More natural resources will be required to make the world economy more environmentally friendly. The mining sector will have to both exploit and defuse this irony. For miners, electric vehicles represent a challenging opportunity. Although a Tesla or even Porsche Taycan has no tailpipe and produces far less carbon over its lifetime than a regular car, its large lithium-ion battery needs more metal than an ICE (internal combustion engine). Yearly lithium demand from Electric Vehicles and energy storage is expected to increase by a factor of more than 20 by 2030, according to consulting firm Rystad Energy, compared to last year’s level.

Cobalt, copper, nickel, and aluminum are also found in lithium-ion batteries. Solar panels, charging stations, wind turbines, and the grid infrastructure that connects them all will all require massive amounts of metal. There’s talk of a new “supercycle,” with specialized businesses like lithium producer Albemarle seeing sky-high valuations.

However, a metals boom fueled by decarbonization will be more difficult for the mining industry as a whole than the previous supercycle fueled by Chinese infrastructure construction that fueled commodity markets.

Because the energy revolution will demand less coal and oil, diversified resource suppliers will be encouraged to alter their portfolios. Following a major shake-up in August, BHP, the world’s largest miner based on the market value, is in course of unloading its stakes in both fuels. Glencore, last of the sector’s giants to maintain a pledge to thermal coal, came under siege this week from an activist investor who wants it to focus solely on growth products like cobalt.

BHP and its rival Rio Tinto still make the most of their money from iron ore, which is a major source of emissions because it flows into the difficult-to-decarbonize steel industry. Despite this, both companies are attempting to expand their exposure to the so-called future-facing products. Rio Tinto said in July that it would invest $2.4 billion in a massive lithium project in Serbia. BHP is attempting to buy Noront Resources, which possesses a potential nickel deposit in Canada.

Everyone seemed to be staring in the same direction. BHP’s offer for the Toronto-listed shares in July sparked a bidding war with a large Noront shareholder headed by Andrew Forrest, an Australian billionaire who previously created another iron-ore producer, Fortescue Metals Group. The two parties are currently in negotiations.

The hunt for fresh mining potential is likely only just beginning. Canada is a very appealing travel location. It has vast resources, is close to the large US market, has favorable geopolitics, and has good environmental, social, as well as governance credentials. These are more important than ever because today’s battery metal sources come with significant environmental, social, and geopolitical issues that are difficult to harmonize with the environmental issue they are intended to fix, let alone Washington’s goal of reducing US reliance on China.

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