Batteries: MINING

Some say electric mobility is just moving from one bad substance to another. Oil to lithium. Lithium is no saint but it’s no comparison to oil. That would be like comparing the flask to the hot liquid that’s in it. We don’t burn lithium, it stores the energy we produce. Batteries are far better than refining and burning oil as a means of energy transfer. However the minerals and metals in batteries need to be mined and mining itself produces carbon dioxide, unwanted byproducts, and is often carried out in geopolitically sensitive regions.

Copper Wire

The primary mined elements for batteries include nickel, aluminum, phosphorus, iron, copper, graphite, lithium, cobalt and manganese. Global demand for these elements is expected to grow by between 10 to 15 times by 2030. With this huge growth comes multiple challenges, from mining, to supply chain, to quelling geopolitical tensions. These raw materials often come from poorer countries where mining activities are essential income drivers to the local economies.

Over 50% of the world's cobalt supply comes from the Democratic Republic of Congo, for example, a region which has experienced on and off political instability for the past 60 years.

Lithium-cobalt batteries are currently superior to other forms of lithium-ion batteries because they offer several advantageous properties for example, a high energy density, relatively low weight and better thermal stability. Cobalt also increases the longevity of batteries and is highly recyclable (I'll cover that issue in a later blog).

Although cobalt is a wonder material, manufacturers are trying to reduce the percentage in their batteries and limit their dependence on international cobalt supply. Two prime reasons for this, firstly cost, cobalt is a very expensive element at around $33,000 per ton (that's twice the price of nickel) and secondly, ethical concerns around mining, particularly in the Congo with allegations of child labor, corruption, and harsh working environments.

Organizations, supported by EV manufacturers, like those for fair trade coffee, have been born. For example, The Fair Cobalt alliance, Responsible Cobalt Initiative, and the Clean Cobalt Initiative.

Achieving a low carbon mobility future is dependent on six metals. In addition to these six metals such as lithium, copper, and nickel are other Rare-Earth Elements (REEs), important not just for electric cars, but also energy storage and clean energy. Indium and gallium for example, are used in the coatings of solar panel photovoltaic film.

Lithium

Establishing a reliable supply chain, at the right price point, which is also massively scalable, is essential to complete the electric revolution. So how abundant are these metals? How reliable is the supply? And what needs to be done to meet the massive EV battery demand predicted?

Starting with lithium, soaring EV demand has given rise to the creation of new lithium mines. Lithium comprises about 6% of the battery and is the 25th most abundant element on earth. In Australia for example, where over 50% of global production occurs, 6 new lithium-ion mines have opened since 2017, increasing production capacity by over 20%.

Even with increasing EV demand, lithium is a relatively abundant element when compared to some of the other battery metals and increasing production is driving down prices. Lithium is found in rock and clay deposits, and it is also dissolved in briny water. Lithium has been dubbed ‘white oil’ and apart from Australia, just three countries control much of the remaining world supply, Chile, China, and Argentina.

The lithium triangle is a region in South America that borders Argentina, Bolivia, and Chile. It is thought that over 50% of the world's lithium reserves are contained there, which is roughly the size of the state of Arizona or Italy.

In Europe recent lithium discoveries in Portugal offers the continent the potential to significantly supply the region’s demand. Localizing the supply of lithium cuts down on the overall supply chain and additional carbon footprint. Sourcing new lithium deposits is now a key focus area for the leading EV markets of Europe and the US.

In the US, with the equivalent of one Gigafactory for battery production being built every four months in contrast to the equivalent of 1 being built in China every week, there are concerns about the continuity of lithium supply. Combine this with the potential geopolitical risks by the US becoming too dependent on China for electric batteries. While the US is estimated to contain almost 7 million tons of lithium, as of last year zero percent of this lithium, or nickel, is produced in the USA for EV batteries.

