Volkswagen to enter mining businesses in effort to secure battery metals

Attendees look around the at Volkswagen of ID.6X during 2022 Central China International Auto Show on July 14, 2022 in Wuhan, Hubei province, China. More than 80 brands took part in the 2022 Central China International Auto Show which started on Thursday. According to local reports more than 30 domestic electric vehicle brands participated in the exhibition. (Photo by Getty Images)

VOLKSWAGEN aimed to enter the mining business in Canada to ensure its raw material supply for battery production, said Reuters citing comments made by a board member for the carmaker to German newspaper Handelsblatt.

“We are not opening any mines of our own, but we want to acquire stakes in Canadian mines and mine operators,” Thomas Schmall told the daily on Tuesday. Schmall added that Canada had virtually all the raw materials needed for battery production.

A memorandum of understanding to this effect is to be signed with the Canadian government later on Tuesday, Handelsblatt said.

Supply of battery metals such as copper, nickel and lithium is likely to be insufficient when measured against expected future demand, analysts say.

In July, Tesla founder Elon Musk urged more entrants to the mining sector saying that producing lithium for use in battery electric vehicles was a license to “mint” money.

“I’d like to once again urge entrepreneurs to enter the lithium refining business. The mining is relatively easy, the refining is much harder,” Musk was quoted by Bloomberg News as saying. “You can’t lose, it’s a license to print money.”

China accounts for more than half of all existing lithium refining capacity, though suppliers are adding projects in other hubs, said Bloomberg News.

Manufacture of electric vehicles is expected to grow significantly over the next ten years as governments around the world embrace technologies that produce less or no carbon emissions.

“We’ve got decades worth of high rates of investment into infrastructure as the world seeks to decarbonise. That’s a widely held consensual view,” said Evy Hambro who is BlackRock’s global head of thematic and sector-based investing in January.

“What we’re likely to see is strong demand that will keep prices at very very good levels for the producers for many years into the future, and that could be decades,” he said in an interview with Bloomberg TV.