The agreement with Stellantis is significant not only in its size but also because it is on the original equipment manufacturer (OEM) level, according to Burns.

“OEMs are recognizing the significance of graphite in their supply chain and the desire to localize it and not be fully reliant on Chinese supply. And they are reaching past their cell manufacturing partners upstream,” the CEO said.

OEMs have been aiming to diversify their supply chains and secure volumes they will need because domestic production of graphite is expected to be limited, he added.

“You will certainly see continued focus on [securing North American supply] from the OEMs because they understand [the need] and can take a very long-term view,” Burns said.

This move to secure and diversify supply chains was spurred by OEMs’ own decarbonization goals and their forecast demand for their vehicle sales, he added.

Novonix’s deal with Stellantis follows a similar binding offtake supply agreement with Panasonic in February, under which Novonix will supply the EV battery producer with at least 10,000 tonnes of anode material from its Riverside facility from 2025 to 2028.

Other battery raw materials producers have recently made deals with OEMs. In October, Lithium Americas entered into a $625-million investment agreement with US automaker General Motors (GM) for North America-sourced lithium supply.

Uphill battle in securing US supply chains

In November 2023, Novonix announced it finalized its $100 million grant award from the Department of Energy (DOE) to expand its domestic production of synthetic graphite anode materials at its Riverside facility.

This April, the company was also elected by the DOE to receive $103 million in tax credit refunds under the Qualifying Advanced Energy Project Credit (48C).

Novonix has experienced great benefits from these stimuli through the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA) as well as indirectly, as these have supported the whole industry, from the vehicle and consumer level to the cell manufacturer level, according to Burns.

“All of those [incentives] have helped push the industry to its tipping point, where it is ready to take off and build some amount of internally reliant domestic supply,” he told Fastmarkets.

The US graphite industry is fighting two uphill battles, Burns said:

• It is competing against an established supply chain from China that is years ahead, while the US industry still carries the inefficiencies of a nascent industry
• Competition with China, the biggest producer of synthetic graphite, is on an unlevel playing field as the Chinese government continues to support its industry with state subsidies and operates on lower cost because it does not heed the Western environmental, social and governance (ESG) practices

The US needs to overcome these two challenges as it builds its industry, and this can be achieved through government policies, whether through injecting capital into the domestic industry, adjusting the price of imported material through tariffs, or, as it has been until now, a mix of them, Burns said.

“Although government policies may shift within the energy sector, we are confident that supporting energy independence and domestic manufacturing will remain a priority,” the CEO said.

“Support for domestic critical minerals production remains a bipartisan priority, and although the mechanisms of support may change — tariffs rather than direct investments, for instance — the goal remains unchanged: building a domestic supply chain, decoupling from China, and strengthening US energy independence,” he added.

Resilience in graphite market

The development of different battery chemistries – such as silicon-based and solid-state batteries, neither of which use graphite – will augment the growth and need for new materials, but they will not take away the market opportunity for graphite sales, according to Burns.

“[The graphite market] is going to continue to grow,” he said.

To limit global warming to 1.5 degrees Celsius, the International Energy Agency (IEA) estimates that demand for graphite will increase by four times by 2040, “propelled by the substantial increase in battery deployment for EVs and grid storage.”

Novonix is on track to achieving the first commissioning of its Riverdale facility in the first half of 2025; delivery to Panasonic is targeted to begin in late 2025 and to Stellantis on January 1, 2026, with total output set to reach 20,000 tonnes per year.

The company will build a new greenfield site with an initial capacity of 30,000 tonnes and the ability to expand into 75,000 tonnes and continue to work with existing customers as well as develop new ones.

Want to find out more about our critical minerals price data, forecasts and market insights? Our expert editorial team, analysts and price reporters working across metals, battery raw materials and rare earths bring you the latest price trends, market insights and forecasts for the critical minerals market. Read more here.

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Broadly, the producers questioned the potential impact of any future new or increased tariffs on imports from China, and downplayed a potential impact of the withdrawal of previous support for the electric vehicle (EV) and battery raw material supply chain in the US.

Tariffs

In his previous term between 2017 and 2021, Trump introduced wide-ranging tariffs on imports from China, under Section 301 tariffs including covering graphite – though broad exceptions were implemented for graphite supply.

In the re-election campaign, he has also threatened to introduce a higher rate on Chinese goods this term. The country is the leading producer of active anode materials globally.

Earlier this year, the US Trade Representative under Joe Biden announced that a 25% tariff rate on imports of natural graphite from China would come into effect from 2026, prompting opposition from some major US automotive companies. A removal of tariff exclusions for synthetic graphite was also announced earlier this year, making imports from China subject to the tariff.

But this figure pales in comparison to the 60% tariff Trump has threatened to introduce on imports of Chinese goods.

Trump’s close association with Tesla chief executive officer Elon Musk during his campaign has raised further questions, specifically over how we would prioritize original equipment manufacturer (OEM) sourcing requirements over potentially painful requirements for sourcing from developing non-Chinese supply chains.

And furthermore, in recent years Trump and the congressional Republican Party appeared to be flirting with repealing elements of the US legislative support for EV subsidies, which have proven a boon to battery raw material demand, posing concern in some other markets.

But producers pointed to the extensive financial support that has already been committed to projects under the Inflation Reduction Act (IRA) – Joe Biden’s landmark economic legislation – as minimizing the potential for a roll-back of its commitments for critical raw material supply chains and the EV sector.

“Under the IRA, billions and billions of dollars have already flowed to the EV sector, with much of that occurring in Republican states, so any changes to incentives would be sensitive to what has already been achieved to advance electrification and the energy transition,” Hugues Jacquemin, chief executive officer of Canadian graphite producer Northern Graphite, said.

A second producer targeting the US anode market also observed that much of the support assigned under the IRA was fairly long-dated, and a third said “the current geopolitical landscape signals that the concepts of the IRA will be continued by this next administration.”

Elongated OEM influence

And Musk’s strong support for Trump’s campaign poses further questions about the latter’s industrial policy priorities, particularly with regards to import tariffs.

