From The Drift Magazine, Issue 10 | July 9, 2023:
Four billion years ago, our planet was a restive place, full of geological commotion. At the earth’s center, a molten metal core began to coalesce, while heat and radioactive energy kept large swaths of the surface liquid. Violent volcanic forces made and remade the landscape. Over eons, magma pooled and hardened, forming some of the oldest and most stable parts of the earth’s crust. Heat, pressure, and fluid heavy with chemicals left deposits of metals and minerals in these ancient, crystalline substrates of the planet.
In early March, I found myself examining a small cross section of one such deposit. Whitish gray quartz and feldspar were speckled with a pale, shimmering green silicate called spodumene. For millennia, this particular specimen had reposed deep below ground about 30 miles north of Lake Superior, part of a geologic formation called the Canadian Shield. It sat there until the invisible hand of the global market reached down into the earth, removed it, and transported it to the Metro Toronto Convention Centre, where a friendly geologist named Ramin Ghaderpanah was calling my attention to the spodumene. Those green bits, he told me, can be refined into high-grade lithium. And right now, lithium is one of the most sought-after minerals in the world, making it “such an attractive investment,” according to Ghaderpanah, who works for a Canadian mining company with additional lithium projects in Argentina and Nevada. Even as recently as three to four years ago, he said, lithium was not in high demand here. By “here,” the geologist was referring to our immediate surroundings: a commotion of excited dealmaking and unrestrained investment taking place over four days at the largest annual mining conference in the world, held in Toronto by the Prospectors & Developers Association of Canada (PDAC).
The geologist and I were standing at one of the more than 1,500 booths that filled the cavernous convention center, which this year welcomed nearly 24,000 attendees representing more than 130 countries. At times, the mining crowd seemed to outnumber the locals, filling the sidewalks beneath the smooth, gleaming high-rises of downtown Toronto. PDAC is where the people, companies, governments, and other institutions that constitute the global metal-mining industry commiserate in the bad times and celebrate the good. The names of the world’s mining titans, each worth many billions of dollars, were plastered on every available surface. A massive Newmont banner hung over the escalator. Freeport provided a café and lounge; BHP sponsored admirably fast Wi-Fi.
There were also investors, both large firms and individual traders. All were looking for the right stock — an up-and-coming miner, or an obscure mineral deposit with promise. They spent their days talking to company representatives, geologists, prospectors, and mineral officials from all over the world. In addition to the registered attendees, many more showed up for the informal, but no less important, conference behind the conference — the backroom meetings, the chats in hotel bars, the parties. Perhaps especially the parties. These happened every night, often sponsored by some firm or investor. I spent one late night at a pub called the Walrus, and struggled for a time to find an actual mining employee. Instead, I met a transit technology salesman, a software designer, a few people who work for market makers, and a securities analyst from Australia. All had come to cut deals, schmooze, and see old friends.
It has been several years since the industry felt inclined to let loose. Metal prices took a dive in the mid-2010s, with gold, silver, and copper prices all bottoming out in 2014 and 2015. Mass layoffs ensued. Reuters described the 2015 PDAC as cowed, with fewer parties and empty floor space; the CEO of a gold-mining company described “far less prime rib, far more chips, far more salsa.” By the end of the decade, metal prices had recovered; they have now recovered again after a brief, Covid-related slump in 2020. At the height of the pandemic PDAC was held online and then, last year, in hybrid form.
This year, prime rib was back — metaphorically, but also on top of a cracker that I ate at a swank open bar. If PDAC is a weather vane for global mining, this year’s event made one thing clear: the industry thinks that the winds of commerce are at its back. Metal miners stand on the verge of a planet-spanning, multi-decade mineral boom, driven by the demands of an electrifying world. Global decarbonization to address climate change will require enormous amounts of graphite and manganese, nickel and cobalt. Above all, it will require copper. Without copper, we cannot build solar panels, wind turbines, or electric cars and their battery chargers. S&P Global, the market research firm, expects copper demand to double by 2035 and climb thereafter, dramatically outstripping supply. “In the 21st century, copper scarcity may emerge as a key destabilizing threat to international security,” its 2022 report found.
