Mining is on a Journey
The focus during the first day of this year's Mines and Money conference in Hong Kong was on the global investment landscape, with a particular emphasis on those metals markets that are impacted by electric vehicles and battery technology.
The first day of the three-day Mines and Money (M&M) Asia conference started with a keynote presentation from Louis Kuijs, the head of Asia economics at Oxford Economics. Mr Kuijs expects China's growth to stabilise this year on the expectation of a trade deal with the US, although he believes tensions are likely to remain. The medium and long-term outlook for the country is "solid", he told delegates.
Mr Kuijs highlighted the recently positive purchasing managers' index for March, which Oxford Economics had predicted based on recent trends within factory production statistics. The Beijing government is not overdoing the financial stimulus as the political objectives are not as ambitious as in the past — steady, sustainable growth is the new mantra. Indeed, Mr Kuijs argues that China's policy makers have a good track record on making the necessary changes, albeit sometimes rather slow in the delivery.
Oxford Economics expects a fall in the intensity of metals usage in China. There is, of course, still considerable room for growth in terms of absolute metals consumption — the country's per capita GDP is still barely 25% that of the US.
The growth of the electric vehicle (EV) market in China was summarised by Gianni Kovacevic, the executive chairman of Copper Bank, in his customary fascinating presentation. Mr Kovacevic identified various 'pivot' moments in history, and wielded statistics to demonstrate that we were at such a point now with personal transportation.
Not only is the internal combustion engine being replaced by EVs, but millennials are not buying cars, of any type, in the same numbers as previous generations. The days of car ownership is coming to an end, to be replaced by shared ownership and renting.
It is not just 'battery metals' that are benefitting from the burgeoning growth of EVs. Mr Kovacevic illustrated the growing importance of copper, and the serious supply shortfalls that are seeming increasingly inevitable.
A panel on innovations in battery metals was chaired by CIBC investment banker Adam Janikowski. Amelia Xiao Fu, the head of commodity markets strategy at BOCI Global, emphasised the importance of the battery-charging infrastructure, and (like all the panellists) expressed concern over the secure supply of cobalt, with almost two-thirds currently coming from the Democratic Republic of the Congo. Xinyue Zhang, senior pricing specialist at S&P Global Platts, emphasised that costs were crucial in the development of new battery technology, as was government policies (especially in China).
Jingwen Sun, an analyst at Changjiang Securities, stressed that there was plenty of lithium available, but delivery of the required quality was the key. (A poll of the audience was tied on whether the lithium market was under or over supplied.)
Tim Goldsmith, a partner at Sentient Equity Partners, said that in the long term, cars should be thought of more as computers. The future is certain, he said, we are simply discussing the journey to get there.