“Elon Musk’s support of Trump’s re-election campaign is likely to afford him a place in Trump’s inner circle and all the influence that accompanies that,” Fastmarkets analyst Amy Bennett said, “we would therefore expect greater consideration around policy impacts on OEMs like Tesla.”

US automotive companies – including Tesla when the Trump administration first proposed a tariff on graphite imports from China in 2018 – have lobbied against the introduction of tariffs on Chinese graphite, arguing that domestic supply chains are insufficient to meet consumption.

The global supply of graphite anode material is overwhelmingly concentrated in China, making automotive producers particularly vulnerable to tariffs on imports from the country.

This has led some to predict that Trump will extend exceptions for tariffs on graphite imports, and potentially reintroduce exclusions on synthetic graphite.

“With regard specifically to graphite, we would expect that the Section 301 tariff exemption on synthetic graphite will be reinstated at some point next year,” Bennett said.

“We would also expect the delay to the implementation of FEOC requirements, specifically on graphite to be extended through Trump’s presidency, with the requirements potentially pushed back to 2029,” Bennett added.

Restrictions in sourcing graphite from countries designated Foreign Entities of Concern (FEOC), as China is, are currently due to come into effect from 2027.

US FEOC requirements exclude EVs containing specified materials produced in China from eligibility for 30D tax credits, which allow qualified buyers to save up to $7,500 on new clean vehicle.

“The caveat of course is that it remains to be seen how long Musk and Trump’s relationship will remain strong, considering that Trump’s inner circle saw extensive turnover during his previous administration,” Bennett added.

The second producer observed that the graphite market was already under significant pressure from automotive and cell maker lobbyists.

“So I’m not sure how much, if at all, graphite is worse off [now],” the second producer said.

There was a consensus that Trump’s industrial policy would be geared towards supporting domestic manufacturing, however, and some market participants told Fastmarkets that they would expect Trump’s support for domestic industry, particularly in the face of China, to be stronger than previously.

“From a China tariffs perspective, we would expect a Trump administration to continue to protect the growth of domestic industry from unfair competition from FEOCs like China… in fact, we expect Trump’s stance on China will be stronger than it is today,” Jacquemin said.

“Tariffs help to level the playing field, and we can only benefit from a stricter regime on imports/dumping of Chinese graphite,” he added.

This will make presence in geopolitical and geographic proximity to the US even more important, the producers agreed.

“I’m confident having a US operation is a competitive advantage in a more protectionist world,” the second producer said.

“For Northern Graphite in particular, as a Canadian company supplying US markets, under a Trump administration there may be more funding available to develop critical minerals in Canada that would be used in USA,” Jacquemin said.

Discover how the 2024 US election is impacting and could impact US and global commodity markets with Fastmarkets. Head to our US election hub.

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The IRA aims to cut emissions by 40% by 2030, but its ultimate goal is to drive economic growth, create jobs and set a global standard for decarbonization and sustainable practices. It has been described as a landmark in legislative history, directing over $369 billion toward sustainable job creation across the supply chain.

Pundits say a future Trump administration will target changes to tax credits and incentives created by the IRA. That includes tax credits for electric vehicles (EV), tightening qualifications for the advanced manufacturing tax credit with regards to foreign entities of concern (FEOC) like China, and slashing the grant program, industry experts say.

“To further defeat inflation, my plan will terminate the Green New Deal, which I call the Green New Scam,” Trump said in a speech to the Economic Club of New York in September. “[We will] rescind all unspent funds under the misnamed IRA,” he added.

That would be a massive setback to many of the lithium, nickel, cobalt and other critical minerals projects, as well as new technologies and processing facilities, whose future is dependent on grants and loans. According to analysts at Jefferies, around $60 billion out of a total $80 billion of funds for the energy transition across the IRA and Bipartisan Infrastructure Law (BIL) are yet to be awarded or obligated for 2024.

Electric vehicles

Trump has made it clear that the push towards EVs, which have formed a key pillar of the Biden administration’s approach to the energy transition, will now be slowed. During the recent presidential campaign, candidate Trump said that he would “end the EV mandate on day one.”

Initiatives such as the Department of Energy’s grant program, tax credits and other incentives for customers and manufacturers of batteries and EVs are now at risk of being rolled back or eliminated, industry experts say.

It is not clear what might replace current credits, if anything. The clean vehicle tax credit currently requires final assembly in North America, and eligibility depends on increasing percentages of US battery components and minerals being used.

Industry observers say all of these changes would likely have widespread implications through the battery raw materials supply chain for those companies that rely on the financing, including producers of lithium used in batteries and copper and aluminium used in renewables, manufacturers of batteries and components, and automotive firms.

Changes to credits would also affect consumers. The IRA had created a mechanism to transfer the 30D clean vehicle credit of up to $7,500 and 25E previously owned clean vehicle credit of up to $4,000 to registered dealers. This mechanism gives consumers an upfront discount and extends the reach of the credits by making the credit available at the point of sale rather than when buyers file their taxes.

According to the US Department of the Treasury, more than 90% of new clean vehicle transactions and around 80% of used clean vehicle transactions reported through Internal Revenue Service Energy Credits Online currently involve a transfer of the credit to the dealer.

Trump has also said he plans to roll back or eliminate standards for EVs under the Environment Protect Agency (EPA). Having already stated a desire to get rid of California’s zero emissions standards, Trump is also expected to do away with the requirement that EVs account for 56% of new vehicle sales by automotive original equipment manufacturers (OEMs) by 2032, and plug-in hybrids or other electric cars account for at least 13% in the same period.

The move would in theory ease pressure on Detroit’s Big Three – Ford, General Motors, and Stellantis – to switch their production lines to EV, which some argue is a boost for the US auto sector as it struggles with slowing sales of clean energy vehicles. Others argue that in the longer term, a move away from EVs could lead the US to fall further behind the rest of the world as foreign competitors continue to innovate and produce EVs.

It would also inevitably have an impact on the 30 gigafactories in development in the US as it actively pursues sustainable mobility and technological innovation.

There is also the question of tariffs, another key policy area for Trump. There is already a 100% tariff on Chinese-made vehicles imported into the United States.

