LDN - Business

Britain looks to ancient mines for electric future

[April 27, 2018] By Barbara Lewis

SOUTH CROFTY, England - Britain is banking on a series of ancient mines on its southwestern tip to secure a slice of the global electric car revolution.

The English county of Cornwall and the surrounding area boast one of the world's largest tin deposits yet their centuries-old mines have lain abandoned since the 1990s when a collapse in prices for the metal made them unviable.

Now however a rise in demand for tin, along with other metals that can be used in electric vehicles, electronics and renewable energy, has helped create a global deficit and quadruple prices. British officials are supporting reopening of the mines and seeking investment, leading to a mini-rush of mining companies into the area.

Adding to the potential, new research shows the extent to which mines also contain deposits of lithium, the so-called metal of the future.

The first industrial metals mining in Britain for decades represents the country's best shot at securing a piece of the supply chain for car batteries as well as renewable energy grid connections, officials told Reuters.

"We need to ensure the secure supply of the technology metals and critical minerals," said government lawmaker Pauline Latham, who heads a parliamentary mining group. "This is necessary with China owning the majority of the market and the potential of a global trade war between China and America."

It is however early days for the mining projects and there is no guarantee they will produce commercial volumes of metal. Even if they do, Britain is dwarfed by the likes of China, Chile and Australia in terms of battery resources.

The unlikely British mining revival is one example of how countries around the world are scrambling to grab a piece of the electric vehicle action, an area dominated by China, by far the biggest producer of battery metals.

Germany, for instance, is looking to produce lithium at the Zinnwald project in Southern Saxony to help secure supplies for its car industry. In Finland, a nickel mine in Sotkamo in the north aims to start producing material for electric vehicles by 2020, while battery-grade lithium production is planned in Kaustinen, to the west, in 2020.

Serbia, meanwhile, is looking to Rio Tinto to develop a giant mine for jadarite, a newly discovered mineral that contains both boron and lithium, in the west of the country.

Governments, keen to develop future-proof industrial strategies, are seeking to establish their own sources of minerals needed for electrification and electric vehicles to provide supply certainty, as well as revenue and jobs.

The British drive has become more pressing, officials said, because of the country's upcoming exit from the European Union, the world's biggest trading bloc.

MINI METALS RUSH

The charge into southwest England is being led by smaller firms, mainly foreign miners with a higher risk appetite. The majors prefer to mine on a vast scale, allowing them to increase margins and cut costs. They prefer to let junior players take the development risk and then buy fully fledged projects.

About half a dozen companies are exploring in the area, with the biggest players being Canada's Strongbow Exploration, Australia's New Age Exploration and Wolf Minerals, listed in Sydney and London.

In the largest Cornish project planned so far, Strongbow is seeking to extract tin at the 4 km-long South Crofty mines as a result of the improved tin market economics.

"The timing is better because global capital markets have a much more receptive attitude towards mining projects," Strongbow CEO Richard Williams said. "This gives us a good chance of delivering on South Crofty."

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The remains of the engine house at the Wheal Prosper copper and tin mine is seen along the Cornish coastline near Porthleven in Cornwall, Britain October 26, 2017. REUTERS/Toby Melville/File Photo

The company needs to raise project financing of about $110 million. To that end, it plans to seek a secondary listing in London this year. It aims to start production in 2021, but first must pump out water that has accumulated over decades of dereliction.

New Age Exploration and its joint venture partner Strategic Minerals said in March they had found tin, tungsten and copper - all useful for electric vehicles - near Plymouth. They have invested about $2.65 million in the project, which is at an earlier stage than South Crofty, and are looking to raise financing.

Just over the English border in Devon, Wolf Minerals has begun operating a mine for tungsten and tin.

One advantage that Britain has, in terms of tin mining and investment, is that it is a stable location compared with big-producing nations such as Democratic Republic of Congo and Myanmar.

LITHIUM PROMISE

A British government-funded research team led by Cristian Rossi analyzed satellite data to find changes in vegetation and temperature that indicate there are some lithium reserves alongside the tin deposits in the area.

The study marked the first time satellite technology has been used to locate lithium - a valuable technique in Cornwall, which is covered in vegetation in contrast to South American prospects in exposed deserts.

"The percentages are small, but that does not mean it's not relevant," said Rossi, principal earth observations scientist of not-for-profit research group the Satellite Applications Catapult (SAC), told Reuters at a conference in March at Cornwall's Camborne School of Mines to present his findings.

The government provided $1.2 million towards the research, which will be available to all explorers.

The SAC findings are currently being used by a British company called Cornish Lithium, which will begin drilling at South Crofty next year. It has an agreement with Strongbow that allows it to explore using Strongbow's mineral rights, with Strongbow getting royalties from any lithium extracted.

CLIMBING PRICES

In 1998, when South Crofty was the last of hundreds of Cornish tin mines to shut after four centuries of operation, global tin demand was around 200,000 tonnes a year, and the tin price was languishing at around $5,000 per ton.

Now demand has risen to around 350,000 tonnes, buoyed by demand for electronics, where it is used as a replacement for toxic lead in solder. Tin can also be used in lithium-ion batteries, which could have a major impact on a market already in deficit. Tin prices have climbed above $20,000.

Lithium prices, meanwhile, rose by a quarter last year. Spot prices are currently between $22,000 and $24,000 a ton, according to industry sources.

In Britain, officials say the country is well-placed to capitalize on the anticipated boom in demand for electric vehicles in coming years.

"It's as if we've fallen on our feet," said Darryn Quayle, a mining specialist at government Department for International Trade. "What we have in our own backyard is quite remarkable."

($1 = 0.7178 pounds)

(Reporting by Barbara Lewis; Editing by Pravin Char)

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