What’s driving the lead economy: An overview

Market analysts report that the automotive lead-acid battery market could rise to approximately US$23.7 billion by 2028, with an estimated compound annual growth rate (CAGR) of 3.1 percent from 2020 to 2028. Much of this increase can be attributed to lead’s role in the EV and hybrid industry and the future of transport.

While in most current consumer EVs lithium-ion batteries are the primary battery, the cars are also equipped with lead-acid batteries. The lead-acid batteries in EVs serve a similar function to those in internal combustion engine vehicles — powering electrical systems such as lights, windows, navigation, air-conditioning and airbag sensors.

Lead as a commodity in the green revolution is also driving global movements towards the overall electrification of the world. Global demand for electrical power will increase by well over 50 percent over the next couple of decades. Most of this increase is expected to be met by renewable energy sources, and that will create more demand for energy storage systems (ESS).

With the increased popularity of electric alternatives to power, transportation and energy, companies and international powerhouses are seeing the substantial economic necessity of investing in mining and base metals commodity players. Companies need to act fast in finding sources of metals like lead to fuel the demand of a rapidly growing sustainability-focused world.

Lead’s market outlook over the next decade

Since demand is high, lead is experiencing similar challenges to other base metals, including diminishing supply. Most large mines are coming to the end of their life, and smaller mines are also producing less pure lead, which is creating a “green” issue.

However, world leaders like China and Australia are held up as the primary sources for viable lead resources in the world. For example, major Australian player Galena Mining (ASX:G1A) operates its own Abra base metals project, located in the Gascoyne region of Western Australia, which is home to one of the largest lead and silver deposits in the world.

Galena Mining leverages advantageous positioning with its 2019 bankable feasibility study for the development of a mine and processing facility. The results of the study include a 16 year lifespan producing high-value, high-grade lead-silver concentrate with potential lead production estimated at 95,000 tonnes per year.

Players like Galena see the economic upside of the lead industry, which is currently experiencing a higher rate of technical development in lead batteries than ever before. Wood Mackenzie's Farid Ahmed projects that "these developments have the potential to narrow the performance gap with lithium-ion — its principal rival for the burgeoning ESS sector."

Unlike other commodities, lead can be recycled infinitely while maintaining its quality, meaning its use in batteries is more environmentally friendly than metals that cannot be recycled in this way. The growing demand for lead in lead-acid batteries for EVs and for use in ESS, as well as its ability to be reused, make it a potentially important part of the green future.

Looking into the future of lead mining

Lead production is expected to grow at a CAGR of 2.5 percent by 2025 to reach 5.2 million tonnes (Mt).Combined production in China, Australia, Russia and Canada is expected to increase from a forecasted 2.8 Mt in 2021 to 3.1 Mt in 2025.

At the same time, these production projections could still see issues with increased demand and undersupply. With limited economic lead mines and recent mine closures — such as the 2019 closure of Glencore's (LSE:GLEN,OTC Pink:GLNCY) 120,000 tonne per year smelter in New Brunswick — major players need to pivot to advance their hold in the lead market.

Notably, Galena has also made show significant strides in its lead player positioning as its major partnerships include IXM, a Swiss base metals trading company; Toho Zinc (TSE:5707), Japan's largest zinc and lead smelter; and GR Engineering Services (ASX:GNG), with which Galena has signed a plant construction contract. Even with mine closures and major disruptions from COVID-19, companies like these are putting in the work to meet the push for a greener world and the demand for vehicle battery, ESS and recyclable applications.

The takeaway

Lead is making a comeback. As an important component in lead-acid batteries for EVs, ESS applications and the overall green revolution, companies and investors alike are looking to this commodity. Despite disruptions from supply issues, COVID-19 and mine closures, prospects are high for lead in the upcoming years.

This INNSpired article is sponsored by Galena Mining (ASX:G1A). This INNSpired article provides information which was sourced by the Investing News Network (INN) and approved by Galena Mining in order to help investors learn more about the company. Galena Mining is a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.

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