Now other foreign-made cars are likely to face higher tariffs, a move that has not been lost on investors as stocks in Mercedes-Benz, Porsche and BMW fell sharply as the election result was announced.

It remains to be seen what this will mean for Tesla, whose chief executive officer Elon Musk has actively campaigned for Trump and which has around 40% of its manufacturing capacity in China. Shares in Tesla soared on Wednesday November 6 following the news of Trump’s win.

Foreign Entity of Concern

A key area that could come into the spotlight are sourcing requirements related to FEOC. When it comes to the 30D credit, FEOC rules permit licensing deals and joint ventures with under 25% ownership.

The expectation is that these rules become stricter, a move that will have important short-term implications for nickel, a market that is struggling to find non-FEOC sources for battery raw materials supply chains.

Similarly, the 45X Advanced Manufacturing Production Credit, which is currently available to any entity in the US, is expected to be prohibited for FEOC.

There is bipartisan support for this, with a group of Senators having already proposed the American Tax Dollars for American Solar Manufacturing Act, which aims to stop Chinese solar panel manufacturers from claiming subsidies for operations in the US. The Act would not just apply to the solar industry but across all technologies eligible for the 45X credit.

Politics

But all of these potential changes are not without potential complications. While there are nuances in the approach of Democrats and Republicans, there has been solid bipartisan agreement on the importance of strategic competition and supply chain security for the US.

Not all Republicans support the elimination of tax credits and subsidies; after all, many IRA projects are concentrated in traditionally Republican states and create permanent jobs.

This was highlighted in a letter sent in August to House Speaker Mike Johnson, signed by 18 House Republicans, expressing objections to repealing IRA credits on the grounds that it would halt project development and undermine investments.

“Energy tax credits have spurred innovation, incentivized investment, and created good jobs in many parts of the country – including many districts represented by members of our conference,” the letter said.

“We must reverse the policies which harm American families while protecting and refining those that are making our country more energy independent and Americans more energy secure. As Republicans, we support an all-of-the-above approach to energy development and tax credits that incentivize domestic production, innovation, and delivery from all sources,” it added.

Outright repeal of the IRA would require the support of both houses of Congress; as it currently stands, the Republicans have won the Senate and the result for the House of Representatives is unclear as votes are still being counted.

Changes to tax credits meanwhile require a change in tax law; a weakening of IRA provisions as part of Budget negotiations would require a simple majority in Congress.

But Trump could move to defund or limit EV subsidies through executive orders or other policy actions, industry experts note.

Given the focus Trump’s administration will have on extending tax cuts that are set to expire at the end of 2025, there is a clear incentive to find the money to pay for this from elsewhere, adding impetus to the potential IRA changes.

In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Sign up today to receive Andrea’s content as it is published.

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Sources feel a Harris presidency could hold oil interests to a stricter, more progressive shift away from petroleum and towards renewables, while a Trump election is likely to have more leniency. In either case, however, delays to key policy deadline dates and decisions are expected.

Feedstocks

Market participants expect heightened trade tensions with China should Trump be voted into office on November 5. Many say trade tensions have affected prices already and could have a “dramatic” impact on the wider industry.

In the past year, US biodiesel producers have imported larger amounts of cheaper foreign feedstocks like used cooking oil (UCO) and tallow, which have weighed on US prices. Scrutiny over Asia-origin UCO flows due to traceability and verification issues has also ramped up, where imported palm oil is thought to have been mislabeled as UCO to obtain US federal tax subsidies due to UCO’s lower carbon intensity score.

Trump however has proposed a 60% tariff on imports from China and a 20% across-the-board tax on all other imports. Meanwhile, the Harris administration would likely carry over most of the current tariffs and policies under the prior administration, and markets should expect the status quo, sources told Fastmarkets, with any restriction on UCO imports likely to drive domestic US UCO prices higher.

Section 45Z

Despite the election outcome, the Clean Fuel Production Credit (CFPC) created by section 45Z of the Inflation Reduction Act (IRA) of 2022 is set to replace the current $1-per-gallon Blenders Tax Credit (BTC) after January 1, 2025, and will be earned by the producer instead of the renewable fuel blender.

Despite the looming deadline, greenhouse gas (GHG) feedstock scoring requirements under the CFPC have yet to be finalized, and this could be delayed further by a win of either presidential candidate, while it remains uncertain whether the credit will apply to fuels produced from foreign-sourced feedstocks.

The tax credit is expected to promote the increased use of more low-carbon intensive (CI) feedstock other than soybean oil, however, which would undermine demand for soybean oil but increase demand for animal fats and greases. The lack of clarity on the credit has made it difficult for biofuel producers to project feedstock demand and biofuel production levels for 2025, which has dampened US animal fat and vegetable oil trading and prices.

A series of protectionist bills have been introduced in Congress to exclude the inclusion of foreign-sourced feedstocks material from qualifying for the credit but if 45Z were to exclude foreign-imported feedstocks, this would boost US demand and likely drive domestic prices higher.

“If we limit the amount of imported waste oils by incentivizing domestic material only, it will further push up the value of those materials,” a trader said. “In pushing for the protectionism of domestic-only producer credits, this could have the exact opposite effect that the soy industry wants.”

President of the Advanced Biofuel Association Michael McAdams told Fastmarkets that “it was not reasonable” to arbitrarily limit qualifying for the 45Z credit to a 50% GHG reduction threshold. At this level, soybean oil may not qualify for the credit. “When you look at the current 40b it begins to reward producers at $1.25, [but] the 45Z does not provide a reward until a 50% threshold is met,” McAdams said.

The 45z may also bring an end to biodiesel imports, adding up to a billion additional gallons to domestic production. While there is segmented interest to limiting feedstocks to only domestic feedstocks, McAdams believes this measure will not advance.

Small refinery exemptions

In July, the US Court of Appeals vacated most of the small refinery exemption (SRE) denials under the US Renewable Fuel Standard (RFS) by the Environmental Protection Agency (EPA) in 2022. During the first term of Trump’s presidency, the administration granted waivers to some smaller refiners, exempting them from biofuel blending requirements and thereby cutting demand for biodiesel – a move, which had a bearish impact on vegetable oil prices.

