Western lithium, graphite miners boost prices for ESG-friendly supply

Northern Graphite

17/11/2023 17:23

By Ernest Scheyder
       LOS ANGELES, Nov 17 (Reuters) - Western lithium and
graphite miners have started charging the electric vehicle (EV)
supply chain higher prices for their material, meeting demand
for environmentally-friendly and consistent supply that is not
linked to China.
        In presentations and interviews at this week's Benchmark
critical minerals conference in Los Angeles, industry
executives, consultants and investors touted the premium pricing
model as a way to help prod development of non-Chinese supply, a
goal of Washington, Brussels and other Western governments. 
  
    The surcharges mirror a plan from the rare earths industry
as Beijing exerts control of the critical minerals market and
some EV backers worry that weaker environmental standards among
some Chinese miners could tarnish the industry's clean energy
credentials. 
    China refines more than 90% of the world's graphite and last
month said it will require export permits for the metal, the
largest component of an EV battery.
    Lithium, the lightest metal, is used to make a battery's
positively charged cathode and prized for its ability to store
energy. China is the world's largest lithium processor. 
    "There's a premium to secure material from North America,"
said Patrice Boulanger of Nouveau Monde Graphite  NOU.V , which
is building a Canadian mine and has a non-binding offtake with
Panasonic Energy. "We have the highest (environmental, social
and governance) standards."
    Miners say the surcharges make investors more comfortable
financing new projects, especially as Chinese rivals have been
known to sell metals below prevailing market rates.
    "For a company to make an investment decision here in the
United States ... there has to be an adequate return for that,"
said Shaun Verner, CEO of Syrah Resources  SYR.AX , which
received U.S. Department of Energy funding to build a graphite
processing plant in Louisiana that will supply Tesla  TSLA.O . 
    "Customers understand that there is going to a degree of
pricing differential across different geographic markets and
potentially different provenance of materials."     
    Later this month, Benchmark, a data and information
provider, will start publishing a sustainable lithium price that
tracks what automakers have been willing to pay for ESG-friendly
supplies of the white metal.
    Brazil's Sigma Lithium  SGML.V  has already begun selling
its production at prices it says reflects its sustainability.   
    The surcharge talk comes despite recent plunges in a range
of lithium prices. That may, some industry members say, make it
harder to convince customers to pay more. Higher metals prices
could also boost the cost of various electronics.
    Amanda Hall, CEO of privately-held Summit Nanotech, said
miners should produce consistent, environmentally-friendly
supplies as a general rule, regardless of market dynamics.
    "I don't think customers will pay more, based on commodity
markets in general," said Hall. Summit Nanotech, a direct
lithium extraction company, has projects in North and South
America. 
    Others say they plan to keep surcharges, convinced that auto
companies will pay.
    Northern Graphite  NGC.V , which runs a Quebec graphite mine
and is building an anode facility, is already selling types of
the metal at prices above Chinese rivals, said CEO Hugues
Jacquemin.
    "Our customers want guarantee of supply, they want quality
of material, and they want long-term sustainability," said
Jacquemin. "Today, when you buy graphite from China, you don't
know where it comes from."

 (Reporting by Ernest Scheyder; Editing by David Gregorio)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))