2020 could be the year that EVs move into the mainstream
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While the automobile industry slumps in the face of the COVID-19 pandemic, there is one bright spark still remaining in the sector as the rest of the industry drops a gear.
Global car sales in the first four months of 2020 have fallen about one third from the same period in 2019, but the International Energy Agency (IEA) believes that electric car sales could reach a record share of the overall market this year.
The IEA noted that on a monthly basis the decline in sales was more pronounced, with China registering an 80 per cent drop in February, its sharpest year-on-year decline in a month that typically marks a decline in car sales because of the Lunar New Year holiday.
In the US, car sales halved in April while Germany recorded a 60 per cent fall.
All these pale in comparison with France, where car sales dropped by 90 per cent, the UK and Italy witnessed 98 per cent falls and India reported virtually no sales at all.
And while there are signs indicating that a quick recovery is possible in countries where the lockdown is gradually easing, the IEA currently expects overall car sales in 2020 to be around 15 per cent, or 13 million cars, lower than in 2019.
However, the lens is really focused on electric vehicle (EV) sales, with the IEA expecting EV sales in 2020 to be much better than for the rest of the industry.
It noted that while Chinese electric car sales fell 60 per cent in February, they also rebounded strongly in April, reaching around 80 per cent of the level they were at a year earlier.
China has already decided to extend subsidies and tax exemptions for new energy vehicles (NEV) by another two years to 2022 and China Daily quoted Minister of Industry and Information Technology Miao Wei as saying that restrictions on contract manufacturing will be lifted gradually while wider use of NEVs in public services will be encouraged.
He added the ministry would also step up the construction of charging facilities and enhance their interconnectivity.
China has stated that its goal is to increase the share of NEV sales to a quarter of all car sales in the next five years.
European EV sales also bucked the trend, rising 90 per cent to more than 145,000 vehicles in the first four months of the year, as 2020 is the target year of the European Union’s carbon dioxide emissions standards, which limit average carbon dioxide emissions per kilometre driven of new car sales.
Under the regulations, at least 95 per cent of new passenger vehicles manufactured in 2020 are required to produce emissions of not more than 95 grams per kilometre (g/km) of CO2. This will increase to 100 per cent compliance next year.
Additionally, Germany increased EV subsidies in February while the impacts of a system implemented by Italy in 2019 to encourage electric cars started to affect the market.
The French government is also moving to inject more than 8 billion euros ($13.1bn) into the country’s car industry and is looking to use the crisis to make France the top producer of electric vehicles in Europe.
Roskill noted that the EU Commission was considering a further strengthening of its support for clean transportation as part of the “green recovery plan” that could lead major producers to continue developing large-scale electric vehicle manufacturing in the next two years.
The IEA believes that global EV sales in 2020 will continue their upward trend and expects them to slightly exceed 2019’s total to reach more than 2.3 million vehicles and achieve a record share of the overall car market of more than 3 per cent.
The continued uptake of EVs is welcome news for rare earths players given that every electric vehicle requires significant quantities of rare earths, particularly neodymium and praseodymium (NdPr).
NdPr is used for the manufacture of ultra-strong rare earth permanent magnets that are essential components of electric motors.
This has been highlighted by China moving to roll back a 25 per cent tariff on rare earths from the US, from which it had imported 7,352 tonnes of rare earths ore in March this year.
Arafura Resources (ASX:ARU) is progressing pre-front end engineering and design activities for its Nolans NdPr project in the Northern Territory.
The project has a reserve of 29.5 million tonnes grading 2.9 per cent total rare earth oxides, with NdPr making up 26.4 per cent of the rare earths content.
This is expected to produce about 4,325 tonnes of NdPr oxide over 39 years at an operating cost of less than $US24 per kilogram.
Hastings Technology Metals (ASX:HAS) has just signed a binding long-term master agreement with tier 1 German automotive supplier Schaeffler Technologies AG for the supply of mixed rare earths carbonate (MREC) from its Yangibana project in WA.
The master agreement strengthens the cooperation between the two companies that could see Hastings emerge as a supplier of MREC, enabling Schaeffler to develop an independent supply chain for its e-motor business for the EV sector.
Meanwhile, Ionic Rare Earths’ (ASX:IXR) drilling has demonstrated the large, high-grade and continuous nature of its Makuutu ionic rare earths project in Uganda.
Rare earth intersections of up to 10.8m at 1,533 parts per million total rare earth oxides have highlighted the potential to significantly expand the current resource.
Test work has also increased rare earths element recovery in some lower recovery areas by 700 per cent.
Makuutu is one of very few ionic adsorption clay-hosted projects outside of China.
Earlier this week, Northern Minerals (ASX:NTU) raised nearly $10m through its share purchase plan, which received applications well in excess of its target of $5m.
The $9.98m raised adds to the first tranche of the company’s $22m placement, which raised $6m to repay convertible notes.
Proceeds from the placement and share purchase plan will also be used for continued development of its Browns Range pilot project, which is currently on care and maintenance due to the COVID-19 pandemic.
Pensana Rare Earths (ASX:PM8) was granted a new exploration licence in May prospective for NdPr that is adjacent to its existing Longonjo project in Angola.
The award of the 7,456sqkm Coola project comes just a week after it was awarded the mining title for Longonjo.
Meanwhile, RareX (ASX:REE) recently completed a review of historical drilling that confirms its belief that the Cummins Range project in WA hosts high-value NdPr.
The review determined that NdPr makes up an average of 22.1 per cent of the Cummins Range rare earths content, in line with other carbonatite rare earth deposits including Mt Weld (24.7 per cent NdPr), Nguall (21.3 per cent) and Mountain Pass (16.3 per cent).
It also found that the project has ultralow thorium content of just 50 parts per million, compared to the usual range of 1 to 10 per cent thorium in monazite derived from mineral sands, minimising the amount of radioactive waste that the company has to deal with.
RareX is currently planning to carry out an infill drilling program that will allow it to update its Cummins Range model with all the rare earth oxide grades estimated individually.