Critical metals for critical times

Features - Battery Materials

Reviewing the EV-battery raw materials supply chain.

May 4, 2022

Photos: © ZETHA_WORK | stock.adobe.com

The European Union set in motion a worldwide race for achieving carbon neutrality by 2050. Metals and mining companies, automobile manufacturers and related industries are now battling to develop, implement and achieve individual climate goals in line with those defined in the European Green Deal by forming strategic alliances and retrofitting existing equipment and technology with sustainable options.

A global transition to renewable energy also has meant that industrial segments will need to source alternative raw materials and overhaul their product portfolios, for example, in the areas of e-mobility or automobile electrification. Global demand for electric vehicles (EVs) and components seems to be on a steady upward trajectory and is lifting demand for base metals with it. Copper, nickel, cobalt and lithium prices have broken previous highs, with no obvious signs of cooling off.

Geopolitical trends

Has the resurgence of COVID-19 in China put brakes on the country’s ambitions as a key critical minerals supplier? Has Russia’s invasion of Ukraine, which began Feb. 24 (and was still ongoing as of press time), changed the narrative for suppliers and buyers alike?

The answer to the first question links to the emergence of the Asian nation as a leading processor, especially of copper and lithium. However, China isn’t known to possess vast natural resources of battery-grade minerals, and the lockdown protocols this past March in 10 provinces, including battery manufacturing hub Shenzhen, could have slowed production. Still, at a current share of about 80 percent in the segment, China likely will remain a formidable opponent against Europe and the U.S., at least for the next decade.

Russia and Ukraine’s political tensions appear to have jeopardized supply of critical elements, including copper, nickel and cobalt. Moscow-headquartered Nornickel is a significant nickel producer and has set its sights on 400,000 metric tons in copper output and 200,000 metric tons of nickel this year. The conglomerate says it expects global nickel consumption to increase by 16 percent and copper usage to rise by 3 percent in 2022. Still, the ongoing sanctions on Russia might hamper supply of at least three critical metals in the EV battery supply chain because the nation accounts for 10 percent, 4 percent and 3 percent of the world’s nickel, cobalt and copper output, respectively, according to an article in Chemistry World.

Ukraine might not be a big player at present, but its vast lithium resources in Donbas (southeast Ukraine) gained investor attention for exploration and mining, according to an article in Engineering and Technology. Donbas’ resource estimates for the metal are pegged at about 500,000 metric tons, according to a conference paper by Naumenko Uliana and Vasylenko Svitlana of the Institute of Geological Sciences, National Academy of Sciences of Ukraine. China and Australia were among the biggest contenders to support Ukraine in lithium mining. However, the war indefinitely has delayed plans to expand renewable energy projects, according to an article in Thred.

Scrambling for alternatives

Given the previously mentioned geopolitical trends, the gap between supply and demand for battery-grade raw materials has been analyzed with no plausible solution. One important aspect of current and future scenarios is glaringly apparent—scalable commercial production (or the lack thereof). Abundant natural and secondary resources are available worldwide, however, most regions remain unexplored. Battery recycling and manufacturing technologies are relatively nascent, with many companies still testing and developing solutions.

Specialists in the segment evaluate factors such as safety, sustainability, cost, weight, temperature range and cycle life. Safety and cost could be considered key drivers behind companies looking for more sustainable alternatives. But one cannot ignore the other features to evaluate product viability.

Michael Burz, president and CEO of San Francisco’s Enzinc, says battery size plays an important role when developing renewable energy powering and storage solutions for small spaces or vehicles. Moreover, a good battery must last longer and survive in any weather, he adds. Enzinc is developing rechargeable 3D zinc microsponge electrodes for mobile and stationary applications.

Testing and developing new and unexplored battery materials also is time-consuming. It takes months to analyze and evaluate every likely scenario to find the right metal and use it in pilot production. Carmakers including Tesla, General Motors and Stellantis all have sought strategic partnerships with cell manufacturers and mining companies to secure their components’ supply chain.

