There has been a major global impetus for getting rid of carbon offsets as much as possible, with many industrialized countries committing to alternative energy development strategies.
However, a significant forecast shows a growing, not shrinking, demand for oil. The International Energy Agency has released its 2023 forecast for oil supply and demand, indicating increased oil demand.
At the same time, the conversion to renewable energy has not happened as quickly as some would like, and this is partly due to the lack of so-called critical minerals – nickel, zinc, lithium and copper, to name a few – that can power electric cars. , batteries, turbines and other products.
Larry Short, a portfolio manager and senior investment consultant at Short Financial, discussed the problems with Krissy Holmes during a recent interview in St. Louis. John’s Morning Show on CBC Radio.
His thought may surprise some. He believes the mining sector could be in an explosion that could surpass what the province has seen with offshore oil development.
This interview has been edited for the sake of length and clarity.
Q: So what happens? Why is oil demand expected to increase next year?
A: Largely because China is still in a lockdown for the last eight months. While the rest of the world has emerged from the COVID crisis, China has not. So, they would only resort to this as a last resort. There are still hundreds of ships off the coast of Shanghai waiting to load and unload.
The reason we still see shortages around the world is because of the construction that China is trying to make, the products can not get on the ships.
Burning coal, as in this plant, also releases mercury into the atmosphere. (Shutterstock)
Electricity – we are definitely talking about this transition in recent years. Is there a relationship? Is this happening as fast as it should?
Oh, paradise no, nowhere near him. Based on the numbers we are still building, 33 percent of the world’s energy still comes from coal, to name a few. In fact, China recently announced a new coal-fired project that will actually use more coal than the whole of Europe is currently using.
We are not moving forward in reducing carbon emissions to a great extent because we are not able to make changes quickly enough due to congestion.
A key of these bottlenecks is critical minerals. Basically, we do not extract all the things we need to extract to make the conversion fast enough.
Looking at countries like Indonesia, Pakistan and Bangladesh, with large populations. Everyone wants air conditioning, running water, TVs and cars. People are still trying to keep up with the demand for these products and services, which means that the total energy demand around the world is increasing, while the ability of the world to produce alternative energy simply does not exist.
Russia’s invasion of Ukraine this winter has helped spark a huge rise in oil prices around the world, with many countries cutting off purchases from Russia. (Andrey Rudakov / Bloomberg)
Let’s talk about what this means for Newfoundland and Labrador. Where do we fit on the supply side here?
We have had many people over the years argue that simply shutting off oil off the coast of Newfoundland will help turn the world into an alternative fuel. What we have seen lately is that 4 million barrels a day are being closed due to sanctions in Russia.
The result was not the rapid conversion to alternative fuels. There has indeed been an increase in inflation. If nothing else, this should help people understand that in terms of this transition, the focus was on the wrong area. The focus was on oil supply, when oil had to be completely replaced using alternative energy, which requires critical metals.
The only thing the province of Newfoundland and Labrador has proportionally more than anywhere else on Earth is all these critical metals that need to be mined to build electric vehicles.
In terms of supply, what is the opportunity here for offshore? What could this mean? Is there a possibility of another explosion here?
We could definitely see a repeat of the explosion. Oil development, any deposit that has already been found, such as the Bay du Nord, will be developed before the new exploration, because people still do not fund new oil projects or new oil exploration projects.
The potential explosion of minerals in the province of Newfoundland and Labrador from it is greater than that which was the explosion of oil.- Larry Short
Again, the reason we are in this crisis is because the thought was that the world could be transformed faster than it could. What we find is that everyone has given up oil at the same time, so we do not even have the supply we need to do the conversion.
The second part is that the potential explosion of minerals in the province of Newfoundland and Labrador from it is greater than that which was the oil explosion. So the opportunity here is much greater if we can find a way to help supply the world with all the metals it needs to make the conversion, because that’s where the money is falling right now on the planet.
Earlier this spring, Vale signed a supply agreement with Tesla to supply nickel for electric car batteries, with part of it coming from its nickel mine in Voisey Bay in northern Labrador. (CBC)
Could the extraction potential be greater than the oil potential for this province? Can you give us a sense of the scale we are talking about here?
Just to make an electric car, you need about six times as much metal, most of which is copper, lithium, cobalt, nickel, these things. There is an article that was released a while ago that talks about how we should basically increase the amount of minerals mined by a thousand over the next ten years in order to achieve climate goals.
You can see the opportunity for this province. The opportunity there is absolutely huge in the future.
You mean, like, saltines and their ilk, eh? [things that come] with some of the emissions with oil production? Could one cancel the other?
More than that. The fact is that for a long time now, environmentalists have been saying that we need to get out of oil. Thus the province escapes in terms of oil revenues.
The key here is that as a province, we need to find a way to open mines faster than the average of 14 years, because that’s losing all opportunity. But, on the other hand, if we can find a way to do it ethically, if we can find a way to do it by meeting environmental standards, then we will become one of the leaders in the world. We have this opportunity.
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