Experts: Battery and Precious Metals Emerging as New Geopolitical Battleground

Trump policies threaten US EV growth

Speaking about freshly inaugurated US President Donald Trump, Alavi-Gunn underscored that US EV proliferation could be hampered by the new administration. Trump could ease EV compliance rules, reduce subsidies and impose tariffs on Chinese batteries and Mexican auto imports, making EVs less competitive.

As a result, US plug-in vehicle sales could drop from 30 percent to 20 percent penetration, with hybrids gaining market share. This shift could reduce US battery demand by 20 percent.

However, outside the US the global EV outlook remains largely unchanged.

“Overall, we see very strong growth in EVs going forward,” Alavi-Gunn said, using a chart to illustrate her point. “Plug ins are growing at nearly 10 percent a year. Hybrids are growing at about 6 percent a year.”

While this steady increase in EV purchases is the largest contributing factor for the battery metals sector, each metal also has other end-use segments that offer support.

“We’re seeing very strong demand growth across all of the battery metals,” the Wood Mackenzie analyst noted. “Lithium, obviously, is just crazy, but the other battery metals are still growing pretty strong.”

IRA decisions could impact graphite supply

Although Trump’s decisions around the Inflation Reduction Act’s EV incentives — in particular the 30D tax credit for new clean vehicles — are expected to have little impact on global battery demand tallies, Alavi-Gunn noted that the graphite market could be impacted by the new administration’s policies.

“We think the US could have quite an impact if they keep the 30D credit in place, but they bring forward graphite inclusion,” she said. She went on to explain that graphite is a crucial component for batteries, with China dominating its supply chain. Currently US sourcing rules don’t require graphite to come from allied countries until 2027.

However, if Trump moves that deadline up, far fewer EVs will qualify for tax credits due to limited compliant supply.

As Alavi-Gunn pointed out, long-term demand for battery metals is bullish, despite a current glut in key markets.

The lithium and nickel markets are oversupplied, driven by surging production in China and Indonesia. This excess has kept prices low, but demand is expected to outpace supply by the 2030s, triggering shortages and price increases.

Cobalt also faces a similar long-term oversupply, though recycling economics could be a risk.

To fulfill the demand growth that Wood Mackenzie is projecting, Alavi-Gunn noted that billions of dollars in new investment will be required, particularly for lithium. She suggested that major mining firms, traditionally focused on iron ore and coal, may need to diversify into battery metals as these legacy commodities shrink in market size.

While lithium and nickel mines generate slightly less revenue than copper, they remain attractive investment opportunities, especially for companies looking to future-proof their portfolios.

This can be achieved through M&A or the development of new greenfield assets.

As Alavi-Gunn explained, lithium and copper assets command high premiums, making new development more cost effective, while nickel is cheaper to acquire than build.

However, greenfield projects come with risks like permitting delays.

She also noted that miners face competing demands for capital, such as shareholder returns, sustainability and diversification. While battery metals offer long-term potential, firms must act now to avoid future shortages.

The current downturn presents a countercyclical investment opportunity ahead of expected supply deficits and price surges in the 2030s, she said.

Canada’s pivotal place in global supply chains

Following Alavi-Gunn’s presentation, Emil Kalinowski, director of metals market research at Wheaton Precious Metals (TSX:WPM,NYSE:WPM), took to the stage.

His 20 minute presentation started with a brief overview of the geopolitical and economic forces shaping metals markets, highlighting a disconnect between analyst forecasts and historical trends.

As Kalinowski explained, critical and in-demand resources have become a key front in geopolitical tensions, alongside artificial intelligence, space and strategic waterways like the Black and Red seas.

“The metals and mining space has become a key battleground for the great powers in the world,” he said.

As metal supply chains become increasingly politicized, he believes Canada may be the most influential nation.

