criteria must be met. 

“They're adding to the timelines, and unfortunately, I think we're getting into a genre of metals that are dirty,” he said, cueing up nickel processing expert Lyle Trytten. 

There are two types of nickel deposits — sulfide and laterite. Sulfides tend to be in North America and Europe, whereas laterite nickel deposits are clustered around the equator. Indonesia is by far the largest nickel producer. Nickel mined there is processed using high-pressure acid leaching (HPAL), which generates less air pollution than traditional smelting but creates fine tailings (2-10 microns) that are difficult to dispose of. 

Trytten said sulfide deposits are easier to handle from a pollution perspective, but “the reality is that we need nickel from a variety of sources. We're not going to bring it all from the sulfide deposits that we have in North America and Europe.” That means that, one way or another, the industry must deal with tailings. 

“They're a necessary evil, and you're in these areas that have high rainfall, high seismic risks, and steep topographies,” he said. “There are no good answers, there's a succession of bad answers.” 

Gavilan said his clients are seeking security in mineral supply, and that is shining a spotlight on problematic mining jurisdictions like Indonesia. He pointed to the recent explosion at a Chinese-owned nickel plant on Indonesia’s Sulawesi Island that killed 13 workers. 

“This type of mining in Indonesia and other areas helps make the case greater when we look at clients that are operating in better jurisdictions,” he said.

Cobalt mining in the Democratic Republic of Congo has come under scrutiny due to the use of child labor, environmental degradation, and civil unrest. 

Trytten said there are also no good answers regarding mining in the DRC, “except driving through the supply chains to understand where things come from, how they are developed, mined, processed, etc., what the full supply chain looks like and having that actually visible right down to the customer level.” 

*Listen to Kitco Mining's Green Rush to understand and profit from a once-in-a-century event: the clean energy transition. Each week, host Matt Watson, founder of Precious Metals Commodity Management, will take a deep dive into a metal that will underpin our new electrified world. Green Rush explores the vital role of nickel, copper, lithium, cobalt, silver, platinum group metals, rare earth elements and other metals that power the batteries driving our sustainable future.*

The amount of copper required for electrification purposes over the next three decades is astronomical, says Matt Watson, founder of Precious Metals Commodity Management LLC. 

On April 10, Watson recorded an episode of Green Rush with guest Bart Melek, global head of commodity strategy at TD Securities. The topic was copper, the electrification metal. 

Watson pulled up a chart showing the total demand for copper — the most highly conductive metal besides silver. In a base case emissions scenario, copper demand will rise to over 50 million tonnes a year by 2050. For context, humankind has mined 620 million tonnes of copper to date, and the mining industry currently produces about 22 million tonnes a year. 

"You're gonna have to mine roughly 2X what we've mined historically in the next three decades," said Watson. "That's just a staggering thought." 

"It is a big number, and it's going to require massive amounts of capex," Melek agreed. 

Watson showed charts requiring greater amounts of copper usage in electric vehicles and renewable energy systems, especially wind power and solar. Seventy-five percent of copper demand comes from wiring. 

"The transition into a net zero economy, electrification of the global economy cannot happen without metals like copper," said Melek. 

"Nearly 50 percent of the global known reserves of copper today will be allocated just to those kinds of renewable and clean energy transition topics, so it's a metal that to me feels like it can only be stressed further going ahead," Watson added.  

Melek said even more copper will be demanded by artificial intelligence, smart grids, and renewable energy storage. 

Each agreed copper is a more stable market than, say, lithium, whose price has been volatile.

"The need for this electrification metal is it perseveres no matter what the macroeconomic conditions look like," said Watson. 

Asked for his outlook on copper this year, Melek pointed to positive demand factors such as a pickup in Chinese economic growth and the lack of recession in the United States. On the supply side, there was the closure of the Cobre Panama copper mine last year, among other mine supply interruptions. 

"We could have the recovery in demand for things like copper and other metals materialize much quicker than I think anybody thought, and you add the supply side to it and we're looking at deficits anywhere from 300 to half a million tonnes this year," he said. 

*Listen to Kitco Mining's Green Rush to understand and profit from a once-in-a-century event: the clean energy transition. Each week, host Matt Watson, founder of Precious Metals Commodity Management, will take a deep dive into a metal that will underpin our new electrified world. Green Rush explores the vital role of nickel, copper, lithium, cobalt, silver, platinum group metals, rare earth elements and other metals that power the batteries driving our sustainable future.*

Silver is increasingly becoming an industrial and an electrical metal, says Matt Watson, founder of Precious Metals Commodity Management LLC. 

On Wednesday, Watson recorded an episode of Green Rush with guest Phillips Baker. Baker is president & CEO of Hecla Mining, the largest silver producer in the United States, and chairman of The Silver Institute. 

Baker agreed that silver is less a monetary metal, like gold, than it used to be. 

Nearly a third of the global silver supply, about 300,000 ounces, is now used for solar power. Other industrial applications include automotive, solder and brazing alloys, and water purification. 

Silver is the most conductive material on the periodic table of the elements, followed closely by copper, making it ideal for electrification. Watson noted both metals are facing a supply crunch. 

He pulled up a chart showing that "2023 we had a huge year for solar PV, there was a big uptake." He said in every scenario, he doesn't see supply keeping up with demand. 

Baker agreed, noting the market has been in deficit for the last three years. He said it takes about 17 years to bring a silver deposit from discovery to production.

By Watson's calculations, silver output has been flat since 2005. 

"We're looking at about 40 years' worth of material here," he said. "This is going to be hard to catch up to this demand and I can see us burning down our reserves very rapidly." 

Watson and Baker diverged over the amount of silver demanded by solar. 

Watson predicts solar demand will peak within the next decade, noting where high rates of solar installation have occurred, such as California, electricity has become more expensive.

"It's really going to become a question of how much solar do we need?" he asked. 

Baker called Watson out on his peak solar demand thesis. 

"Everybody who has said we're reaching a peak has been wrong. It's continued to grow," Baker said, emphasizing he is struck by the amount of additional silver being demanded by new applications. 

Solar plus automotive, which adds another 200,000 ounces — EVs use more silver than gas-powered vehicles — comes to nearly half the amount of silver currently being mined.

"I can't see any scenario where this is going to drop, the demands seem to be built in as far as I could tell," Watson concluded.  

"Photovoltaics are the central bank of silver," Baker summarized. "You have this base of demand that is going to continue to push the silver price." 

Listen to Kitco Mining's Green Rush to understand and profit from a once-in-a-century event: the clean energy transition.

Each week, host Matt Watson, founder of Precious Metals Commodity Management, will take a deep dive into a metal that will underpin our new electrified world. Green Rush explores the vital role of nickel, copper, lithium, cobalt, silver, platinum group metals, rare earth elements and other metals that power the batteries driving our sustainable future.