Raphael Stevens

Everyone wants more metals. In recent months Britain has inked a deal with Zambia, Japan has sealed one with Namibia and the eu has shaken hands with Chile. The bloc’s negotiators also started talks with the Democratic Republic of Congo; America’s, meanwhile, visited Mongolia. This scattershot campaign, which is also targeting the Philippines and Saudi Arabia, has a single aim: obtaining the minerals required for rapid decarbonisation.Seventy-two countries, accounting for four-fifths of global emissions, have committed themselves to net-zero targets. According to the Energy Transitions Commission (etc), a think-tank, hitting them by 2050 will require 15 times today’s wind-power capacity, 25 times more solar, a tripling of the grid’s size and a 60-fold increase in the fleet of electric vehicles (evs). By 2030 copper and nickel demand could rise by 50-70%, cobalt and neodymium by 150%, and graphite and lithium six- to seven-fold. All told, a carbon-neutral world in 2050 will require 35m tonnes of green metals a year, predicts the International Energy Agency, an official forecaster. Adding aluminium and steel to the mix, the etc forecasts that demand between now and then will hit 6.5bn tonnes.Hence why analysts and policymakers worry about an almighty supply crunch towards the end of the decade. The etc expects shortages of market-breaking magnitudes by 2030: some 10-15% for copper and nickel, and 30-45% for other battery metals. When dwindling stocks cause prices to rise, producers will crank up output and customers use scarce materials more efficiently or turn to cheaper alternatives. What demand remains unmet after this will be destroyed, however, as would-be buyers that cannot or will not pay higher prices are forced out of the market. Too much of such demand destruction will kill the green transition. The question, then, is simple. Can the crunch be minimised?Start by considering the metals in question. Three are already widely used in industry: aluminium and steel are the backbone of panels and turbines, and copper is vital for everything from cables to cars. Then come those powering electric vehicles (evs): cobalt, lithium and nickel, which make up battery cathodes, and graphite, the main anode element. Except for nickel, which is also an ingredient in stainless steel, all these have only niche applications. The last group features magnetic rare earths like neodymium, found in ev motors and turbine generators. These are required only in minuscule amounts.image: The EconomistThe search for such metals is made slightly less urgent by a discomforting fact: climate policies are unlikely to restrain global warming to 1.5°C above pre-industrial levels, as assumed by most forecasts. Moreover, many future-gazers also assume demand for green gear, and thus metals, will rise in a linear fashion, even though some countries will no doubt start to sprint only in the final yards. Net-zero projections may therefore be more credible about 2050 than 2030. Steel, for which green uses will remain a drop in the ocean, will probably stay abundant. The supply of cobalt, a byproduct of other sought-after metals, may outpace demand for ever.Yet plenty of difficulties remain. Industry oracles canvassed by The Economist predict copper-supply gaps of 2-4m tonnes, or 6-12% of potential demand, by 2030. They also foresee a shortfall of lithium of 50,000-100,000 tonnes, a 2-4% deficit. Nickel and graphite—plentiful in theory—could cause problems because batteries require a purity of material that is elusive. There are too few smelters to refine bauxite into aluminium. Next to no one produces neodymium outside of China.These will be hard problems to overcome. Yet we find that three levers may lower the pressure without wrecking the transition. First, producers may extract more supply from existing sources, which can be done straight away but will produce limited quantities of metal. Second, firms may open new mines, which could solve the problem entirely but will take time. The limitations of these two levers make a third the most important of all, at least over the course of the next decade: finding ways to circumvent green bottlenecks.Full metal racketQuick wins could come from reusing more material. Such gains will be greatest for aluminium, copper and nickel. All are widely recycled, but higher prices will motivate spending in an unglamorous, fragmented industry. Some of this is already happening. bhp, a big miner, has backed a nickel-recycling upstart in Tanzania. Huw McKay, the firm’s chief economist, reckons that scrap could represent 50% of the total copper supply in a decade, up from 35% now. Rio Tinto, another mining giant, is investing in aluminium recycling centres. Last year startups focused on battery-metal recycling raised $500m, a record.More could come from restarting idle mines. There are not many of them: a post-covid surge in demand has already reduced slack. Even if prices double, cost curves for copper and nickel indicate that just a few mines would reopen. But aluminium is an important exception. Since December 2021 soaring energy costs have caused 1.4m tonnes in annual smelting capacity (2% of the world’s) to shut in Europe. A 25% rise in prices would lure much of that back, reckons Graeme Train of Trafigura, a trader.The greatest hope lies in technologies that squeeze supply from tricky deposits. New firms are developing chemical processes, known as “tail leaching”, that extract copper from ores with low metal content, making waste worth exploiting. Using the tech at scale could yield an extra 1m tonnes of copper a year without costing much, says Daniel Malchuk of Jetti Resources, one such firm. Meanwhile, in Indonesia, the world’s largest nickel producer, miners are using “high-pressure acid leaching” to turn low-grade ores into material fit for electric cars. Three billion-dollar plants have been built already, and nearly $20bn-worth of additional projects have been announced. Daria Efanova of Sucden, a trader, reckons