Investment in critical minerals is a web of doubts, says industry

By Eric Onstad

PARIS (Reuters) – Many companies are reluctant to invest in critical minerals and energy transition projects due to uncertainty over consumer demand for electric vehicles and the government’s commitment to zero-carbon targets, industry participants said.

The long-term picture remains intact, of a world that needs large quantities of materials such as lithium, cobalt and copper to enable the world to transition away from fossil fuels.

The timing of the next few years, however, is in question, they said at the World Materials Forum in Paris last week.

Both the European Union and 12 US states aim to ban the sale of new gasoline cars by 2035, but there has been resistance to these goals.

“I think there are a lot of doubts now that this will happen,” Mathias Miedreich, former CEO of Belgian battery materials and recycling group Umicore, said at the conference. “That makes it very difficult to invest.”

In May, Miedreich left Umicore, which cut its 2024 profit forecast the following month due to weak demand projections for battery materials due to the slowing EV market.

Sales of new battery electric cars in the EU fell 12% in May compared to the previous year.

“Financing wasn’t a big issue a few years ago,” said Stephane Michel, president of the TotalEnergies Gas, Renewables & Power unit. “You can still find capital now, but you have to have the right project.”

TotalEnergies is part of the ACC EV battery joint venture that includes automakers Stellantis and Mercedes, which last month suspended plans for German and Italian factories.

An executive at a major European chemicals group that supplies battery materials said many companies are assuming there will be a delay of around two years in the energy transition, with 2030 projections now being pushed back to 2032.

“That’s the opinion now, but it could change and be more serious, it’s hard to say,” the executive told Reuters, declining to be named because he was not authorized to speak to the media.

An executive at a global company involved in materials for electric vehicle batteries said demand for critical materials in China and Asia was holding up better than in Europe and the United States.

“The question is where do we put our next capacity. You have to be very agile, the market is moving very fast,” he said.

(Reporting by Eric Onstad; Editing by David Evans)