As we’ve already seen in the previous parts of this series, mining companies are positive on metals used in electric vehicles. According to Reuters, “Rio Tinto, Canada’s Wealth Minerals and Chinese private equity firm GSR Capital are considering a bid for a stake in Chilean lithium producer SQM (Sociedad Quimica Y Minera).” Along with other miners, BHP Billiton (BHP) is betting on nickel and copper assets to play the vehicle electrification theme. BHP sees 2017 as a tipping point for electric vehicles (or EVs). The company sees the global EV fleet growing to 140 million by 2035. Currently, there are only about 1 million EVs globally.
What to expect
The electric vehicle fleet could continue to grow globally if backed by a push by governments in countries such as China and India. In absolute terms, EVs could take a lot of time to cause any major change in metals demand. Mining companies might have plenty of resources and time to explore new mines. Miners with a lot of cash after the commodity price rally may not want to be seen lagging the market. But some believe that vehicle electrification could turn out to be too much money chasing modest growth for the metals and mining companies.
Let’s also look at technological changes over the next decade as automobile companies increase EV production. Toyota is betting on its hydrogen fuel cell car that doesn’t require some of the typical EV metals. As with technology (QQQ), the pace and path of vehicle electrification might be difficult to predict.
In the next part, we’ll see how analysts are rating Teck Resources (TECK).