that Indonesia could produce some 400,000 tonnes of top-grade nickel by 2030, filling part of the 900,000-tonne supply gap she projects.Yet these new techniques are uncertain, and in some cases come with drawbacks such as pollution. The resulting supply cannot be taken for granted. Starting new mines, the second lever, would bring larger gains, even if slowly. McKinsey, a consultancy, calculates that if the 382 projects in cobalt, copper, lithium and nickel that have at least commenced a pre-feasibility study were to be completed by 2030, it would keep markets just about balanced. These projects would represent a huge increase in production: there are around 500 cobalt, copper, lithium and nickel mines operating worldwide at present. To open on time, they will have to overcome a number of difficulties.image: The EconomistThe first is a shortage of money. McKinsey estimates that to fill supply gaps predicted by 2030 annual capital expenditure in mining has to double to $300bn. cru, another consultancy, reckons that spending on copper alone must hit $22bn in 2027, compared with an average of $15bn in 2016-21. Although not yet by fast enough, investment by big miners is rising. Customers are entering the fray, too. General Motors, a carmaker, is investing $650m in Lithium Americas, a miner in Nevada. catl, a Chinese battery firm, is spending billions to source cobalt and lithium. Since the start of the year pension and sovereign funds have invested $3.7bn in private mining assets, the most since 2013. And about $21bn in capital raised by private-equity firms since 2010 is also chasing deals.This will take time to make a difference, however, since digging new mines takes ages—from 4-7 years for lithium to an average of 17 for copper—and delays have been worsened by a paucity of permits. Egged on by activists, governments and regulators are increasingly blocking projects on environmental grounds. Between 2017 and 2021 it took an average of 311 days for new mines in Chile to gain approval, compared with 139 in 2002-06. Meanwhile, the metal content of copper ores mined in placid countries is falling, forcing miners to look to dicier locations. Two-thirds of the new supply planned by 2030 sits in countries that in 2020 ranked below 50th in the World Bank’s “ease of doing business” index. Reko Diq, a project led by Barrick Gold, a Canadian firm, containing one of the world’s largest untapped copper deposits, sits between Iran and Pakistan.All this means new supply can only be a solution in the long run, perhaps after a spell of high prices. Thus the lion’s share of adjustment in the next decade will come down to demand—our third lever. This side of the equation, which is more difficult to model than future production, is poorly understood. But it is probably more flexible than commonly realised.Auto- and battery-makers are a type of buyer the metals market has never seen before. Fiercely innovative, price-sensitive and risk-averse, such firms work around problems at the first sign of a squeeze in supply. They have already achieved a lot through “thrifting”—the continuous discovery of small ways to use less metal. The typical electric-car battery now contains just 69kg of copper, down from 80kg in 2020. Simon Morris of cru reckons that the next generation may need just 21-50kg, saving up to 2m tonnes of copper a year by 2035. He thinks that the lithium intensity of batteries may halve by 2027.More can be achieved through substitution. Nickel-manganese-cobalt chemistries that contain as much cobalt as nickel, known as nmc 111, are being phased out in favour of nmc 721 and 811, which contain more nickel but little cobalt. These account for a quarter of ev-battery cathodes, up from zero in 2017. Meanwhile, the cheaper but less energy-dense lithium-iron phosphate (lfp) mix is now conquering the booming Chinese market, where city dwellers are less concerned by a shorter driving range. Indeed, lfp now represents 30% of ev cathodes worldwide.Graphite anodes are also being doped with silicon, which is hyperabundant. In March Tesla, an ev-maker, said it would build a motor that did not need rare earths. Sodium-ion batteries, which replace lithium with sodium, the sixth most abundant element on Earth, may in time triumph. Because of their low energy density, they will first be used for stationary storage, where volume is less of a constraint.Customer preferences will play a part. Today people want to be able to drive their ev for 600km on a single charge—but few travel such distances often. As lithium runs scarce, carmakers may design shorter-range vehicles that can be augmented by bolting on a portable battery, radically reducing the size of the standard pack. At the right price, adoption could be fast.Copper, which cannot easily be engineered out of grids, is the chief problem. But here, too, consumption shifts could help. cru estimates that green demand as a share of total copper demand will rise from 7% now to 21% in 2030—a bigger chunk, but still a fraction. That leaves many grams of copper that could be transferred to green applications when supply gaps emerge. As the cost of metal rises, sales of phones and washing machines, which also contain copper, will probably decline sooner than those of wires and solar panels—especially if the clean-tech market is propped up by subsidies and government orders.By the late 2030s there will probably be enough new mines and recycling for the transition to proceed as planned. The question is how much disturbance there will be in the interim. Things will be tight. Since supply will be concentrated in a few countries, local unrest, geopolitical conflict or even bad weather could hit markets: simulations by Liberum Capital, a bank, suggest a miners’ strike in Peru, or three months of droughts in Indonesia, would tip the copper or nickel markets in 2028 into 5-15% supply deficits. But with nimble buyers, steadfast governments and a dash of luck, the green-metal bump need not cause an electric-car crash. ■ More

