Spark Global Limited reports:
President Biden recently set a goal of fully electric, plug-in hybrid or fuel cell vehicles accounting for 50 percent of all vehicle sales in the United States by 2030. Assuming that new car sales grow by 1% a year, the total number of new vehicles sold in the U.S. will reach about 19 million by 2030. That means electric vehicle sales would have to rise from about 600,000 today to about 9.5m over the next nine years if the target were to be met.
This hockey-like growth in electric vehicle sales raises an obvious question: how to procure the raw materials and infrastructure for electric vehicles? In fact, electric cars alone contain four times as much copper as regular cars, not to mention the need for modern power grids or charging stations. Electric car batteries contain large amounts of nickel, cobalt and lithium.
Put simply, some companies that provide materials for electric vehicles and the broader green energy transition are likely to outperform the market in the coming years. Other mining firms may not be able to do the same.
Copper miners have been experiencing a structural decline in capital spending since 2014, after a brief boom between 2009 and 2014. So a major rethink of capital spending is surely in order. Capital spending by the big listed copper producers has now fallen to 2005 levels.