If Trump is re-elected, it is largely expected that he will grant most outstanding SREs, which could further dampen vegetable oil demand, prices and, according to McAdams, further exacerbate the EPA’s underutilization of renewable fuel capacity in the US.

Yet one source told Fastmarkets that this “play” will not necessarily be available to Trump this time around due to rule changes and a pending case with the US Supreme Court. On the other hand, some sources think a Harris win could mean an outright denial of all pending SREs, which would support higher prices, while a “blanket” denial could end up before the Supreme Court.

Renewable Volume Obligations

In July, the EPA announced it would delay the release of 2026 Renewable Volume Obligations (RVOs) until after the US presidential election in November. The Renewable Fuel Standard (RFS) requires obligated entities to either blend billions of gallons of biofuel into the US fuel mix each year or to purchase tradable credits from other blenders or producers. While the new EPA deadline of March 2025 with a final rule scheduled in December 2025 is likely to be affected by which administration is in office, the extent of the impact remains unclear.

Much of the biomass-based diesel sector said the EPA’s last released volumes were too low, particularly due to expected increases in sustainable aviation fuel (SAF) production, and urged the agency to make upward revisions to the volumes to keep feedstock demand and prices supported. One thing that is certain, “we can safely anticipate policy delays,” Paul Winters of Clean Fuels Alliance America said, adding that the presidential transition to either Harris or Trump “will almost certainly delay the March proposal.”

Biodiesel and SAF

Neither candidate has revealed anything biofuel-related ahead of the election. This has come as little surprise to some market participants after Trump characterized 2019 negotiations between biofuel producers and refiners as “more difficult than dealing with the Taliban.”

Moves from a Harris administration in the growing market of SAF would be “predictable”, sources told Fastmarkets. “The only issues might be IRS guidance on 45Z and the overproduction of biodiesel,” versus issues that the market is already facing with the mandate for RINs.

A Trump presidency however would bring a more variable outcome for the SAF market. Given that SAF is embedded in the IRA, sources told Fastmarkets it would be very difficult for Trump to directly change this without Congressional action, although “the idea of forcing a $400 billion infrastructure buildout for SAF is not going to happen, and banning co-processing from having a larger role was a big mistake,” according to McAdams.

Changes to the IRA are unlikely not least because Trump’s party “is not predicted to gain full control of Congress in the upcoming election,” a source said. Fastmarkets understands that Trump may want to push down the value of RINs as he did during his first presidential term, which would appease conventional fuel refinery owners by reducing their cost of compliance with the RFS. Lower RINs values during another potential Trump administration “would make the economics of biodiesel and renewable diesel and therefore SAF very problematic,” the source said, which could be reduced by creating a situation of oversupply through a Trump administration’s influence over the EPA.

Electric vehicles

As the US works toward its decarbonization goals, the ever-pressing topic of electrification remains a flashpoint for the election. While it is expected that a Harris presidency would continue Biden’s EV rollout legacy, which has taken the total number of EVs on US roads to 4.2 million, the traditional assumption that Trump could put the brakes on has been thrown into doubt by recent endorsement from Tesla CEO Elon Musk.

“There’s discussion that Musk will take on a government role in a new department that would investigate government efficiency,” senior research fellow at Chatham House Patrick Schroeder said, adding that it would then be unlikely that Trump would put in place a lot of policies that are counter to Tesla’s business interests.

“This equates to lots of potential conflicts of interest as there are a number of investigations from various US government departments and various US agencies into Tesla including the departments of transportation, justice, labor, interior…” but in any case, potentially makes the landscape for EVs different, Schroeder added.

Under the IRA, the US currently has consumer tax credits for up to $7,500 for new EVs and $4,000s for used EVs, as well as tax credits for home chargepoints. Sources assume Harris would keep these in place, but Schroeder told Fastmarkets Musk would do the same if given a role in a Trump administration, since Tesla has “directly benefitted” from these initiatives.

Learn more about how the US is navigating critical mineral challenges in the global energy transition with Helaina Matza, special coordinator for global infrastructure and investment at the US Department of State.

A Musk scenario aside, according to Fastmarkets energy transition analyst Phoebe O’Hara, Trump could take a more restrictive view of how many EV models qualify for subsidies using Foreign Entity of Concern (FEOC) regulations, as well as remove EPA vehicle emissions standards that were expected to cause 67% of vehicles to become EVs by 2032. O’Hara added that Trump would also look to remove the commitment to 50% of the government fleet being electric by 2030.

Fastmarkets analysts estimate that overall EV sales will reach 10.7 million units by 2035 if Harris wins the election, versus around 5% less – or 10.2 million units – with a Trump administration in power in the same timeframe.

“Just [recently], Trump was in Detroit telling auto workers that he would push back against the current administration’s effort to expand EV use,” Bracewell Policy Resolution Group partner Frank Maisano told Fastmarkets.

Meanwhile, “union rank and file remain a big problem for Harris in Rust Belt States like Michigan and Wisconsin,” he said, adding that “whether Harris can convince key workers in union states, that are worried about their jobs in the new energy transition world, remains her most pressing challenge.” Trump will “continue to try and drive this wedge between unions and Harris, using consumer discontent, auto company backtracking, and worker worries as his hammer,” Maisano concluded.

EV competition from China is another area to watch, with a 100% tariff currently imposed on Chinese EVs coming into the US. “Both Harris and Trump would keep up these tariffs,” Schroder said, adding that “there’s a good chance Trump could probably even increase them, so that is where there is an agreement on both sides in their need to protect domestic industries and the US battery industry.”

Discover how the 2024 US election is impacting and could impact US and global commodity markets with Fastmarkets. Head to our US election hub.

The post How a Harris or Trump US presidential win could shape the renewable fuel sector appeared first on Fastmarkets.

In the panel “Critical Minerals & the Future of the Battery”, Geoff Streeton, chief development officer at French non-ferrous miner Eramet, highlighted this trend.