The world's known lithium reserves are predicted to last for at least 200 years, but the US produces just 1.2% of the world's lithium. Developing a lithium supply chain domestically in the United States is therefore a crucial strategic endeavor to avoid the US becoming overly dependent on foreign supplies.

The global lithium market is currently valued at around $50 billion and expected to grow to at least $200 billion by the end of this decade. In the UK, there is research on deep boreholes, tapping into geothermal waters beneath the Earth's surface to detect lithium. The lithium could then be extracted, like salt production from a salinization plant. Concept technologies to then reuse the hot water pumped out of deep boreholes to power the actual lithium extraction process would make the entire endeavor highly sustainable.

So, when it comes to lithium, the problem is not really if there’s enough reserves, it's more where they are, and who is further ahead in mining and production.

In the US, Japanese Panasonic supplies car batteries to Tesla as there are effectively no domestic US owned companies producing electric car batteries as of now. For example Korean LG is working with GM on their electric ambitions and another South Korean owned company, SK innovation, is building new battery plants in Georgia capable of supplying up to 300,000 EVs per year.

Cobalt

When it comes to the other key elements, for example, cobalt, manganese, nickel and carbon (graphite), most of these are mined in China, Indonesia, South Africa, and Congo. The vast majority of these minerals are then shipped to China, where over 80% of the world's raw mineral refining takes place, further demonstrating the overdependence on a single country for battery production.

All these factors give China the global lead in battery cell production with almost 80% of the world's battery output.

China, Japan, Canada, South Korea, and Germany lead the United States in the lithium-ion battery supply chain. With the Biden administration’s push into the new green economy there is going to have to be a structural shift.

The good news for the US is that there it is estimated to have more lithium reserves than China; the problem is the lack of infrastructure to date. With the tipping point now reached, and major American automakers committing to an electric future, America is very much now in lithium catchup mode, a decade behind China's lead in battery production and mining.

In 2021 the early signs of a real battery supply shortage hit Tesla with Musk indicating the Tesla Semi-truck project will be delayed due to battery supply concerns. Tesla consumed more lithium than BYD, VW, Renault, & Audi combined in 2020 and has secured the rights to mine lithium on 10,000 acres of land in Nevada.

Tesla's lead already gives it a battery cost advantage over competitors which it is expected to hang onto until 2030.

Next to lithium, copper is a starring metal in electric cars, not just for the batteries but also in electric motors, wiring and circuitry. Concerns about global copper supply against rapidly growing demand has driven the price to all-time highs in recent years, more than doubling since the year 2000. A conventional car contains 18-49 pounds (22 kilograms) of copper, an electric car contains at least five times this amount. Like peak-oil (the point at which global oil supplies reached their maximum output and begin to decline) peak-copper has been debated to be as early as 2035 or as late as 2100.

But unlike oil, copper can be recycled, and it is estimated 80% of all the copper ever mined is still recyclable, estimated to be 550 million tones, or at least 20 years of today’s copper mining production. Copper is an abundant mineral in the Earth’s crust but there are only limited concentrations where extraction is economical. Chile, Australia, Peru, Congo, Zambia, Mexico the US and China account for over 50% of global production with remaining production widely spread amongst 52 countries. Given this wide dispersion we are not as dependent on any one country, unlike lithium. So, copper has more of a production capacity issue than world reserve issues and given its recyclability it is a highly sustainable material. To take an EV lead, predictable copper and lithium supply is number one.

Just as oil was a major influence on American foreign and geopolitical policies, battery material supply is likely to become center stage for world governments as the electric revolution accelerates. When it comes to the environmental impact of mining, yes, it is far from perfect, however a recent study by Transport and Environment concluded that the impact of mining and the raw materials needed to make an electric battery, particularly when factoring recycling, demonstrate that EVs use significantly less raw materials than a fossil fuel car. For the battery mining ‘gold rush’ careful navigation of the demands to reduce carbon emissions with the protection of the natural environment is required in the years ahead.