By: Richard Roberts - Editorial Director, Beacon Events

‘There’s a race going on to develop recycling capabilities … to support a pivot away from reliance on Chinese metals supply’

Traxys CEO Mark Kristoff is no stranger to one of the mining industry’s common refrains: “This time it’s different!”. This time, however, it just might be with China’s (so far) superior strategic minerals long game, a choked Western project pipeline and increasing prospects for “turning waste into industrial-scale mines” just a few of the pieces of a very, very complex global mineral commodity picture.

“If you start looking at a new mine today you’re talking 7-to-10 years in many cases for first production by the time you permit it, finance it, go through pre-feasibility and feasibility studies,” says Kristoff, a leading figure in world mineral commodity trading and finance for more than three decades.

He is a keynote speaker at the upcoming IMARC event in Sydney, Australia, and Resourcing Tomorrow 2024 in London.

“That’s if you’re not in a jurisdiction where the government can just mandate it, which is not the case in the West.

“I think recycling is relevant because you do have government mandates which are calling for a significant percentage of EV raw materials to originate from scrap. And clearly the circular economy and supply chain fundamentals are supporting that type of development.

“Many of the government mandates are targeting 40-70% of battery feed materials having to ultimately come from recycled materials, which is a big piece of the equation.

“So I think recycling is a very germane topic and is part of the raw material solution at the end of the day: turning waste into industrial-scale mines.

“And there’s a race going on to develop recycling capabilities, particularly in the West and in Korea, to support a pivot away from reliance on the Chinese supply, which currently dominates the market in every facet.

“We think it’s an inevitable piece of the puzzle and we’ve looked at novel technologies that we think have some compelling attributes and potential. We have been modest early-stage investors in projects that we think could provide very advantageous returns.

“If these technologies are successful they can be in the market before a greenfield mine development will be available.

“The current scrap-to-virgin-production ratio might be circa 30% [for some materials].

“So you don't have to wait for obsolescence to have recycling requirements. You don't have a lot of EVs yet in the system but there’s enough generation at source [with phones, laptops, etc] that you have the critical mass to already start to sequence the development of these recycling projects.”

Kristoff says outside the plus-US$10 billion-a-year group’s core “green metal” trading and financing activities, it is looking to add to partnerships with lithium-battery recycling technology company, Li-Cycle, and Brix Metallurgy, and investments in fledgling firms such as Princeton NuEnergy, a clean-tech innovator that could have the “best mousetrap, potentially, for this metal recycling story”.

“Recycling will become a multi-billion-dollar business,” he says.

“I think it will move the needle and will reach a significant scale over time.

“It will likely have a material impact on our business in the next 2-5 years.”

Beyond the urban mining shift, Kristoff is watching closely moves by US and other Western governments to restore strategic metals stockpiles disgorged in the 1990s while transport, military and other materials supply and product assembly lines are expanded in “friendly trade blocs”. This is also partly a response to the “very effective and successful” maneuvering by China’s State Reserve Bureau (SRB) over the past two decades.

And he is keeping a close eye on the electric vehicle buying trends that will play such a pivotal role in shaping those supply chains being frantically pieced together in major markets outside China.

“I think one of the real problems the automakers are seeing with consumer adoption and purchasing of EV platforms is the very severe depreciation you have the second these vehicles are driven off the showroom floor,” Kristoff says.

“You compare the depreciation of an EV platform, which I think in some cases is 30-50% from day one, versus a combustion engine platform which is 10% from day one … That’s inhibiting the consumer demand for the platform and that’s why you’re seeing announcements by car makers of significantly reduced earnings and a dearth of new sales for the EV platform.

“There is also a lot of confusion today because if you want the materials for your EV supply chain you really have to buy from the Chinese.

“That is challenging when you have this backdrop of considerable trade actions, as evidenced by the US 25% tariff across the board on all materials, and 100% on EV platforms.

“If trade tensions with China escalate and there is a reliance on many of the requirements of the EV platforms emanating from China these complexities increase.

“I think we will continue to see trade tensions.

“It started with the Trump administration, but it was the Biden administration that put a 100% tariff on Chinese EVs coming into the US. So there seems to be a bipartisan acceptance of both the trade tensions and the need for some governmental intervention to allow Western producers in Europe or the Americas to have the ability to compete with the Chinese productions.

“Ultimately you’re going to need to find alternative domestic production, from the mine source through to the industrial processing capabilities.

“In the near term, you have to consider critical mineral stockpiles.

“I think we’re in the early days of these stockpiling assessments.

“Many of the Western governments are relearning what a supply chain means because part of the Cold War ending dividend was the ubiquitous global supply chain, where the market got very efficient and had material on a just-in-time basis in front of every plant.

“That changed markedly in COVID when you had supply chain disruption.

“That’s the new reality people are confronted with now.”