Visitors at the Tesla booth at the World Artificial Intelligence Conference in Shanghai, July 6, 2023.
Costfoto | Nurphoto | Getty Images

Check out the companies making headlines in midday trading.
Tesla — Shares of the electric vehicle maker jumped more than 10% after Morgan Stanley upgraded the stock to overweight from equal weight. Analyst Adam Jones said the firm is on the verge of a major leap in autonomous driving.

J.M. Smucker, Hostess — Smucker lost 7% after it agreed to buy Twinkies-maker Hostess Brands for $34.25 a share in a cash and stock transaction, valued at approximately $5.6 billion. hares of Hostess popped 19.1%, reaching a new 52-week high. 
Tenable Holdings — The exposure management solutions provider added 3.1% on the back of an upgrade to overweight from neutral by JPMorgan. The firm said the company should see improved fundamentals going forward.
Kenvue — Shares of the Band-Aid maker gained 3.6% after being upgraded by Deutsche Bank to buy from hold on Sunday. The Wall Street firm called Kenvue a high-quality company and believes the stock’s slide has created an attractive entry point. The J&J spinoff has lost 15% since going public in May.
Alibaba — The Chinese tech company shed 1.5% on the news that outgoing CEO Daniel Zhang would unexpectedly quit its cloud business. In June, the company had announced Zhang was leaving as chairman and CEO of Alibaba Group to focus on the cloud intelligence unit. 
Meta — The tech giant gained 3.2% after the Wall Street Journal reported Meta is developing a new AI system as capable as OpenAI’s most advanced model, and more powerful than the one it released two months ago called Llama 2. According to the report, Meta is aiming to launch the product by next year. 

Nubank – The U.S.-traded shares of the Brazilian financial firm rose more than 8% after JPMorgan upgraded Nubank to overweight from neutral. JPMorgan said in a note to clients that Nubank should continue to gain market share in Brazil for multiple years and is trading at a “good entry point” after a recent stock price decline. 
Qualcomm — The chip stock jumped 3.9% after the company announced that it will supply Apple with 5G modems for smartphones through 2026. The continued sales to Apple will boost Qualcomm’s handsets business, and could soften the blow of potentially losing a critical customer. 
Media stocks — Shares of Disney and Charter Communications gained 1.1% and 3.2%, respectively, as both companies are nearing a deal that would end the blackout fight between the two companies. Shares of media peers Warner Bros. Discovery and Paramount also traded 2.3% higher on the news.
AstraZeneca — The pharmaceutical company’s shares lost 2.3% Monday. Per Reuters, the pullback comes after a Sunday report in the Mail saying Chief Executive Pascal Soriot privately discussed leaving the company as early as next year.
Moderna — Shares of the drugmaker fell 1.7% after it announced it is partnering with German drug developer Immatics to further cancer vaccine developments. Moderna will give Immatics $120 million in upfront cash as part of the deal.
— CNBC’s Alexander Harring, Samantha Subin, Yun Li, Jesse Pound, Michelle Fox and Tanaya Macheel contributed reporting More

Car shoppers are showing more interest in vehicles selling under $50,000, according to car site Edmunds. That reverses a recent trend that saw shoppers splurging on higher-end models with more features.
But cars under that price point can be harder to find.
Consumers looking for a good value can take a few general steps to save money at the dealership.

