Joining the dots: Green metals and energy transition

Joining the dots: Green metals and energy transition – minor changes for the different metals long term prospects and where it is possibly heading?

In the second half of 2023, spodumene prices has plummeted quite a bit resulting in major price dropped in Lithium sector.  In addition, this has also impacted prices of Copper (Cu), Nickel (Ni), Cobalt (Co) and Manganese (Mn) et. al. in the recent past.  In my opinion, there are many factors behind this of which I now share:

  1. Global growth slowing.  Commodities prices usually have a strong correlation to global growth; this will inevitably impact of the short-term prices.  According to World Bank, the global growth is expected to slow from 2.6% in 2023 to 2.4% in 2024.
  2. Consensus has pulled back the growth of EV sale in 2024 to around 20% (from 30%+ last year), possibly due to the slowing global growth as well as other factors.  This is mainly attributed by less optimistic EU and US sales than due to China.  China’s EV sale remains resilient.
  3. Different battery technologies are moving faster than previously forecast.  For example:
    • LFP (Lithium iron phosphate) batteries is growing stronger than expected due to the BYD’s blade battery technology and improvement in power density per kg of LFP battery technology.  Moreover, LFP batteries are also cheaper as it does not have expensive Ni or Co in the battery.  Telsa has now completely adopted the LFP battery for Model 3 globally.  Model 3 is their lowest range BEV.  Previously, I understood only Model 3 produced in China uses LFP and now they have decided to move all to LFP globally.  This is a huge change.  There are also other advantages for adopting LFP battery technology such as higher cycling compared to Lithium nickel manganese cobalt oxides (NCM) batteries, lower chance of thermal runaway, supply and cost.


  • Long term forecast for NCM battery technology may need to be pulled back.  This means the long term demand of Ni, Co and Mn green metals that analysts have provided over the past 2-3 years is likely too optimistic.
  • While there will be an increase in demand for iron ore, this increase I suspect is not material compared to the magnitude the world requirement for construction and infrastructure purposes.  My estimate for this amounts to 2% of the increase in demand for iron ore based on a stoichiometric calculation for a LFP battery’s chemistry once the energy transition is completed.  However, this calculation is prior to Tesla’s decision to adopt LFP battery technology in all its Model 3.  This suggests that this decision will likely result in a marginal increase in iron ore demand over the long term but it may be offset by the Sodium (Na) ion batteries technology (see next).
  • Na ion battery from research to commercialisation has moved much faster than previously has forecasted.  Whilst Na ion battery is inferior to Li ion batteries in terms of power density compared to LFP and NCM technologies, it has nevertheless found applications in static storage, smaller transport vehicle (e.g., 2 and 3 wheels) such as scooters and cheaper BEV.  In fact, the cheapest BYD BEV – Seagull will be powered by Na ion batteries.  There are many commercial advantages for adopting Na ion batteries technologies.  They are:
    • They are far cheaper than Li ion batteries,
    • They do not suffer from thermal runaway,
    • Na is found almost everywhere and easier to extract compared to Li resulting in less environmental impact1 over the life cycle of the battery compared to Li ion.  This also means less supply chain issue and China would not be dependent on Australia’s Li or any perceive to be less friendlier nations for the input material.  In other words, geopolitics can be taken out of the equation.
    • Na ion batteries can be shipped safely without any charges in the battery, unlike Li ion battery where it can’t.


If this continues to take off and the Na ion technology improves further, I anticipate:

  • It will likely eat into the demand of the lower range BEV.  It is not clear if the LT demand of Li previously forecast has considered the adoption of Na ion battery.  In my opinion, this is unlikely because Na ion batteries technology is very recent development.
  • China will have one less commodity it will need to rely on Australia and geo-political factors are minimised from their viewpoint.

As the result of batteries technology is moving so fast, it is clear that long term forecast growth of:

  1. NCM batteries is too optimistic.   There is a need to be more realistic in the demand of Ni, Co, Mn for the LT beyond say 2030.  This is because metal recycling of these existing NCM batteries materials would likely hit a threshold where it is commercially viable to enter mainstream due to scale.
  2. LFP batteries have taken over the lower BEV price entry.
  3. Na ion batteries will likely be adopted by the static storage, 2-3 wheel motor transport vehicles and the cheaper 4 wheel BEV that does not require extended range (say ~200km or less).
  4. One other batteries technology which I have not touched on is Li-Metal batteries (or condensed matter batteries).  Li condensed matter batteries was announced by CATL around mid-2023 which is aimed at the high end BEV.  These are different technologies compared to Li ion or Na ion batteries technology.

To sum it up, I anticipate:

  • Na Ion batteries will likely dominate the cheaper static storage2 and 2-3 wheelers, and low range (up to 200km) 4 wheels motor vehicles that does not require ultra fast charging.
  • Li ion LFP will likely be used for average priced storage batteries and BEV for 400-500km range for the average priced BEV.
  • Li Ion NCM batteries will likely be used for premium BEV for 550 to 650km range.
  • Li-Metal (or condensed matter) will likely be used for high end BEV up to 1000km range.



Based on the current dynamics, in my opinion, the safer bet for this energy transition is copper and followed by Li while there is a need to pull back the long term demand expectation for Ni, Co and Mn.  Li ion batteries may face a minor but not immaterial substitution from Na ion batteries.  In addition, the long term demand (beyond 2030) for all green metals should be pulled back due to the improve recovery of recycle metals and scale of recycling becoming commercially viable post ~2030.  These changes are driven mainly by technology, followed by climate change and lastly geopolitics playing a minor role.


About Vincent Chin – Portfolio Manager

PhD Physics, MSc Physics, BSc Ch. Eng. (Hons), Grad. Dip Fin


Vincent has been with Clime for more than 12 years of his 22-year in financial services spanning both Fixed Income and Equities. Due to client demand, he established a goals-based investment style using quantitative analysis with qualitative top-down process which is utilised in the Clime Income strategies. Vincent is passionate about sustainable ethical investing which forms part of his investment philosophy. Prior to working in financial services, Vincent worked as a scientist specialising in infrared and photovoltaic solar cells. In this time Vincent produced about 50 internationally peer reviewed scientific and technical papers. Vincent holds a PhD in Physics from the University of New South Wales.



[1] Sanna Wickerts, et. al. “Prospective life cycle assessment of sodium-ion batteries made from abundant elements”, J. Industrial Ecology, 1-14, 2023.

[2] For storages, there are few more options and not just exclusively related to metal ion batteries.


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