Scarcity of raw materials for batteries – and now?

The scarcity of raw materials – particularly for the automotive business and even more so for electric cars – is a hot topic in economy and science. Without batteries there are no electric cars and sans electric cars there is much less climate compatible mobility.

Despite the fundamental discussions needed, on one hand due to the massive consumption of resources of our society, at the other hand about the needed resources to maintain our mobility, all this hopefully resulting in new solutions in these areas: we have the car manufacturers which need to handle the scarce and dire resources situation, too. Manufacturing cars requires lots of raw materials and so does the manufacturing of electric vehicle and their batteries. Battery manufacturers not only have to worry about the batteries and the need for raw materials for cars but equally for stationary applications since they are not only used to store energy of the home PV systems but even more so as energy balancing and storage systems for the grid, particularly in conjunction with renewable energies.

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How long can we build batteries for cars until we run out of raw materials?

Those giving a definite answer would unveil not having any clue about the business at all – or having a hidden agenda, no matter whether personal, economical, political, or emotional. The whole subject is multilayer, changes frequently, and, therefore, cannot be answered easily. We simply do not know enough in the related areas and subjects and, therefore, cannot really predict. R&D in batteries is the most dynamic environment in technologies to be in. Not a single month without relevant findings, developments, breakthroughs, and the introduction of innovations into serial production – R&D in batteries is as dynamic as computer science in its earlier days was with the doubling of power and storage every other month.

There is one thing we know for sure: in the middle of the next decade the recycling of batteries of electric cars will become an important if not the most important source for raw materials to build further batteries for electric cars. This also means the electric cars being much different to cars with combustion engines which are recycled in a rather coarse manner: a few parts will be taken out and all the rest gets compacted and molten, without any deference for the materials included.

With electric cars, all this is different, particularly for the batteries. Lithium, nickel, manganese and copper, cobalt and other metals from batteries and their peripheral technologies are taken out and remain in the circular flow. First and foremost, this is very cost effective for the manufacturers (otherwise, they would not care). But there are interesting materials in the motors and the power electronics to be recycled, too, such as magnetic materials, precious metals, and others more. As soon as these circular flows are initiated the scarcity of raw materials becomes less and less an issue.

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Scarce and expensive – lithium, cobalt, nickel

For the well-known and popular ternary batteries, particularly the NMC variants (lithium-nickel-manganese-cobalt), getting the hands on these materials is a challenge. These classic battery cells are liked for their high energy density, the relatively low weight, the known and easily manageable production processes, and the experience. Cobalt, however, not only is scarce but can be found in certain regions only. And in some of these regions, depletion of cobalt relies on child labor as well as close to no safety measures: dangerous child labor for the rich car drivers. Meanwhile, car manufacturers and their battery suppliers depend on cobalt from controlled, unproblematic sources.

The same applies for lithium: mines wasting water, spoiling water, dispossessing water wells, and others more can no longer deliver their lithium to the automotive industry since no car manufacturer and battery company wants to be associated with such procedures. However, some media like to show their “investigative” work about such questionable mines and suspected the automotive industry – but never proved the allegations. For a good reason: the quality of lithium from questionable sources most of the time is not suitable for automotive, thus, this lithium finds its way into cheap electronics.

All this is carrying a price tag, NMC batteries became expensive and will become even more so. Besides cobalt nickel, too, is scarce. And in certain battery design nickel is used in large quantities – but this will not be a sensible way to go. Depletion of nickel is not a problem, but the efforts to do so and the resulting short supply is one – all this depending on the mines, read more under “Lithium is scarce”. The third metal – manganese –, too, isn’t available in large amounts. However, manganese can be found all over the globe and some sources state manganese, therefore, will not be on short supply. If looking into the matter all this can be de-bunked: powerful batteries require high purity manganese, and such can be found primarily in China. Thus, resulting in a dependency and there are questions regarding the depletion, too.

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Lithium is scarce – but not the way we think

Lithium is the poster metal for the media showing off on every occasion and particularly in conjunction with apocalyptic predictions: lithium is very scarce, it quickly will become extremely expensive, and electric cars, therefore, will have not a chance to become relevant. All three claims … are claims only, or: rubbish. Right now, in January 2023, the price for lithium dropped and will not rise much for the foreseeable future.

Lithium is available in abundance – but where? Lithium is water-soluble and as a result lithium can be found in mineral water, here with a content of up to 10 mg/l. In geothermic water the content often is much higher. All this indicates gigantic quantities of lithium from the mountains having been washed out of the rocks and salt domes into the lakes, flows, and rivers to the sea over the past tens of thousands of years. Therefore, the sea water is the largest lithium reservoir on earth, all dissolved in the sea water and the sea ground. Furthermore, all lakes, flows, and rivers and their respective ancient beds and ways contain large amounts of lithium if the mountains contain/ed lithium.

