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Jan 9 (Reuters) -

By Andy Home Senior Metals Columnist

Power Up is published on Mondays and Thursdays. Think your friend or colleague should know about us? Forward this newsletter to them. They can also subscribe here.

Welcome to Power Up. Electric dreams have turned to nightmare for the battery metals sector with a year of bombed-out pricing taking a heavy toll on producers of lithium, cobalt and nickel. Too much supply has coincided with weaker-than-expected demand from the electric vehicle sector. It wasn’t a great year for investors in solar energy either but will this year be any better? Also in today’s issue, the states leading the U.S. clean energy race, Norway’s record gas production and a cold blast for European wind power stocks.

Meltdown in battery metals Last year was a brutal one for the battery metals sector. After slumping in 2023, prices of lithium, cobalt and nickel ground steadily lower in 2024. Cobalt miner Jervois Global is the latest casualty, announcing that one of its lenders will take the company private as part of a pre-packaged bankruptcy. The company had already suspended work on its Idaho cobalt mine just weeks before it was due to open in 2023. It needs a cobalt price of at least $20 per pound to reopen the site, almost double the current spot price of $11. Cobalt prices have been crushed by a tsunami of new supply from the Democratic Republic of Congo. China’s CMOC Group, which is the country’s largest producer, more than doubled output last year. The same dynamic has played out in both nickel and lithium markets. Indonesia’s nickel production boom has swamped the global nickel market and contributed to the glut of cobalt, a by-product of the country’s nickel processing sector. Western lithium producers have closed assets and deferred new capacity even as Chinese and African miners ramp up output. The battery metal supply surge has coincided with weaker-than-expected demand from the all-important electric vehicle $(EV)$ sector. The global EV market is still expanding, with sales growing by an impressive 25% year on year in the first 11 months of 2024, according to consultancy Rho Motion. However, just about all the growth was in China, with Western buyers still reluctant to make the shift from internal combustion engine to electric drive. Moreover, Chinese buyers are increasingly opting for hybrids or plug-in hybrids over pure battery vehicles. These have batteries about a third of the size of pure battery models, meaning a similar-sized reduction in cathode inputs. Batteries themselves are also evolving, with the resurgence of lithium-iron-phosphate chemistry heralding more bad news for nickel and cobalt markets. The consensus is that prices are now so low there is little further downside. But a recovery is going to depend more than anything else on supply discipline. Or the lack of it.

ESSENTIAL READING

* Solar electricity generation posted its largest-ever annual rise globally in 2024 but it’s been a torrid year for investors in the sector, with share prices plunging and exchange-traded funds collapsing. Reuters energy transition columnist Gavin Maguire identifies the key themes that will determine if 2025 is any better.

* Texas is leading the U.S. renewable energy race, followed by California, Florida, Arizona and Colorado. Gavin Maguire runs the numbers on which state is doing what in terms of both generation and battery capacity.

* Norway's natural gas production rose by 6.9% in 2024 to a record 124 billion cubic metres (bcm) but is expected to ease slightly this year, Nerijus Adomaitis and Nora Buli report from Oslo.

* India's electricity generation grew at its slowest pace in 2024 since the COVID-19 pandemic, hit by a slowdown in the world's fastest-growing major economy. Sudarshan Varadhan and Gabrielle Ng take a deep dive into the federal grid regulator’s load dispatch numbers.

* European wind power investors took fright after U.S. President-Elect Donald Trump called wind turbines “garbage” and said that “no windmills” would be built on his watch. European wind power stocks tumbled, reflecting increasing concern about the outlook for the U.S. wind market.

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(Editing by Mark Porter)