“The Chinese engineering and project delivery ecosystem is able to deliver [large capital-intensive projects] with a step change in cost and speed relative to the traditional project delivery models,” Streeton said.

Eramet, a significant producer of nickel, already has several partnerships with Chinese firms across their global operations.

These include a partnership with Chinese firm Tsingshan, the world’s largest stainless steel producer, for nickel mining and refining in Weda Bay, Indonesia. The two companies also have a joint venture agreement for the operation of the Centenario direct lithium extraction plant in Argentina.

Ivan Vella, managing director and chief executive officer of Australian miner IGO, discussed their partnership with Tianqi Lithium in Australia.

He emphasized the importance of these collaborations, saying: “I think it’s fundamental. The strength of the broader battery and EV (electric vehicle) industry in China, with companies like Ganfeng and Tianqi, is formidable. Being partnered with Tianqi gives us a lot of insight and strength.”

Indonesia perhaps provides one of the best examples of this speed and cost competitive scaling of projects. Chinese firms within the country have been able to develop, build and operate nickel refining assets at considerably lower cost than many other nickel producers, a trend which has ultimately shifted the global supply-demand balance of the market.

Streeton also highlighted the complementary skills that Western companies bring to these partnerships.

“You have to bring also to the table the skills that they lack… which is around how you manage workforce, how you manage ESG (environmental, social, and governance) issues, and how you ensure that community development can be done properly,” Streeton said.

Europe’s EV supply chain should work more closely with its Chinese counterparts to technologically catch up, according to experts at Fastmarkets’ European Battery Raw Material conference in Amsterdam on September 16-18. Several speakers emphasized the importance of forming partnerships with Chinese technology companies for immediate transfer of technology to help Europe develop knowledge and drive down costs in its battery supply chain.

Low prices threaten future critical mineral supply

Though partnerships with Chinese firms can provide benefits to Western producers of critical raw materials, the current price environment for battery metals like lithium and nickel are providing a barrier to investments in new projects and exploration.

Hanna Schweitz, director of battery materials and asset development at WMC Energy, said, “It’s of course a very high risk that at these prices you see less investments, less companies can spend money on actually investing in finding the best deposits.”

In the lithium market, it is typically said that the incentive price for investment in expansions or new projects sits around $20-25 per kg on a lithium carbonate equivalent (LCE) basis, depending on the resource and region.

At present, lithium prices sit well below this level.

Fastmarkets’ daily assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was $10.70-11.30 per kg on Tuesday October 1. 

Nickel is a more complicated market to evaluate in terms of incentive prices, because it depends on the type of nickel being produced and the technology being used. But typically, non-Indonesian producers of nickel have sat on the higher side of the cost curve.

The benchmark price for nickel remains the London Metal Exchange nickel cash price. The LME nickel cash official price closed at $17,002 per tonne on September 30, up from $16,652 per tonne on September 27.

The LME nickel cash price is down by close to 12% since June 1.

IRA and the battery metal regulatory landscape

Panelists at the FT’s Mining Summit also discussed how the Inflation Reduction Act (IRA) in the US might influence battery metal sourcing.

“No OEM (original equipment manufacturer) wants to take the risk of having some non-compliant material in their supply chain with the risk of losing the money if they are not adherent to the rules,” said Schweitz.

Streeton commented on the IRA’s potential impact, saying, “You’ve got to factor in that these are policy interventions. They’re not structural interventions that are permanent potentially.”

Vella expressed scepticism about the IRA’s impact on raw material suppliers, stating, “I don’t know of anyone who can reference the point where that EV subsidy actually flows all the way back to the raw material supplier… and even if it did, how material would it be?”

Our expert editorial team, analysts and price reporters working across metals, battery raw materials and rare earths bring you the latest price trends, market insights and forecasts for the critical minerals market. Track critical minerals markets with our price data and market coverage today.

The post Critical minerals sector eyes Chinese partnerships to cut costs, boost technology: LME Week appeared first on Fastmarkets.

“Transactional pricing is out there but it would be great if we had more transparency in the markets,” Harris added. “[Lithium] is not listed on [the London Metal Exchange] for example, we don’t have a future market.”

Fastmarkets’ latest price assessment for lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $10.00-11.20 per kg on Tuesday August 20, down by 0.93% from $10.00-11.40 from Monday August 19.

Meanwhile, Fastmarkets assessed the price for spodumene min 6% Li2O, spot price, cif China at $750-790 per tonne on August 20, stable from August 19.

Chinese lithium prices have been on a general downtrend in 2024, pressured by weak demand and oversupply. Several Chinese lithium producers are considering production cuts or complete suspension to mitigate losses from high costs amid the ongoing price declines and muted demand.

On April 4, Fastmarkets launched weekly price assessments for spot battery-grade and technical-grade lithium hydroxide and carbonate for the United States and Canada.

The movement followed feedback from market participants who are interested in seeing regional price references for lithium in the US and Canada that reflect the evolving battery supply chain in the region.

“In North America, demand is growing, [electric vehicle] penetration is slower than people thought but it’s still growing around 25% per year. We know that the market needs domestic supply but almost nobody’s doing anything about it, car companies or battery companies,” Harris said. 

The chairman believes that, although the lithium market has been characterized by low prices and oversupply, there will be an inflection point between 2024 and 2030, when people are going to need to secure domestic supply.

“In the long term, people want green energy, the government wants to support green energy and businesses are looking to provide green energy. EVs are a natural solution,” Harris said.

Surge Battery Metals owns the Nevada North Lithium Project, which has an estimated resource of 4.7 million tonnes of lithium carbonate equivalent with a grade of 2,839 part per million of lithium and an overall composite grade of 4,939 ppm in the Granite Range southeast of Jackpot, Nevada. 

“Our grade is 3-4 times the conventional clay deposits that people have been working on in North America and it is considered the highest clay lithium resource in America,” Harris noted. 

New projects in North America are facing challenges from Chinese investments in some regions such as Africa, which offer a cost advantage, according to Harris.

“They may have a competitive cost advantage, but, with the Inflation Reduction Act (IRA), they are not going to allow those batteries to be rebate eligible in North America,” Harris said.

