Three headlines hit today:

  • GM says it's open to funding EV battery minerals mining ventures
  • Ford raised the price of the electric F-150 Lightning truck by up to $8,500 due to 'significant cost increases'
  • Tesla signed a $5 billion deal for nickel from processing companies in Indonesia

There's clearly a supply shortage here and auto companies are making moves to secure materials. Meanwhile, nickel prices are down 40% since March and prices are nowhere near high enough to incentivize the needed production.


It's the same in copper markets where miners with 30 years of inventory are trading at dirt cheap multiples based on current prices rather than where prices will go as the green transition ramps up.

What's scary is the it's getting even harder to build mines. A large portion of mining capex is energy costs and with oil prices near $100, it will make it tougher to start new projects. Add in labor inflation, higher interest rates and a new mine today might cost 50% more than 5 years ago.

It also ignores the profound timing disconnect between when metals will be needed and how long it takes to get production. One of the final mega-projects that's scheduled to come online this decade is Quebrada Blanca 2 in Chile, which should be ready for its first copper around the turn of the year...that's 15 years since it was discovered.

"Over the last two years, even though the copper has doubled, there hasn't been a single new copper mine approved," said Goldman Sachs metals analyst Nick Snowden.

Even governments have recognized the looming scale of the problem and in North America, they've made some token agreements to try to speed up permiting but -- like the energy crisis in Europe -- this is a visible crisis where there will be no quick solutions.

We're sleepwalking into a crisis here that will derail green energy plans and warp the economics of EVs. We'll look back at the last 5 years and regret dedicating so many resources to mining crypto rather than mining metals.

I fear that the next step will be large companies like automakers making moves to secure existing supplies for themselves and leaving the rest of the world materially short.