The segment is seeing billions in investments; however, the underlying challenge is whether enough batteries will be available for future EVs that roll off assembly lines, even with such a significant infusion of capital worldwide.

Base metals on the rise

As companies search for sustainable battery production, the demand for “greener” base metals, such as lithium, has been soaring in tandem. More manufacturers are shifting to lithium iron phosphate (LFP) or other metals instead of conventional nickel cobalt manganese (NCM). That, however, doesn’t mean the latter is out of the race. NCM’s market share still is expected to be considerable, even with LFP grabbing 50 percent, according to Wood MacKenzie. But most of these battery-grade metals also are becoming expensive to procure.

Lithium. Global demand for lithium-ion batteries is expected to be more than 3,000 gigawatt hours (GWh) in this decade. Manufacturers already have begun ambitious capacity expansions, with China’s CATL aiming for 800 GWh. The company already has roughly 60 GWh in operational capacity, with a scope of doubling to 120 GWh in Fuding City in the Fujian province, according to Panda Daily.

Other manufacturers, such as LG Energy Solutions, have laid out frameworks for about 350 GWh to 400 GWh per year. Spot prices for lithium also have been inching up with increased demand and were approximately $62,000 to $67,000 per metric ton in February, according to Mining.com.

Mining companies have amped up their exploration plans. Conglomerates have acquired major projects, including Australia’s Rio Tinto purchasing the 25,000-metric ton-per-year Rincon lithium deposit in Argentina, with a possibility to expand by twice the volume.

Copper. The red metal has witnessed a demand spurt, especially for copper foil that is used in lithium-ion (Li-ion) battery cells in EVs. The U.S., Democratic Republic of Congo and China’s total refined production (electrolytic and electrowinning) increased by 10 percent, 8 percent and 4.5 percent, respectively, but India and Belgium led with growth of 47 percent and 20 percent, respectively, during 2021.

Nickel. This sought-after base metal leads the race in sourced raw material. As demand for EVs and components grows, so will this mineral’s popularity. Elevated prices likely will add to vehicle manufacturing woes in an industry already reeling under rising costs and short supply.

Zinc. Just as EV battery manufacturers and developers consider cobalt the “blood diamond” of base metals because of the difficulty in procuring it, zinc is the “underdog” of battery-grade material. The metal has tremendous untapped potential, and experts like Enzinc that have recognized the importance of zinc know it is likely to emerge at the top of the list.

Zinc beats lithium in two significant features, according to Burz: It is the safest to handle and has the lowest lifetime cost. Li-ion batteries tend to catch fire when exposed to high temperatures, whereas zinc can withstand anywhere between -40 Celsius to 50 Celsius. Developing zinc for EV battery packs or storage also takes less capex than implementing Li-ion technology.

Prices of the metal might increase by 20 percent this year to $3,500 per metric ton, however, its usage for galvanized steel production is more apparent. Burz says he is confident that zinc easily will capture the lead battery market, however, taking over Li-ion demand might be a little more challenging. When asked about whether availability is an issue, Burz says that with 4-million-metric-tons worth of natural zinc resources in the U.S. alone, ample zinc supply is available for EV battery manufacturing.

Looking ahead

Global demand for these critical minerals, especially copper and lithium, continues to outpace supply. However, this gap could visibly narrow by 2025 as new capacities come online. Supply bottlenecks, innovation, sustainability and risk assessments will continue to play important roles, at least for this decade, in a relatively unexplored segment. Many analysts also have recommended strategic stockpiling. However, building them takes years and additional costs. Finally, governments, manufacturers and suppliers will have to adapt to new policies or strategies if one probability doesn’t work or a project doesn’t get approved. It all boils down to how quickly industry players can turn the supply-demand scenario around well before the EU’s 2050 timeline to achieve carbon neutrality nears the horizon.

Huban Kasimi is deputy editor – Americas at Davis Index and can be contacted at huban.kasimi@davisindex.com.