The chairman also said that investing in non-US trading partner countries is not a solution due to the IRA. 

“We are not getting involved in a project in Argentina, for example, because if they ship raw lithium products to China to be upgraded and incorporated into batteries, those batteries will not qualify in the US under the current IRA,” Harris said, adding that it is better to focus on domestic supply.

Supply side for lithium

The market faces an oversupply in the short term, but it won’t last long as the market dynamics will adjust, according to Harris.

“As long as prices stay low, some companies will cut production, some will delay expansion and some of the feasibility stage companies will not get funded,” Harris said, but added, “The cure to low prices is low prices.”

“Since it takes a long time for supply to come on stream, it is inevitable that there will be another supply crunch. EV demand is still growing at 25%,” he said. 

Fastmarkets research team forecasts that available production for lithium in 2025 will reach 1,439,400 tonnes of lithium carbonate equivalent (LCE), while demand will reach 1,390,370 tonnes. 

According to ANZ analysts Daniel Hynes and Soni Kumari, slowing growth in EV sales and an oversupply in China’s battery capacity are likely to weigh on demand for battery metals. 

“Lithium, cobalt and nickel are likely to remain oversupplied in the short term, but the response from producers in cutting output amid the low prices should limit the downside. We see a strong long-term outlook. Supply still needs to increase by a factor of 1.5-3.5 over the next five years, which is a difficult goal,” they said in a report published on Sunday August 18.

The Nevada North Lithium Project

Surge Battery Metals produced its initial assessment of the Nevada North Lithium Project in February 2024. According to the estimate, the project contains an inferred mineral resource of 4.67 million tonnes of LCE with a grade of 2,839 ppm of lithium at a 1,250 ppm cut-off.

“We are in the preliminary economic and development phase. Based on additional drilling in 2024, we will release an updated [estimate] in September. We  are aiming to deliver a Preliminary Economic Assessment (PEA) in December this year,” Harris said.

“We don’t have a specific date to start producing, but based on similar project timelines, we estimate 2030 as a target start date,” Harris added.

The process to extract lithium will utilize the same flow sheet used at the sedimentary-clay deposit at Thacker Pass, which is the largest-known measured and indicated lithium resource in North America, according to owner Lithium Americas. 

The Thacker Pass project will use a newly-developed process to extract lithium from the clay deposit, similar to mining techniques for coal deposits. Usually, lithium is mined by either hard rock mining or brine mining. 

According to Lithium Americas, the production process is designed to use conventional and commonly available equipment, arranged to take advantage of the distinctive qualities of the high-grade ore. The process comprises a series of steps to concentrate, separate and produce battery-quality lithium chemicals.

“One of the key advantages of clay, unlike spodumene where you sell a concentrate and you get a discounted price, is that we can actually produce carbonate and/or hydroxide directly, ” Harris said.

“We can extract a premium price from the clays as we are producing a premium end product, ” Harris added, noting that spodumene is typically shipped to China to be upgraded into battery-grade lithium, which would disqualify it under the IRA.

Harris said, however, that producing lithium from clay requires more capital expenditure (capex) compared with spodumene.

“[There is less capex] in spodumene but you are getting a much lower price for your product. With clay, and our Nevada North project containing such high-grade lithium, we are hopeful that the [operational expenditure] will be more in line with traditional lower-cost brine projects,” Harris said.

In addition, Surge Battery Metals will try to secure funding from the Department of Energy.

“We will certainly be applying for [funding] because, for mining companies, when we are looking at traditional construction debt financing, it’s expensive. And… the IRA  that would greatly enhance the economics of the projects,” the chairman aid.

The IRA, which was signed into law on August 16, 2022, prohibits using critical minerals and battery components from a “foreign entity of concern,” which includes companies based in China, Russia, North Korea and Iran.

Data from the US International Trade Commission’s Interactive Trade DataWeb shows that the US imported nearly 154,000 lithium cells and batteries (excluding spent products) from China in 2022, up from nearly 109,000 units in 2021 and more than double the approximately 71,000 units imported in 2019. Indonesia, Japan and Singapore were the other major suppliers in 2022. 

From January through May of this year, however, US imports of lithium cells and batteries from China, Indonesia, Japan and Singapore fell significantly versus the same five-month period last year.

However, the global lithium market is still seeking more clarity on what lithium supply will qualify for the financial incentives offered by the policy. The definitions of IRA-compliant lithium have yet to be clarified and opinions on whether there would be any IRA premium for lithium are divided.

Gain a competitive edge with our lithium prices. Talk to us about our market-reflective lithium prices, data and analysis.

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Hosted by Andrea Hotter, the episode features Paul Lusty, head of battery raw materials research at Fastmarkets.

The key points covered in the discussion include:

• State of the lithium market
• Outlook for global EV sales and the rise of plug-in hybrid electric vehicles
• Latest EV battery chemistry trends and preferences
• Challenges in decreasing reliance on Chinese supply chains
• Factors to keep a close eye on in the BRM markets

Listen to the full episode and subscribe to Fastmarkets’ Fast Forward podcast on Spotify, Apple Podcasts, Amazon Music or other podcast providers today.

What is the state of the lithium market?

The lithium markets experienced a major price rally in late 2022, followed by a correction in 2023 that resulted in an 80% drop in lithium prices. This downturn has prompted producers to cut costs and delay investments, particularly affecting supply chain development outside China.

While the lithium market currently lacks direction, we are beginning to see positive signals that could lead to price increases in the coming months:

• Strengthened spodumene prices: Spodumene prices have increased by 40% from the 800-900 per tonne range seen in February, which is expected to support chemical salt prices later in the year
• New Chinese automotive policy: The Chinese government has introduced a policy to boost consumption in China which led to a rally in Chinese lithium futures prices
• Increased battery installations in China: Battery installations in March 2024 resulted in a 70% increase month-on-month and a 40% increase year-on-year
• Destocking cycle coming to an end: Analysis shows that since the price fall of 2023, Chinese producers have de-stocked around 70,000 tons of lithium carbonate equivalent. This trend cannot continue indefinitely and consumers will eventually need to return to the market for new materials

The lithium market is expected to mature with time, resulting in increased liquidity, more suppliers and diverse sources. As the market stabilizes, demand fluctuations will have less impact on prices and volatility should decrease over the next five to ten years.