Used car sales are soaring all over the U.S., and companies from Autonation to CarMax, Carvana and Buffalo, New York-based used car start-up ACV Auctions are benefitting.
Patrick T. Fallon | Bloomberg | Getty Images

During the pandemic, shoppers splurged on higher-end new cars. Now, given the current high car costs and interest rates, drivers are shifting their focus to less expensive models. Finding one, however, might not be easy.
More shoppers are opting for vehicles that fall in the $45,000-$50,000 range, the price point of mid-to-high-trim three-row SUVs, said Joseph Yoon, an Edmunds consumer insights analyst.

That shift shows in so-called “days to turn” numbers, which measure how long cars are in dealer inventory before being sold. Vehicles selling for under $50,000 currently linger for just 26 days on the lot, on average, compared to 40 days for those with a higher sticker price, according to Edmunds data.
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“We’re seeing the overall effect of the economy at play here,” said Yoon.
“People have stopped going for top-of-the-line cars and are going for mid-trim cars,” he added, “That’s where we’re starting to see the shift.”
Even so, the average transaction price for a new car was $47,941 in August, up 0.8% from July and up 1.6% from a year earlier, Edmunds found. Interest rates for new-vehicle financing also climbed 7.4% in August, marking the highest rate since 2008.

As a result, the average monthly payment for new vehicles reached a record $738.

Models averaging under $20,000 are rare

Drivers in search of a new ride are likely to quickly discover that it’s harder to find cheap new cars these days.
The $20,000-or-below barometer is a sort of unofficial price threshold for an affordable new car, said Brian Moody, executive editor for Kelley Blue Book.
“There aren’t as many inexpensive new cars as there used to be,” Moody said.

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In fact, only one car model had the average new-vehicle transaction price below $20,000 in July, according to Kelley Blue Book data: the Mitsubishi Mirage.
Consumers looking for a car that sells for a price within the $20,000-$50,000 threshold are likely to find more options. Of 35 makes, 14 — Buick, Chevrolet, Chrysler, Fiat, Honda, Hyundai, Kia, Mazda, Mini, Mitsubishi, Nissan, Subaru, Toyota and Volkswagen— had average transaction prices under $50,000 in July, according to Kelley Blue Book.
Transaction price doesn’t tell the full story, of course, experts said. That price records what the average buyer pays — a variable that depends on factors such as markups and promotions by car dealers and any add-ons selected by buyers at the time of purchase.

‘Americans don’t like not having features’

Consumers were able to find entry-level vehicles with a $15,000 starting price as recently as a few years ago, said Paul Waatti, an industry analyst at market research firm AutoPacific.
The dearth of cheaper options today is due to a multitude of factors, experts said. 
Among them is consumer preferences — people tend to want models with more features, Waatti said.
“Culturally, Americans don’t like not having features in their car,” such as automatic climate control, a car play screen and parking sensors, said Yoon.

Auto manufacturers know this to be true and use it to their advantage in marketing, Waatti said.
“Automakers obviously want to be able to tell that they’re offering an affordable vehicle and they can do that in messaging,” he added. “But when it comes down to it, they’re not building many of those lower-price models.” 
Instead, automakers will make more of the higher-end models with features that consumers want, added Yoon.
In fact, car sales in the luxury market segment have increased, Moody said. They now account for about 20% of total new car sales, up from roughly 10% to 13% before the Covid-19 pandemic, he said.

When it comes down to it, they’re not building many of those lower-price models.

Paul Waatti
industry analyst at AutoPacific

Five years ago, there were 12 vehicles selling for an average price of more than $100,000. Today, there are 32 vehicles, according to Kelley Blue Book data. Both tallies exclude “super exotics” from companies such as Ferrari, Lamborghini and Rolls-Royce.
Inflation for new and used cars also surged during the pandemic era, leading to higher vehicle prices. Materials and supplies became more expensive, driving up production costs for auto companies, said Waatti, and those higher costs are at least partly passed on to buyers.
Higher interest rates may also be keeping would-be buyers out of the car market right now, experts said.
Since buyers who generally shop for the least expensive cars tend to be budget-constrained, their absence from the market may be skewing average purchase prices higher, they said.
The average new-vehicle purchase price today is about $48,000, up from about $30,000 in 2012, according to Kelley Blue Book.

