Preview: Small miners hungry for fresh capital despite rampant EV enthusiasm

Leading Edge Materials

01/03/2020 06:00

By Jeff Lewis
    TORONTO, March 1 - Small miners hoping to take advantage of
demand for battery metals are struggling to convert electric
vehicle aficionados into investors, compounding the sector's
funding constraints even as analysts predict a long-term
shortage of the raw materials used to make EVs.
    The predicament has made it harder for already-strapped
miners to raise money and could stall construction of new mines
in the event the burgeoning EV industry faces a supply crunch
for battery-grade lithium, graphite and other minerals.
    "You need a mine for almost everything that we touch, and
people still don't get that," said Eric Desaulniers, chief
executive of Nouveau Monde Graphite Inc  NOU.V , which is
developing a graphite mine in Quebec. "They want the electric
car to save the planet but no mining." 
    Traditional mining investors are reluctant to put money in
unproven markets while the most ardent EV backers seem loathe to
invest in mining at all, even if the products support green
technology, industry executives and analysts said.
    Whether loss-wary investors will finally focus on EV
minerals will be a key question at this week's annual
Prospectors and Developers Association of Canada (PDAC)
conference in Toronto. 
    "There's been this very weird hole in financing," said Mark
Saxon, chief executive at Vancouver-based Leading Edge Materials
Corp  LEM.V , which is developing a rare-earth deposit in
Sweden.
    Efforts by the industry to court new investors are set
against rising opposition to mines. Protests have snarled
lithium exploration in Portugal while automakers have stepped up
scrutiny of production in Chile's environmentally fragile
Atacama desert.  urn:newsml:reuters.com:*:nL8N2A67A3  urn:newsml:reuters.com:*:nL1N2AB1D7 
    Indeed, top lithium producers Albemarle Corp  ALB.N  and
Chile's SQM  SQMA.SN  have curbed expansions amid sinking prices
for the white metal.  urn:newsml:reuters.com:*:nL2N27T1D2
    Nemaska Lithium  NMX.TO , which is backed by Japan's
SoftBank Group Corp  9984.T , filed for bankruptcy last
December. France's Eramet  ERMT.PA  postponed a lithium project
in Argentina earlier this month, citing the country's uncertain
economic outlook.  urn:newsml:reuters.com:*:nL1N28X0OI urn:newsml:reuters.com:*:nL8N2AJ355
    Others, including Argentina-focused Neo Lithium Corp
 NLC.V , are looking for joint venture partners after
unsuccessful financing campaigns.
    "With the tens of billions (of dollars) that are going in
downstream at the EV level, at the battery level, ultimately the
raw materials will have to catch up," said Andrew Miller of
metals pricing provider Benchmark Mineral Intelligence.   
    To be sure, not all companies are strained.
    Nouveau Monde Graphite, backed by mine financier
Pallinghurst Group, is in talks to secure C$330 million in
project financing, said CEO Desaulniers.
    Pension investor Caisse de dépôt et placement du Québec and
the provincial investment body are also investors.

 (Reporting by Jeff Lewis; editing by Ernest Scheyder and Steve
Orlofsky)
 ((Jeff.Lewis@thomsonreuters.com;+1-416-687-7723))