Typical examples are the Salton Sea in California – people already are talking about the “White Gold” and very American even issued shares – and the upper plane of River Rhine in Germany, holding lithium for 400 million electric cars. Depending on the source much over 30 new locations with potentially high lithium deposits have been identified over the past five years. But why do we find such deposits right now? Well, many locations have been known for decades as possible deposits for lithium. During the past years such locations have been explored systematically, measurements and drilling were made, and in certain locations large deposits of lithium were found, sometimes much more than expected. There are many further locations with potentially large lithium deposits – along other metals and even uranium. Last year I’ve written an article about lithium in Afghanistan describing the general framework – a link can be found at the bottom. Many locations share the same fate of a demanding depletion, like the one under the River Rhine: it will take many years until lithium could be gained from there. Thus, lithium is not scarce, it is on short supply, we “just” need to filter sea water and could build trillion electric cars (not a great idea, I guess). However, there is a problem. Not matter what kind of (even to be developed) method we will use to deplete the lithium, an industrial water filter, digging under a river, or conventional lithium mining: the efforts required are gigantic. As a rule of thumb, it needs about 10 years from signing the contract until the mining system becomes operational. In certain cases it can be done within seven years, but 15 to 20 years are common, too, particularly if a region is lacking infrastructure, the construction situation is critical, or the political settings are demanding. Latter doesn’t apply to Afghanistan only; it equally applies to Germany where society and politics rightfully and critically observe such intervention into nature and permission procedures as well as bureaucracy are slowing such projects down.

Obviously, mining companies decide for investments only if sales of the raw materials are certain for decades. All this is steered by the demand in the market and within this market the London Metal Exchange LME is the key player: metals are traded through the LME. Commonly, suppliers of the automotive industry (e.g. a battery manufacturer) directly or indirectly procure such metals through the LME. Deliveries happen in batches over a certain period of time. This also means the raw materials and metals for the future car production must be allocated a long time before production begins. Demand has risen remarkably, thus prices stepped up accordingly – and we see scarcity. However, it is not the scarcity of the metal, e.g. lithium, as such, it is the short supply of lithium at a certain point of time, limited by the capacities of the mines. Laggards face huge problems to source raw materials since the available raw materials have been sold, already. And exactly this is problem of many car manufacturers, suppliers, and battery manufacturers.

Car manufacturers not only have to secure production capacities for batteries, but they also equally have to secure raw materials. Strategically acting car manufacturers already have secured the required raw materials at the LME in order to supply the battery manufacturers. Strategically acting car manufacturers even go directly to the mines to secure the raw materials. This to ensure the availability of the metals only, since the prices follow the market developments and the resulting pricing at the LME: it is about to have “access to the excavation output” of the mines for the requested raw materials.

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Laggard car manufacturers will suffer

All this explains why laggards in electric mobility are challenged already by the sourcing process of the important components such as batteries. For instance, if a manufacturer plans to build 1 million electric cars in 2030 the relevant “items” must have been secured already today – 2023 – with the battery manufacturer (which then have to secure the raw materials) or the mines. For being able to order these “items” the car manufacturer must have developed the respective technologies and building groups in a way to actually know which raw materials in which quantities are needed.

This is a bigger challenge than in might look like from a distance. If they go for NMC batteries, they decide for a well predictable technology making engineering and calculation easy. However, not only are these batteries expensive but also potentially dangerous. And it is likely the NMC batteries playing a much smaller role since the market wants contemporary, cheap batteries. If they decide for the cheaper, safer, and less critical (regarding raw materials) LFP batteries (lithium-iron-phosphate) they also have to design and develop the car differently to compensate for the higher weight and the lower energy density (thus, bigger size) of the batteries. Or they decide for the newly introduced LFMP batteries (lithium-iron-manganese-phosphate) which challenge even the NMC regarding energy density (and range). For these batteries, too, design and development of the car must be different. Or they go for the new SIB (Sodium-Ion-Battery) – they will come in serial production in 2023/2024. The characteristics of the SIB are convincing, they are cheap, contain no critical and scarce materials, offer a decent energy density, and are robust. And there are the solid-state batteries but despite all promises they still are not ready for large scale serial production.

Batteries are the most expensive parts in a car. Car manufacturers lacking know-how in batteries and if they do not plan own battery manufacturing facilities, they will not be able to increase the vertical integration in their production, have less value adding processes and gain less profit, thus have less flexibility in their pricing and lose market power (this article was written in German before Tesla has dropped its prices: this is the perfect example for such a challenge). This is not what the owners and shareholders of a car company want. All this is causing the laggards problems and the car manufacturers particularly in Japan – all Japanese car manufacturers are laggards – are intensively in search for solutions.

Many analysts have said the year 2025 will become the year of truth of their predictions: first car manufacturers will face severe pressure, they either will be taken over, look for a fusion, go into joint ventures, or even will cease their production. And this is not a conspiracy theory: Honda, for instance, communicated a joint venture with Sony. But the car from Honda/Sony (AFEELA) will not be launched before 2025 in the USA, the question arises whether Honda will have enough money to survive until 2025 – this in light of the recent sales figures in the USA showing a massive drop of -33% in 2022. Or will Sony take over Honda and become a car manufacturer?

And all this because of a light metal with the name Lithium – which is not scarce, but short on supply.

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Article Lithium in Afghanistan

https://www.dhirubhai.net/pulse/lithium-afghanistan-gold-dust-nicolas-boehmer

#lithium #battery #electriccar #futuremobility #BEV