“Canada, in my mind, is one of the leaders on deciding who, what and where deals can take place,’ Kalinowski said. ‘With respect to national security and economic security, logistics, supply chains — Australia is leading the way when it comes to financing projects, but Canada is getting involved on a geopolitical basis very heavily.”

Although Kalinowski’s comments came the day after Trump’s inauguration, they appear to have been prophetic. Since taking office, the president has made numerous comments about the US absorbing Canada as the 51st state.

Trump has cited poor trade negotiations and subsidies as his reasons, but many have questioned the motives behind the proposal, with some speculating that the president would like to access Canada’s mineral wealth.

More recently, the Trump administration has requested US$500 billion in rare earths from Ukraine.

Analyst price predictions clash with supply realities

Switching his focus to gold, Kalinowski noted that despite bullish sentiment in the market and dramatic price increases for the precious metal, some analysts are making bearish projections.

“They are forecasting that gold prices will fall,” he told the audience.

“This is completely off the charts compared to the market and to history. I think they’re wrong.”

According to Kalinowski, analyst consensus predictions for gold don’t align with supply projections.

Forecasts suggest a slight annual decline in supply through 2030 — roughly 1 percent per year — putting future supply 2 to 3 percent below historical trends dating back to the Cold War, he explained.

Alternative supply sources like scrap and recycling are also shrinking.

Unlike past decades, when investors and central banks sold off gold, projections for 2030 show these entities will be accumulating instead, reducing available supply and challenging traditional market assumptions.

“So supply is not really explaining why analysts are so bearish,” he said. “Might it be demand? I don’t think so.”

In fact, global gold demand surged to an all-time high of 4,974 metric tons in 2024, fueled by strong central bank purchases and rising investment interest, according to the World Gold Council. The combination of record prices and high volumes pushed the total market value of demand to a historic US$382 billion.

Ultimately, Kalinowski attributed analysts’ bearish stance on the gold price to their failure to fully account for the supply constraints, the nuanced nature of gold demand and the geopolitical factors that could drive increased buying.

Diverging paths for silver, platinum and palladium

For sister metal silver, the consensus was more optimistic, with analysts predicting long-term price growth.

As Kalinowski pointed out, historical trends suggest the silver price rises over any six year period, but forecasting remains complex. Unlike gold, silver lacks a single price-driving factor, earning its reputation as the “devil’s metal.”

Silver’s extreme financialization — where paper trades vastly outsize physical supply — makes short-term price moves unpredictable. However, long-term demand shifts are clear. Industrial use, especially in solar panels, is set to grow, while speculative demand is expected to decline — though its correlation to gold raises doubts.

Kalinowski added that a key geopolitical wildcard is government stockpiling of silver. Russia recently began adding silver to its reserves, sparking speculation that other nations may follow.

Even a tiny shift in global FOREX reserves into silver could absorb an entire year’s supply.

For Kalinowski, that raises the question: “Could silver become a strategic asset alongside gold?”

He spent the remainder of his time highlighting the seismic shifts occurring in the platinum and palladium markets. With so many supportive fundamentals, analysts are bullish on platinum long term, and the numbers support it.

While total mine supply is expected remain stable, platinum demand is being reshaped, moving away from internal combustion engines and into the hydrogen economy. According to Kalinowski, this transition is expected to drive ongoing supply deficits, with platinum stores reaching a 47 year low.

Palladium, on the other hand, faces a different story. While analysts remain optimistic in the short term, long-term fundamentals for the metal look shaky. A flood of recycled palladium from scrapped gasoline-powered cars — peaking in the mid-2030s — will add massive supply, just as demand declines by 15 percent.

Unlike platinum, palladium has no clear role in the energy transition, raising price concerns long term.

“There is no hydrogen rescue coming for the palladium market; (there is also a) tremendous amount of supply, falling demand (and) price (is) very concerning,” Kalinowski said.

With supply tightening for one and surging for the other, the two metals appear to be on diverging paths — platinum poised for strength, palladium facing pressure.