What is the outlook for EV sales?

EV sales growth rates have slowed since the exceptional growth rates of 2021 and 2022, dropping to a 36% year-on-year growth rate in 2023 from over 100% back in 2021.

Some commentators suggest the EV market is losing momentum, but Fastmarkets believes it will continue to grow steadily at a more sustainable year-on-year growth rate over the next decade.

The current market trends reflect various regional and country-specific challenges:

• Countries with high EV penetration, like China and Norway, are seeing slower growth due to market saturation, but China’s robust charging infrastructure combined with affordable EVs are likely to continue to drive consumer adoption
• Sales in Europe and the US have fallen short of expectations, largely due to interest rates impacting vehicle financing and consumer buying decisions
• The Asia Pacific region is experiencing exceptional growth, particularly in emerging economies like Thailand, which saw nearly 500% year-on-year growth recently, powered by strong government policies and incentives

Plug-in hybrid electric vehicle (PHEV) sales have been rising at a stronger rate than full EVs in the US and China. In China, market saturation in major cities and the lack of established EV charging infrastructure in rural areas are making PHEVs a more practical choice. In the US, PHEVs appeal to buyers hesitant to switch to fully electric cars due to range anxiety and a preference for long-distance travel.

What are the latest EV battery chemistry trends?

NCM (nickel cobalt manganese) chemistries have seen a resurgence in the past year, particularly for NCM 622 and NCM 523 as a result of lower BRM prices. LFP (lithium iron phosphate) demand has also increased.

LMFP (lithium manganese iron phosphate) has recently been included in Fastmarkets’ chemistry forecast due to rapid advancements in LMFP cell production and commitments from original equipment manufacturers (OEMs) to use this chemistry. We are anticipating LMFP to capture 17% of the passenger EV market by 2034.

Sodium-ion batteries, similar to LFP, arrived on the scene due to high lithium prices in 2022. Given the low lithium prices right now, there is little incentive for commercializing sodium-ion technology and it is predicted to capture only 4% of the battery market by 2034.

In terms of energy storage, solid-state batteries are generating interest due to their potential for significant advancements in range and charging times. Recent announcements, like Toyota’s claims of 750 miles range and 10-minute fast charging, highlight their promise. However, there are still significant technical and manufacturing challenges to address before they can be widely commercialized.

What are the challenges in reducing dependency on Chinese supply chains?

There are many policy and regulatory efforts to regionalize supply chains, such as the Inflation Reduction Act (IRA) aimed at onshoring and clean energy investment in the US, the push for Chinese de-investment from lithium projects in Canada and the establishment of the National Security Investment Act in the UK.

In terms of markets, graphite is a great example that exemplifies the challenges in moving away from Chinese supply chains. With the US regulations for critical minerals coming into effect in 2025, no EVs will qualify for the 30D tax credits under the foreign entity of concern (FEOC) definition, since nearly all natural anodes are produced or processed in China.

Another example of this is nickel. Indonesia’s dominant nickel market, backed by the Chinese steel industry and investments, faces compliance challenges with FEOC guidelines. Over 25% Chinese ownership in major projects and the lack of a US free trade agreement affect its eligibility for new EV tax credits under the IRA.

There will be significant challenges in reducing reliance on China due to its established dominance in this space. Policymakers need to understand that building economic capacity and resilience takes time.

What should BRM market participants watch for in the next decade?

1. The impact of the low-price environment on BRM supply

This is expected to cause BRM supply challenges by the late 2020s, leading to deficits in the next decade. The weak market sentiment is discouraging investment and essential project development, which could hinder the establishment of supply chains outside of China.

2. China’s response to the low-price environment

China remains poised to dominate global EV and battery production, posing risks to US and European automotive industries. It may move to support financially challenged projects or invest in underfunded areas like Africa and South America.

3. Battery recycling and the circular economy

This will significantly impact the BRM industry in the next decade. Regulations focused on minimum recycled content and supply chain performance will drive increased use of recycled materials in batteries.

4. Green premiums and other pricing mechanisms

The industry should anticipate the emergence of pricing mechanisms for green or low-carbon materials in BRM markets in the coming years. These mechanisms may include regional premiums tied to regulatory compliance, such as the IRA.

Fastmarkets’ Fast Forward podcast provides invaluable insights for industry professionals, metal traders and battery material buyers. For more in-depth discussions and to stay updated on the latest trends, be sure to listen to the full episode and subscribe to the Fast Forward podcast.

The post What to watch in the battery raw material markets: Five takeaways for the next decade appeared first on Fastmarkets.

“With the IRA, we’ve seen quite an increase in positive investment and positive thinking toward recycling, which was different in the past when it was not as talked about as a discussion topic,” she continued.

Price swings in lithium, nickel and cobalt have had downstream impacts on investments, as well as commercial agreements and associated payables, according to Schilling.

Glencore’s smelter in Sudbury, Ontario, processes black mass using pyrometallurgy, which does not recover lithium.

“That was a big reason for Glencore’s investment in Li-Cycle,” she said, noting that lithium prices a couple of years ago made it more desirable to recover lithium from black mass.

Glencore and Li-Cycle’s hub in Italy was expected to become Europe’s largest source of recycled battery-grade lithium with a target commissioning time of late 2026-early 2027, though those plans could be under threat after a request to fast-track the project was rejected by the regional government.

With lithium-iron-phosphate (LFP) technologies becoming more popular, interest in hydrometallurgical technologies or other processes may increase to maintain mineral yields and reduce the loss typically associated with burning processes, Schilling said.

The weekly assessment of the black mass, LCO, payable indicator, lithium, cif South Korea, % payable Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was 3-5% on Wednesday, unchanged since December 6.

Fastmarkets’ daily assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was $13.50-14.50 per kilogram on Thursday May 23, up from $13.00-14.25 per kg a month earlier but down from $32.00-36.00 per kg year on year.

