THERE is not a single charging station for electric vehicles (EVs) in Wyoming, a predominately rural state in the mountainous west of the US where people tend to drive large distances. “A lot of citizens are not convinced by EVs,” says Melissa Sanderson, a board member at American Rare Earths, which, despite its name, is an Australia-listed business. “EVs are good in cities, but not in rural America.”
The plug-in hybrid EV(PHEV) variant is seen as a halfway house for late adopters and as a ray of relief for miners of platinum group metals (PGMs). While EVs don’t need autocatalysts or the PGMs required to make them, hybrid technology incorporates more PGMs than the internal combustion engine (ICE). It could provide a welcome lift to PGM demand over the medium term.
Sanderson, speaking at the FT Mining Summit last month, said EVs face the hurdles of “onerous psychology” and economic reality. They are costly and might face political opposition if Donald Trump wins in November. Republicans are keen to repeal the Biden administration’s Inflation Reduction Act, which offers subsidies to refiners of EV feed metals such as lithium and copper. Trump wants to see the US return to its oil and gas roots.
EV production also faces shortages of one of its most important inputs — copper. “There is simply not enough copper in the world to support all the potential uses of the energy transition,” Duncan Wanblad, CEO of Anglo American, said at the conference. Plug-in hybrids require less copper than pure EVs.
Wanblad foresees the need for “a rational mix of drivetrains”, as reflected in sales of EVs in China, Europe and the US, and supported by changes in policy. “You are also getting big auto manufacturers retooling, changing their strategy to support hybrid vehicle production. So [the] next two decades or so will be the time for plug-in hybrid EVs,” said Wanblad.
Volvo recently backtracked on its commitment to be all-electric by 2030. Ford abandoned plans to make a large, fully electric SUV, opting for hybrid power. Hyundai is doubling its range of hybrids from seven to 14 models, according to a report by The Economist.
Citing Bernstein, the New York bank, the magazine said sales of pure EVs were more than double those of hybrids last year, but had slowed recently. In fact, sales of hybrids were now up almost 50% year on year.
“EVs have sold as fast as ICE vehicles but once rates were over 5% we’ve seen a slowdown. The economics are just not adding up,” Gracelin Baskaran, founding director of the critical minerals security programme at the Center for Strategic & International Studies, said at the FT Mining Summit.
Bernstein reckons the popularity of hybrids will be brief as EV technology improves, lowering the cost of batteries. Legislation, such as that in California, will ban all ICE vehicles, including their hybrid counterparts by 2035, according to The Economist.
But for now, the conjunction of inflation, politics and popular consciousness is giving PGM miners a much-needed shot of octane.
This article first appeared in the Financial Mail.
