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Metals are jostling for position to be a part of the next wave of battery technology for electric vehicles

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Assumptions of how many electric vehicles are going to be on the round in 10 or 20 years are subject to all sorts of factors: what will government policies be? What will be the price of gasoline and diesel? How quickly can OEMs build them and will the public accept them?

Another huge question: batteries. Not just whether the capacity to build them can be added quickly enough but the more complex question of whether the metals that they are built out will be in adequate supply.

That was the key focus of the first-ever S&P Global Platts Battery Metals Conference in New York on Tuesday. Whether there is going to be adequate metals supply, and which metals will be desired, was the overriding subject of a day-long debate on the first day of the two-day conference.

The chemistry of the individual battery creates different strengths and weaknesses. For example, Roman Kramarchuk, the head of technology policy and energy analytics for S&P Global Plats, said a lithium nickel/manganese/cobalt battery is good for electricity storage and vehicles, while a lithium iron phosphate battery can be preferred for storage and for larger vehicles. “There are always tradeoffs in terms of cost and density,” Kramarchuk said.

Even as battery improvements are being made, Kramarchuk cautioned that other technologies that batteries will need to compete with are not standing still. He said there was likely to be a natural gas vehicle conference going on somewhere at the same time as the battery metals conference, and “there is also hydrogen lurking in the background in terms of energy storage and transportation.”

Essentially there are three key risks for the future in lithium ion batteries, Kramarchuk said. The first is what changes in the price for lithium and other components mean for battery updates. The second is technology, and whether technologies are getting locked in during the construction of an auto plant, thereby possibly foreclosing the adoption of newer, better technologies. The third is policy and regulatory risks. “If you look, as soon as subsidies are pulled away, you see a tremendous drop in installed vehicles, even in places like Denmark,” Kramarchuk said.

“How easy is it to change chemistries if metals prices shift and there is pressure to use more or less of a metal?” Kramarchuck asked.

As Kramarchuck noted, developments in battery technology “are not necessarily a quick process. It can take 10 years to go from introduction to full development. These are the technologies of the future, but they will not sneak up on us.”

Plenty of lithium out there…in the ground

One issue that everyone agreed with is that reserves of lithium are not an issue. The world has ample reserves of it, though there is concern that the world is overly dependent upon Chile, Argentina, China and Australia.

And that’s a good thing, because the numbers on expected growth of lithium demand are staggering. According to figures presented by Kramarchuck, in 2017, the world produced 230 kilotons of lithium carbonate equivalent (LCE). Passenger light-duty electric vehicles were 15% of total consumption.

 In 2025, the figure for LCE  consumption by EVs is expected to be 280 kt given the projected increase in adoption, so that EV consumption of lithium in seven years will exceed the consumption of all lithium now.

In the case of cobalt, total production now is about 110 kt. By 2025, the expectation is that consumption just from EVs will be 80-100 kt. By 2030, that cobalt figure will be anywhere from 170-300 kt.

The irony is that even with projections of massive growth in demand over the next 15-20 years, the market is expecting a surplus of lithium in the next few years. Mustafa Hafeez, a director at Deutsche Bank, said the market is “still trying to understand the trajectory of the mineral in the coming year,” but there is a consensus that with new projects slated to come online in the near future, there will be a surplus of lithium. And then, as Hafeez noted, the market becomes “circular,” with the low prices discouraging investment in the projects that are going to be needed for the years after the surplus disappears.

The equity markets for companies that produce lithium, Hafeez said, “are pricing in a medium-term oversupply.”

The fact is that lithium prices have been weakening in recent months. While S&P Global Platts only recently launched its first lithium assessment, it already has seen a decline in its North Asia lithium hydroxide price to $18,000/mt from $19,000/mt in early September.  The website for Benchmark Minerals reported that the price was about $23,000/mt in March of this year.

Lithium mining coming back to the Carolinas

But the surge in prices over the past few years, as it always does in mineral markets, has incentivized the production of old reserves that in some cases have been closed for many years. A case in point: Piedmont Lithium, a publicly-traded mining company that is looking to revive an old mine near Charlotte, NC at a site that is also not far from existing processing facilities.

Howard Klein, a partner at RK Equity who filled in for Piedmont’s CEO on a panel, talked about synergies between “auto alley” stretching from Ontario down into the U.S. southeast, and what he said could become “lithium alley,” where not just Piedmont but other reserves are reactivated to supply the tremendous expected growth in demand.

Klein said at one point back in the 50’s, about 100% of the world’s lithium came from U.S. deposits near those of Piedmont, though that was well before the advent of the lithium ion battery.  Klein said he hoped Piedmont would produce its first lithium by 2021.

There is new transparency coming to the market for some key metals. The London Metal Exchange is seeking to launch a cash-settled lithium contract. An existing LME cobalt contract–which has issues with the fact that some of its deliveries might come from mines with child labor–is looking to add a cash-settled contract to provide more liquidity and help sidestep that issue.

“The next phase of supply needed will require time and capital,” Hafeez said. “Supply could once again play catch-up to a much steeper demand curve.”

It was clear from the conference that within the battery community, there will be a battle for what metals go into the next generation of batteries and at what percentage. Consistent through all the discussions is that cobalt use needs to be reduced. It has strong battery properties, including its chemical stability, but more than 50% of the world’s production comes from the Democratic Republic of Congo, the former Zaire, a country racked by decades of war.  Its price has been extremely volatile the past several years.

For example, Paul Casbar, a regional sales manager for Vale Americas Inc.–Brazil’s Vale owns the assets that formerly made up nickel giant International Nickel of Canada–made his pitch for nickel’s role.

His arguments: nickel’s energy density is a strong asset in building the next generation of batteries, it’s plentiful, its costs make it far more attractive than cobalt, and it comes from stable areas. But another area of stability–the chemical’s stability in the battery, a key selling point for cobalt–is problematic with nickel, Casbar said.

“That can be overcome by technology,” he said.

But nickel production would need an enormous ramp-up in output that at present has no reasonable chance of occurring, based on the numbers cited by Casbar. Nickel supplies would need to be 200 kt above what is produced today in the next few years “and that is something that has never happened before,” Casbar said.

Enter manganese. Christopher Ecclestone, a mining strategies at Hallgarten & Co., said more manganese into the battery chemistry–it is being used now with cobalt and nickel–“can give you the best results, but you pay top dollar.”

Finally, there’s vanadium. But that metal is heavy, and while it was referred to several times over the course of the day, the assumption is that vanadium has a bright future for stationary uses, like home storage batteries. Vanadium in EV batteries add too much weight to the car to be economically effective.

But vanadium’s weight will make it problematic to make its way into electric vehicles, where lithium’s light weight as well as density make it the perfect choice to be the base metal in any formulation for an EV battery. As was noted by one speaker, it isn’t going to be engineered out of batteries anytime soon.

That is unless the “holy grail” of batteries, as mentioned by several presenters, is developed: solid state.

The Wikipedia definition of solid state batteries is that they are “a battery technology that uses both solid electrodes and solid electrolytes, instead of the liquid or polymer electrolytes found in Lithium-ion or Lithium polymer batteries.” But as this story notes, a full description of how they work is tough to come by, because they don’t exist: “Unfortunately, the characteristics of a solid-state battery for EV use can’t be described yet, because no one has produced such a battery of the appropriate size and cost for an electric vehicle,” Power Electronics, an Informa publication, said of the technology.

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.