Special Report: From trucks to trains and even underground vehicles, some of the world’s biggest gold, iron ore and battery metals miners are looking to electric vehicles to lift clouds hanging over the ethical supply of minerals key to the transition to a low carbon world.

It is one thing to produce lithium for batteries that go into the EV supply chain.

But there is a growing expectation from customers and investors that minerals headed into that market are produced in a way that avoids increasing greenhouse gas emissions too.

Companies like Fortescue (ASX:FMG), BHP (ASX:BHP) and Rio Tinto (ASX:RIO) are urgently working to retrofit low emissions technology into their substantial mining empires at the cost of billions of dollars.

Up and coming miners like Arizona Lithium (ASX:AZL), which owns the Big Sandy lithium project in the American mining state of Arizona, is looking to start off at a zero carbon base.

Its newest measure to achieve that goal will be a partnership with US-listed EV producer Nikola, which will provide a Nikola Tre electric truck for studies at Big Sandy.

Should AZL’s feasibility work be successful it will look to purchase between 50-100 Nikola Tre’s in its operational phase to help target a zero carbon liftoff once full-scale lithium production begins.

Trucking a major source of emissions

AZL’s US-based board member Matthew Blumberg said hauling the project’s rich lithium bounty was identified as one of the major sources of emissions at Big Sandy.

It prompted the company’s board to take action, with a scoping study at the major US lithium project on the way.

“One area that is of particular focus for the board is Environmental, Social and Governance issues. It’s something we discuss all the time, and the ESG lens is one we often look through,” he told Stockhead.

“We are currently in the middle of a scoping study for the Big Sandy project, and identified trucking as a major source of emissions for the project.

“Through my network I got in touch with the team at Nikola and we discussed our requirements and their product, and it turned out to be a great match.

By using Nikola electric trucks rather than conventional diesel truck, Blumberg says emissions from haulage will reduce to zero.

There are added benefits. Consider how volatile fuel prices have been since Russia’s invasion of Ukraine.

While miners in many commodities have been shielded by high prices for now, supply shocks have shown diesel inflation could become a major barrier for miners to remain economic in times of lower prices.

Blumberg said using vehicles which will be powered by AZL’s own clean energy on site will have operating cost savings as well as ESG benefits.

“We think this is a huge net win for the environment, and our shareholders too.”

Majors taking similar path to ESG success

AZL is not alone in studying the use of EVs to haul ore, waste and products as the mining industry gets more conscious of its role in reducing global greenhouse gas emissions.

It is following a similar path to other major battery metals producers like BHP, which is trialling the use of Toyota EVs underground at its Nickel West operations in Western Australia, one of the world’s largest integrated nickel businesses and a supplier to EV giant Tesla.

Despite their obvious difference in corporate muscle Blumberg says there are distinct similarities in their approaches.

“I think we are thinking about this issue the same way as BHP are,” he said.

“BHP are converting a LandCruiser to be fully electric and running a trial before they roll out a fleet.

“We are doing something very similar where we are buying one electric truck and seeing how it performs before rolling out a full fleet for our operational phase.

“I think the way BHP is approaching the Nickel West BEV trial is shrewd and a step in the right direction.”

If it can enter the market as a low emissions producer, AZL will be in serious favour with customers, who are under growing expectations from investors and regulators to produce environmentally sustainable batteries and vehicles.

“I think as ESG becomes a larger focus for companies our prospective off takers are going to be looking at the whole supply chain, not just their own emissions,” Blumberg said.

“So if we can get ahead of that and make sure we are a low emissions producer, we will be doing our bit for the environment and setting us up well for future marketplace dynamics.”

Building a US lithium supply chain

Governments all over the world are getting more anxious about the concentration of the battery minerals supply chain in China.

Recently we have seen Australia’s Commonwealth Government invest hundreds of millions of dollars in grants for junior mining companies to get projects in commodities like vanadium, rare earths and nickel off the ground.

The same process is taking place in the US, where domestic lithium supplies are considered a key to ensuring the sustainability of the local industry.

It is already home of EV manufacturing, battery and auto companies like Tesla, General Motors and of course Nikola.

But America is lagging when it comes to raw materials supply and processing.

“Right now the majority of Lithium chemical processing and refining is in China,” Blumberg told Stockhead. “Furthermore, the majority of lithium ion cell manufacturing is in China.”

And as battery manufacturing really ramps up stateside, Blumberg says it’s hugely  important there is sufficient local supply of base metals in the USA.

“This includes Lithium, and also includes graphite, cobalt, nickel and others. Having local production makes sense from a logistics, environmental and geopolitical standpoint.”

Time is ripe for Big Sandy development

Big Sandy has an impressive resource already containing around 320,000t of lithium carbonate equivalent.

“To put that in context, if we produce at 15,000 – 20,000 tonnes of LCE per annum, we would have a mine life of 15-20 years,” Blumberg says.

“As we increase the size of the resource through drilling, the mine life will increase.”

The downturn in lithium prices between 2018 and 2020 had a big impact on global supplies of the battery metal, with customers now racing to invest in and secure lithium in a market presenting huge deficits for years to come as EV demand explodes.

“For a long time Lithium demand did not warrant further supply, and prices made it impossible to have an economic development,” Blumberg said. “With the hypergrowth in demand coming from batteries required for electric vehicles, this has changed.

“Lithium prices have increased substantially and new supply requirements are looking harder and harder for the market to achieve.

“It appears to be the perfect time for a lithium development.”

Next steps

While AZL’s Big Sandy project may seem large already, demand continues to outpace supply.

Blumberg says just 4% of Big Sandy’s landholding is incorporated in its declared resource. A scoping study is already under way.

“We commenced our Scoping Study at the end of January and we should get results in a few months,” he said.

“Next up will be the Pre-Feasibility Study and after that… the sky’s the limit.“



This article was developed in collaboration with Arizona Lithium, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.