At this year's AME Roundup, experts discussed the impact of US policy, geopolitical tensions, and the new realities facing the resource sector. During the session on commodities and financial markets in Vancouver, BC, key topics such as the rapidly changing metals landscape and where to invest were addressed. Rowena Alavi-Gunn, senior analyst at Wood Mackenzie, began her presentation “Battery Powerplay: Is it still possible to invest in battery metals?” by recounting the challenges that battery metals will face in 2024. She mentioned that battery metals have had a difficult 2024 due to low prices, weak demand, rising costs, and geopolitical uncertainty. In addition, recent election results and weaker-than-expected demand for electric vehicles may be deterring investors from entering the battery metals sector. However, the overall fundamentals remain positive for key metals such as lithium, nickel, cobalt, and graphite. Alavi-Gunn suggested that there is an opportunity for countercyclical investment in these metals.
Speaking about US President Donald Trump, Alavi-Gunn stressed that the proliferation of electric vehicles in the US could be hampered by the new administration. Trump could relax electric vehicle compliance standards, reduce subsidies, and impose tariffs on Chinese batteries and Mexican car imports, making electric vehicles less competitive. As a result, sales of plug-in vehicles in the US could fall from 30 to 20 percent, and hybrids would gain market share, reducing demand for batteries in the US by 20 percent. However, outside the US, the global outlook for electric vehicles remains largely unchanged, with very strong growth projected for the future.
Although Trump's decisions on electric vehicle incentives in the Inflation Reduction Act are expected to have little impact on global battery demand figures, Alavi-Gunn noted that the graphite market could be affected by the new administration's policies. If the US moves forward with including graphite in sourcing rules, far fewer electric vehicles will qualify for tax credits due to the limited supply that meets the requirements. Despite the current oversupply in key markets, long-term demand for battery metals is bullish. The lithium and nickel markets are oversupplied, driven by increased production in China and Indonesia, but demand is expected to outstrip supply in the 2030s, causing shortages and price increases. Cobalt also faces a similar long-term oversupply, although the economics of recycling could be a risk.