Mike Beck: Demand for Battery Metals Set to Explode
Tom welcomes Mike Beck back to the show to discuss the battery metals markets.
He explains their investment methodology, and their focus is on the macro picture and the supply-demand fundamentals. Exploration risk is challenging as very few projects become mines and generally worth avoiding. They try and pick specific metals that have a robust future, and then they search for qualifying assets that have largely derisked.
Often they get the calls correct, but sometimes the entry price is not right. Lithium and potash are examples of two calls they made that didn’t work out. However, when it works, it can work very, very well.
Near-term EV adoption rates are slightly behind the concensus view. They are now projecting that 25-30% of new passenger sales will be electric vehicles by 2030. This demand is in part to government emissions mandates and economics. Battery costs drive electric vehicle cost parity. When batteries are at 100 dollars per kWh, it’s game over for ICE vehicles. Tesla has just reached that point, and by 2025 we will likely see 70 to 75 dollars.
Aside from electric vehicles, there will be increasing demand for lithium batteries to improve grid stability. He anticipates that investors will be surprised by the growth on the horizon.
He discusses lithium recent growth, and it has other applications. Lithium is not scarce, but it takes a long-time to bring about new production capacity.
Mike discusses the two nickel classes and a rather earth-shaking announcement by Tsingshan. They announced a plan to deliver 100,000 tons of class one nickel which has disrupted supply forecasts.
He gives us his predictions for the copper market and details the market’s size and its uses. Grid storage is a new demand market for the metal. Every EV requires an additional 80kg of copper, but you also need copper to improve the generation and grid infrastructure.
Lastly, Mike gives us his thoughts on the need for additional uranium for baseload nuclear power.
Time Stamp References:
0:00 – Introduction
0:40 – Macro Mistakes
6:38 – EV Adoption Curve
9:40 – Grid Battery Use
11:42 – Lithium Macro Outlook
13:49 – Nickel Market Shakeup
18:34 – Shortages & Disruptions?
19:46 – Macro Forecasting
22:11 – Copper Market/Demand
28:35 – Uranium & Base Power
32:00 – Final Thoughts
Talking Points From This Episode
- Investment approach and getting the macro picture correct.
- EV adoption rates and battery prices.
- Lithium and nickel market forecast
- Baseload power and uranium.
Guest Links:
Reuters: https://www.reuters.com/article/china-nickel-idUSL3N2L10VC
Mike Beck is the founder and Managing Director of Regent Advisors LLC, a corporate finance advisory and investment firm. He has advised on equity and debt financings for private and public companies in the natural resources sector, including Signet Petroleum Limited, West African Minerals Corporation, Polo Resources Limited, Direct Petroleum Exploration Inc., Titanium Resources Group, Copper Development Corporation, UraMin Inc., Diamond Fields International Ltd., Weda Bay Minerals Inc., Regent Pacific Group Limited and CCEC Ltd.
Mr. Beck was a Managing Director at N M Rothschild & Sons responsible for the firm’s mining, oil and gas advisory, and investment activities. Before that, Mr. Beck was the founder and President of Librion Group Inc., a corporate finance boutique. He also was with the International Finance Corporation of the World Bank Group, where he oversaw the structuring and financing of many natural resource projects in Africa. Mr. Beck has also been a founder or co-founder of several companies listed on the Canadian, Australian, and London stock exchanges. He has an M.S. in Engineering from Princeton University and a B.S. (High Honors) from Rutgers University.