4 tips for finding cars at a good price

Here are some general tips for consumers to find a reasonably priced car, courtesy of Tom McParland, owner of Automatch Consulting, a car-buying service for consumers:
1. Know your budget — really
Most car buyers use monthly payments to conceptualize how expensive a car is.
However, consumers should know their overall budget before shopping by using an online auto loan calculator, said McParland. Otherwise, it’s hard to know if you’re getting a good deal, he added.

Certain auto loan calculators let consumers work backwards, by plugging in a monthly payment that fits their budget, along with other estimated information such as the loan’s term and interest rate. The output: the total vehicle price a buyer can afford.
“This is probably the best step any customer can take,” McParland said.
2. Look outside your local market
Casting a wide net during a car search yields more potential inventory and leverage against dealerships, McParland said. Some markets are “better than others,” and looking even an hour or two away will “very likely get you a more competitive deal,” he added.
3. Get prices in writing beforehand
Confirm car prices in writing with a dealer before walking in the door, McParland said. A refusal to do so is a red flag, he said.
“It’s code for, ‘We’re going to try to rip you off,'” he said.
4. Shop your financing
Don’t depend on a dealer’s financing offer.
Dealers can profit off consumers by offering a higher-than-necessary interest rate, experts said. That’s why it’s a good idea to get pre-approval for an auto loan — perhaps from a local bank, credit union or online lender — before setting foot in the dealership, they said.
These offers can provide leverage for a better rate at the dealership and are especially useful for buyers with credit scores below 700, who are unlikely to qualify for the best available rates, McParland said. More

JPMorgan Chase CEO Jamie Dimon said Monday that while the U.S. economy is doing well, it would be a “huge mistake” to believe that it will last for years.
Topping his concerns include central banks reining in liquidity programs via “quantitative tightening,” the Ukraine war, and governments around the world “spending like drunken sailors,” the CEO said.
“To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake,” Dimon said.

Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, US, on Thursday, Oct. 13, 2022.
Ting Shen | Bloomberg | Getty Images

JPMorgan Chase CEO Jamie Dimon said Monday that while the U.S. economy is doing well, it would be a “huge mistake” to believe that it will last for years.
Healthy consumer balance sheets and rising wages are supporting the economy for now, but there are risks ahead, said Dimon, who was speaking at a financial conference in New York. Topping his concerns include central banks reining in liquidity programs via “quantitative tightening,” the Ukraine war, and governments around the world “spending like drunken sailors,” the executive said.

“To say the consumer is strong today, meaning you are going to have a booming environment for years, is a huge mistake,” he said.
The world’s largest economy has defied expectations for a downturn for the past year, including from prognosticators like Dimon, head of the biggest U.S. bank by assets. Last year, he warned that a potential economic hurricane was on the way, citing the same concerns around central banks and the Ukraine conflict. But the U.S. economy has proven resilient, leading more economists to expect that a recession might be avoided.
“Businesses feel pretty good because they look at their current results,” Dimon said. “But those things change, and we don’t know what the full effect of all this is going to be 12 or 18 months from now.”
While JPMorgan and other banks have been “over-earning” on lending for years because of historically low default rates, strains were emerging in parts of real estate and subprime auto lending, Dimon said.
“If and when you have a recession, which you’re eventually going to have, you’ll have a real normal credit cycle,” Dimon said. “In a normal credit cycle, something always does worse than” expected, he added.

Dimon on regulations, markets, China

Dimon struck a note of caution throughout the panel discussion. JPMorgan is repurchasing stock at a “lower level” than before, a pace which might last through 2024, he said, as the bank husbands capital to adhere to upcoming rules.
He called the new regulatory mandates “hugely disappointing” and pushed for greater transparency from regulators, saying that JPMorgan would have to hold about 30% more capital than European banks.
“Is that what they want? Is that good, long term?” Dimon asked. “What was the goddamn point of Basel in the first place?”
When asked about whether the IPO and merger markets were picking up given the upcoming Arm listing, Dimon said he encouraged CEOs to take action rather than waiting too long.
“I think the uncertainties out there ahead of us are still very large, and very dangerous,” Dimon said.
Among those risks is the deterioration in relations with China, he said. Prospects for JPMorgan operations in China went from looking bright to only “just OK” because of the rising risks, he said.
“I don’t expect war in Taiwan, but this can go south,” Dimon said. More