Lithium is also expected to win big. A world that does not rely on fossil fuel combustion will need rechargeable battery technology at an unprecedented scale, in everything from the cars we drive to grid-scale energy storage infrastructure, with enough capacity to power a city when the sun sets and everyone turns on their lights. None of this will be possible without lithium. The Biden White House estimates that demand for lithium and other electric vehicle (E.V.) battery minerals could swell by 4,000 percent in the coming decades. And, as with copper, there’s evidence that global lithium supply will soon be insufficient — without a production boom, we’ll have only half the lithium and cobalt we need to hit 2030 climate goals, according to the International Energy Agency (IEA). A May report by the Carnegie Endowment for International Peace laid out still more dire projections: in 2030, lithium, cobalt, and graphite demand may outpace production for the U.S. and its allies tenfold, thirtyfold, and eightyfold, respectively.
Expected shortages and bottomless demand have automakers scrambling to secure their supply chains. In January, General Motors announced a $650 million investment in Lithium Americas, which is developing what will likely be the U.S.’s largest lithium mine. Since then, G.M. has also invested in a lithium-extraction startup and announced a fourth planned battery manufacturing plant in the U.S. And in the past year, mining giant Rio Tinto and Chinese battery manufacturer CATL both signed deals with Ford.
To call the mood at PDAC optimistic would be an understatement. The conference was awash with talk of new mines and big profits. Amid the hubbub, I caught up with John Thompson, a geoscientist and longtime mining insider who seemed to know everyone. Thompson spoke softly, in a British accent, and projected an ironic detachment from the surrounding commotion, born of many years in the industry. “The buzz,” he said, “is related to the perceived importance of critical metals and minerals. You can debate lots of issues around that, but the industry is just feeling ecstatic. Everybody loves us, and that hasn’t traditionally been the case.”
Mining is getting a makeover. To build a mine, a company needs legal permits, and in the old days, perhaps those were enough. Today, though, the industry and its investors increasingly believe that in order to be successful — and maximize profits — a company also needs what the industry calls a “social license to operate,” or moral permission to reap the benefits of tearing up the earth to extract minerals. Social license and profit go hand in hand. With that in mind, companies are trying to reinvent themselves as part of the solution to the climate crisis, allies to the environmentally minded with carbon-neutral targets for their global operations. And that’s not all: this year’s PDAC also displayed a heightened interest in the concerns of Indigenous nations and a focus on increasing the number of women in the industry. Many panels and speeches began with land acknowledgements. Sessions on offer included “Why Indigenous women in mining is a golden opportunity,” “The amazing race to decarbonize,” and “Operationalizing the ‘S’ in ESG: Does it matter to investors?” (ESG stands for environmental, social, and governance, a shorthand for a supposedly more socially conscious form of investment.) Unequivocally, the answer was yes.
From the opening keynote address, it was clear that the climate crisis itself has become a means for mining interests to obtain social license, providing a ready justification for the industry’s activities. Following a land acknowledgement, Ken Hoffman, head of the battery materials team at McKinsey, took the podium in front of a large room packed with hundreds of people. Hoffman summarized the state of global supply, demand, and pricing trends for various key metals. He discussed the significant material needs of electric vehicles and several renewable energy technologies. An electric car requires six times the amount of mineral resources as a gas-powered car, according to the IEA; an onshore wind turbine outstrips a natural gas-fired power plant in mineral inputs by a factor of nine. He encouraged the industry to position itself to deliver ethically sourced, low-carbon metals and minerals to meet specifications laid out by regulators in the U.S. and E.U., and discussed various advances in E.V. technology. The upshot of each of these topics, though, was the same. Decarbonizing the modern world is going to make the mining world a lot of money — by Hoffman’s estimate, on the order of fifteen to twenty trillion dollars. At one point, Hoffman seemed to address a nameless, climate-conscious consumer, the sort of person who wants their personal choices to reflect their desire to save the planet — a desire that, in all likelihood, will enrich the people in that room.
“To stop global warming,” he said, “you need us.”....
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