By Jeff Lewis
TORONTO - Small miners hoping to take advantage of demand for battery metals are struggling to convert electric vehicle aficionados into investors, compounding the sector's funding constraints even as analysts predict a long-term shortage of the raw materials used to make EVs.
The predicament has made it harder for already-strapped miners to raise money and could stall construction of new mines in the event the burgeoning EV industry faces a supply crunch for battery-grade lithium, graphite and other minerals.
"You need a mine for almost everything that we touch, and people still don't get that," said Eric Desaulniers, chief executive of Nouveau Monde Graphite Inc (V:NOU), which is developing a graphite mine in Quebec. "They want the electric car to save the planet but no mining."
Traditional mining investors are reluctant to put money in unproven markets while the most ardent EV backers seem loathe to invest in mining at all, even if the products support green technology, industry executives and analysts said.
Whether loss-wary investors will finally focus on EV minerals will be a key question at this week's annual Prospectors and Developers Association of Canada (PDAC) conference in Toronto.
"There's been this very weird hole in financing," said Mark Saxon, chief executive at Vancouver-based Leading Edge Materials Corp (V:LEM), which is developing a rare-earth deposit in Sweden.
Efforts by the industry to court new investors are set against rising opposition to mines. Protests have snarled lithium exploration in Portugal while automakers have stepped up scrutiny of production in Chile's environmentally fragile Atacama desert.
Indeed, top lithium producers Albemarle Corp (N:ALB) and Chile's SQM (SN:SQMA) have curbed expansions amid sinking prices for the white metal.
Nemaska Lithium (TO:NMX), which is backed by Japan's SoftBank Group Corp (T:9984), filed for bankruptcy last December. France's Eramet (PA:ERMT) postponed a lithium project in Argentina earlier this month, citing the country's uncertain economic outlook.
Others, including Argentina-focused Neo Lithium Corp (V:NLC), are looking for joint venture partners after unsuccessful financing campaigns.
"With the tens of billions (of dollars) that are going in downstream at the EV level, at the battery level, ultimately the raw materials will have to catch up," said Andrew Miller of metals pricing provider Benchmark Mineral Intelligence.
To be sure, not all companies are strained.
Nouveau Monde Graphite, backed by mine financier Pallinghurst Group, is in talks to secure C$330 million in project financing, said CEO Desaulniers.
Pension investor Caisse de dépôt et placement du Québec and the provincial investment body are also investors.