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    ANTO   GB0000456144

ANTOFAGASTA PLC

(ANTO)
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Real-time Estimate Cboe Europe  -  06:57 2022-10-04 am EDT
1160.25 GBX   +2.59%
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Miners face supply chain overhaul to meet U.S. EV credit deadline

08/11/2022 | 12:10pm EDT
FILE PHOTO: Arizona copper fight reflects tough choices as America tries to go green

(Reuters) - Miners will struggle to expand operations in the United States in record time to meet a deadline for sourcing key minerals domestically or from select countries as set out by a bill likely to be passed on Friday, companies and industry watchers said.

The requirement is part of a sweeping bill that includes climate and clean energy policies and rules on electric vehicle (EV) battery materials such as cobalt, lithium, nickel and graphite. The U.S. House of Representatives is set to vote nL1N2ZJ02X on the measure Friday.

"Considering it takes seven years to build a mine and refining plant but only 24 months to build a battery plant, the best part of this decade is needed to establish an entirely new industry in the United States," said Simon Moores, chief executive of Benchmark Mineral Intelligence.

The Inflation Reduction Act (IRA) includes a $7,500 tax credit for new electric vehicles, but to win the full credit, EV makers have to source in 2023 at least two-fifths of battery materials from the United States or free trade agreement (FTA) partners such as Canada, Chile and Australia or recycle it in North America.

The guidelines exclude Indonesia and Argentina, two providers of key metals - nickel and lithium respectively - and increase the material sourcing target to 80% by 2026. Automakers had pressed Congress to expand the number of eligible nations.

"The most feasible option is to use recycling ... yet the impact of recycling will be very limited when there are barely any EVs coming off the road," said Max Reid, analyst at WoodMac Battery Raw Materials Service.

The United States is home to some of the world's largest automakers, including Ford Motor and General Motors, as well as automotive parts suppliers, but limited home-grown battery manufacturing and refining capacity.

Top lithium producer Albemarle Corp, which aims to build a lithium processing facility in the U.S. Southeast later this decade, said the bill is a "positive step" toward attracting investment for a domestic supply chain.

"The conditions and timeline for the credit on electric vehicles is challenging as the battery industry largely operates in Asia and the domestic supply chain is in early development," an Albemarle spokesperson said.

"Our Kings Mountain mine project and proposed Southeast meg-flex production site will help move the U.S. supply chain forward, but this will take time."

Global major Rio Tinto, which has refining and smelting operations in Utah and Canada, said it "welcomed the provisions on domestic extraction and processing" and was working with auto sector customers.

Other major EV metal miners, such as copper miner Freeport-McMoran and Glencore, declined to comment.

New U.S. mining projects have faced stiff opposition from local communities and environmentalists, underscoring the broader tension in the United States as resistance to living near a mine clashes with the potential of EVs to mitigate climate change.

Chile's Antofagasta, for example, saw the leases for its proposed Twin Metals copper and nickel mine in Minnesota canceled by the U.S. Department of the Interior in January on environmental grounds, while the White House last year said it planned a 20-year ban on mining in Minnesota's Boundary Waters region, where Antofagasta hopes to build an underground mine.

"The view that you need to source domestically ... will start to prevail and be more significant," Antofagasta Chief Executive Ivan Arriagada told Reuters.

"It's grounded on national security considerations, on the challenges posed by the energy transition and there is no way the world is going to get to carbon neutrality by 2050 unless there is more raw materials.

"There is a contradiction there but the wave seems to be moving in the direction of realizing that these projects need to be done."

Efforts by the United States and Europe to build an independent supply chain for the key minerals used in EVs have accelerated with heightened tensions between the West and China and Russia, while the COVID-19 pandemic highlighted the risks from supply chain shutdowns and shortages.

Companies are under pressure to reduce their carbon footprint but complex battery supply chains require materials cross multiple continents in different stages of processing before a finished battery ends up in an EV.

Last year, the White House said it would rely on allies to secure the minerals needed for EV batteries, noting at the time that the country "cannot and does not need to mine and process all critical battery inputs at home." [L1N2N034B]

"Since the market is global in nature and spot prices predominate, the larger effect (of the bill) is to push firms serving the U.S. market to deepen investments into relevant FTA partners, namely Canada and Australia," said Fitch Solutions commodities analyst Nick Trickett.

(Additional reporting by Praveen Menon in Sydney and Helen Reid in Johannesburg; Editing by Marguerita Choy)

By Clara Denina


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
ALBEMARLE CORPORATION 3.51% 273.73 Delayed Quote.17.09%
ANTOFAGASTA PLC 3.49% 1170.5 Delayed Quote.-15.50%
EURO / ARGENTINE PESO (EUR/ARS) 0.63% 146.7225 Delayed Quote.23.62%
FORD MOTOR COMPANY 2.41% 11.47 Delayed Quote.-46.08%
GENERAL MOTORS COMPANY 2.43% 32.87 Delayed Quote.-43.94%
GLENCORE PLC 1.43% 493.5 Delayed Quote.29.76%
NIKKEI 225 2.96% 26992.21 Real-time Quote.-9.91%
RIO TINTO PLC 1.46% 5008 Delayed Quote.0.98%
US DOLLAR / ARGENTINE PESO (USD/ARS) 0.00% 148.23 Delayed Quote.43.47%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 1.66% 59 Delayed Quote.-19.64%
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Financials (USD)
Sales 2022 5 609 M - -
Net income 2022 695 M - -
Net Debt 2022 823 M - -
P/E ratio 2022 18,1x
Yield 2022 3,01%
Capitalization 12 605 M 12 605 M -
EV / Sales 2022 2,39x
EV / Sales 2023 2,18x
Nbr of Employees 6 883
Free-Float 34,5%
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Mean consensus HOLD
Number of Analysts 17
Last Close Price 12,79 $
Average target price 14,14 $
Spread / Average Target 10,6%
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Managers and Directors
Iván Arriagada Herrera Group Chief Executive Officer
Mauricio Ortiz Chief Financial Officer
Jean-Paul Luksic Fontbona Non-Executive Chairman
Vivianne Blanlot Soza Independent Non-Executive Director
Jorge Bande Bruck Independent Non-Executive Director
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