The post US interest in black mass increasing: Glencore appeared first on Fastmarkets.

Westwater is building its Kellyton battery-grade graphite processing plant in east-central Alabama, and it owns the Coosa and Bama Mine graphite projects, also both in Alabama.

“It might seem strange that we decided to build the processing plant before the mine, but we really did that to ensure that we could get revenue and cash flow sooner,” Cryan said.

The Centennial, Colorado-based company has an offtake agreement with South Korean EV battery manufacturer SK On for the supply of coated spherical purified graphite (CSPG) to SK On’s US plants.

“There’s approximately 17 battery Giga plants under development in the US, and all of those are designed to use graphite as the anode material, and yet here in the United States, we don’t produce any of it,” Cryan said. “We’re trying to stand up a North American battery-grade graphite business in an industry that is completely dominated by China today.”

Westwater’s practices are “fundamentally different” from the way the industry operates in China, mainly due to its environmental benefits, according to Cryan. Chinese companies use hydrofluoric acid to produce CSPG, and Westwater does not, he said.

“When you’re having conversations with battery manufacturers and OEMs, they are very interested in your environmental footprint until you get to the point where you’re trying to negotiate offtake pricing with the supply chain, and then the conversation shifts – then the conversation is really about price – because they’ve been the beneficiaries over the last 20 years of inexpensive Chinese anode material,” Cryan said.

“Battery manufacturers and OEMs are sincere about wanting to have a supply chain that is environmentally responsible,” he clarified to Fastmarkets after the panel. “We see clear evidence of that in their behavior; they want to know before they do business with us about the particulars of our environmental footprint.”

Today, all anode material for lithium-ion batteries comes from China, with graphite as the anode material representing about 50% of a lithium-ion battery by weight, he said.

“We didn’t get into this business to compete with the Chinese on price,” Cryan said. “We got into this business to create a domestic industry in a critical material that has the most significance to be in supply-demand imbalance than any of the critical materials.”

Westwater applauded the US government for recently increasing US tariffs on Chinese EVs from 25% to 100%, and implementing a 25% tariff on natural graphite imports from China beginning in 2026. 

“These tariffs are just what the new and critically important US-based natural graphite industry needed to compete with the monopoly that exists in China today and only strengthen Westwater’s value proposition as we move to secure additional customers,” chief commerical officer Jon Jacobs said in a statement on May 15.

The tariffs are unlikely to have much of an impact on Chinese EV manufacturers, sources in China told Fastmarkets. 

Separately, the US Treasury Department earlier this month gave automakers a two-year extension, to 2027, on restrictions to some hard-to-trace minerals from China, such as graphite contained in anodes. 

Fastmarkets’ assessment for graphite flake 94% C, -100 mesh, cif Europe stood at $600-700 per tonne on Wednesday, unchanged since mid-April. Fastmarkets’ assessment for graphite flake 94% C, -100 mesh, fob China was $460-481 per tonne on Thursday May 23, down from $460-491 per tonne a month ago and $530-575 per tonne at the beginning of the year.

The spread between Chinese and European graphite prices hit a five-year high in the past couple of months amid developing market dynamics caused by rising freight rates, falling Chinese prices and geopolitical factors, sources told Fastmarkets.

The post Graphite buyers are willing to pay IRA premium: Westwater Resources appeared first on Fastmarkets.

Renewable diesel producer switches to petrol

Speaking on Vertex, a renewable diesel (RD) producer that announced one of their production plants will switch back to petroleum-based fuel, McAfee said: “They are a great example of what happens when the low carbon fuel standard [credit price] trends downward by 30% in a matter of a few months.”

“There are probably other producers that will be considering the same kind of move,” the CEO added, emphasizing how the incentives to produce biofuels are heavily influenced by tradable credit prices.

LCFS credit prices have fallen sharply from a peak of near $200 per tonne in 2020 due to rapidly increasing production of RD and other renewables. The number of credits has nearly tripled since then, leading to a surplus and causing the price to plunge. The most recent LCFS credit price was just below $50 per tonne.

Aemetis has received the final permits needed to move forward with its SAF plant project in Riverbank, California, and it is now focused on financing the project, the company said.

The Riverbank facility will have a capacity of approximately 78 million gallons per year of SAF production when it is optimized to produce only SAF, McAfee said, or up to 90 million gallons per year if producing a combination of SAF and RD.

The company has invested $30 million in Topsoe’s HydroFlex technology to allow them to shift from 100% SAF production to 100% RD or anywhere in between. That investment will never pay off if the Riverbank facility is always run as a SAF production plant, McAfee said, but “we think that flexibility is important because of the uncertainties in the [IRA] and, frankly, in the low-carbon fuel standard.”

Aemetis seeks new pricing structures

Aemetis is negotiating with investors on “innovative pricing structures” to finance the Riverbank project, McAfee said.

“It becomes more of a partnership between the supplier and the airline at which the airline is taking more of the risks around incentives and feedstock and energy costs,” McAfee said. “In exchange, the producer gets a more known amount of cash flow from the operations, which enables long-term debt financing at lower cost.”

McAfee referred to an article he wrote in April, in which he suggested that airlines should agree to purchase SAF on a “cost plus” basis – the cost of production plus a set profit margin – to help incentivize more production. McAfee also previously said that airlines are in a better position than startup biofuel producers to influence government environmental policy and should be doing so.

Aemetis has signed offtake agreements worth $3.8 billion with ten airlines, the company previously said in a separate investor presentation. The largest officially announced agreements were with Delta Airlines (100 million gallons of SAF over 10 years), JetBlue (50 million gallons over 10 years) and the Oneworld Alliance group (more than 74 million gallons over seven years).

The Riverbank facility is currently scheduled to come online in 2027.

Aemetis operated at a net loss during the first quarter but expected to start earning significant income from the IRA’s 45Z tax credit due to renewable natural gas production starting from the first quarter of 2025, the company said.

View our SAF production and credit price data

The post Current US SAF tax credits do not incentivize production, says Aemetis CEO appeared first on Fastmarkets.