Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email [email protected] to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
https://www.ft.com/content/44af43da-a1d6-11e7-8d56-98a09be71849
As carmakers gear up to electrify their fleets, a new scramble for resources is under way to ensure there is enough raw material for a rapid expansion of battery production. Electric car batteries rely on a host of materials — from lithium to nickel, cobalt and graphite — while some cars also use motors that require rare earths. Prices have soared rapidly over the past year, with cobalt, a greyish metal mostly mined in the Democratic Republic of Congo, up more than 190 per cent over the past 18 months. Carmakers and battery producers are rushing to lock in supply agreements from mining companies for the metals as forecasts for consumer uptake of electric vehicles increase and governments launch policies to back a shift away from combustion engines. According to the International Energy Agency, there were 2m electric vehicles on the world’s roads last year. It predicts at least 40m will be driving around by 2040. Some of the largest miners are also reshaping their operations to supply the lithium-ion battery market. BHP Billiton has said 2017 would be the “tipping point” for electric vehicles. In September, Chinese carmaker Great Wall Motor signed an agreement with Australian lithium miner Pilbara Minerals to secure supply of the chemical for five years. “It highlights the strategic importance for the global automotive sector of securing access to large-scale, consistent, high-quality sources of battery materials in low-risk jurisdictions,” Ken Brinsden, Pilbara’s chief executive, said. This month, Pilbara’s competitor Galaxy Resources said it was in discussions with several parties in the battery supply chain, including Panasonic, which makes batteries for Tesla Motors. It also said it was in talks with carmakers about long-term supply of lithium. Financial speculators have joined in the action, too. Cobalt 27, a Canadian-listed investment vehicle, has amassed a stockpile of more than 2,000 tonnes of the metal. Chinese hedge fund Shanghai Chaos is also thought to have a large stockpile of the metal. Batteries produced in a French factory © Reuters Magic chemistries that don’t rely on rare materials . . . are not viable now Stephen Irish Cobalt faces the most difficult supply dynamics for car and battery makers. As much as 65 per cent comes from the DRC, one of the world’s poorest countries. Analysts at UBS expect cobalt demand to double by 2020 to around 200,000 tonnes a year, and say new projects are required over the longer term to avoid a deficit. “The sheer volume of new supply needed by the market means there will be no EV industry without DRC cobalt,” says Simon Moores, head of London-based Benchmark Mineral Intelligence, which provides market price assessment for battery materials. While lithium is more abundant, it also faces a supply shortfall over the next few years, as new projects struggle to meet supply. Lithium demand is expected to be four times greater at 779,000 tonnes by 2025, according to Goldman Sachs, but new projects are likely to face hurdles to coming into production. Goldman says: “Many projects announced with fanfare have failed to achieve significant financing.” Lithium is currently extracted from hard rock in Australia and from brines in the deserts of South America. But any new lithium project needs to have the right chemistry for batteries, says Waldo Perez, chief executive of Canadian miner Neo Lithium, which is developing a project in Argentina. While Bolivia has large reserves of lithium, for example, its high magnesium content leads to precipitation of the lithium. “Impurities are critical,” Mr Perez says. “Bolivia is definitely a no go.” A key uncertainty for the commodity markets, however, is the future of battery technology. Battery makers are reducing the amount of cobalt they use, owing to its high price and supply uncertainty. In September, UK-based sustainable technology company, Johnson Matthey, said it had developed a battery material with higher performance using lithium and nickel but with less cobalt. Nickel helps improve the power of the battery and is one-sixth the cost of cobalt and around 20 times more abundant, according to Liberum, an investment bank. Mr Moores expects demand for battery-grade nickel to grow from 75,000 tonnes last year to up to 400,000 tonnes by 2025, depending on which chemistries take hold. Longer term, battery companies are looking to overhaul battery design. British engineering group Dyson aims to enter the electric vehicle market by 2020 using a solid-state battery, which promises to store and release more power. Toyota plans to use solid-state batteries in its cars by the early 2020s. These batteries replace a battery’s liquid electrolyte with a solid, safer material. “People are looking for these magic chemistries in the future that don’t rely on these rare materials but they’re not viable now,” says Stephen Irish, commercial managing director of UK battery company Hyperdrive. “Everyone asks whether there will be revolution in battery technology, but it’s really been a series of evolutions. It’s lots of increments.” Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web. Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) 7 Save to myFT Explore the series READ MORE Nio plans to speed into China’s electric car market ABOUT THIS SERIES China not only sells more electric cars than any other country, it also made the fastest. Meanwhile, Japan’s battery makers look set to dominate, while Honda and Toyota fix sights on a post-lithium future powered by hydrogen gas.
