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Supply Constraints Could Put the Brakes on Electric Vehicle Rollouts

Supply Constraints Could Put the Brakes on Electric Vehicle Rollouts

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“It will be impossible for many EV targets to be achieved” on the current path, says Wood Mackenzie research director Gavin Montgomery.

Investments in mining projects to support key materials for batteries could come too late to meet rising demand, new research says, stoking fears of a battery materials crunch.

Supply chain constraints could start to bite as soon as the mid-2020s, according to Wood Mackenzie’s latest Global Battery Raw Materials Long-Term Outlook.

Part of the reason is that pricing for many key materials has fallen in recent months, taking away the incentive for mining companies to invest in new projects.

Spot prices for lithium carbonate, for example, have dropped by almost $7,000 per ton since June 2018, or by around 40 percent.

And the price of cobalt, which mostly comes from the troubled Democratic Republic of the Congo (DRC), has dropped “more with a crash than a steady decline” in the first half of 2019, said Gavin Montgomery, research director for battery raw materials at WoodMac.

Low cobalt prices may defer some mine projects and are likely to result in reduced artisanal output from the DRC, Montgomery said. The stronger pricing needed to encourage new projects could be some time in coming, since the industry is facing an oversupply of cobalt intermediates that could last at least out to 2024.

Batteries continue to get bigger and so require more materials. It’s possible that potential future shortages could be avoided with new battery technologies that use less of the at-risk metals. If not, the targets in place in many countries for expanding EVs and curbing internal combustion engines could be under threat, said Montgomery.

Total passenger EV sales, including hybrid electric vehicles, were up more than 24 percent last year, WoodMac says. The market research firm expects EVs to account for 7 percent of all passenger car sales worldwide by 2025, rising to 14 percent by 2030 and 38 percent by 2040.

WoodMac’s research reinforces long-held concerns about how the mining sector will cope with unprecedented demand for battery materials, some of which have only had limited use until now.

A recent analysis by John Petersen, a non-executive director at the manganese mining firm Giyani Metals, pointed to cobalt, in particular, as being at risk because China controls most of the supply that goes into batteries.

“At some point in the back half of the next decade, there won’t be a reliable cobalt supply chain for any non-Chinese company that makes batteries for transportation and stationary applications,” Petersen predicted.

Simply too much demand?

Beyond worries about short-term supply, which is largely related to the rate at which new mines can come online, some experts express concern that massive growth in battery demand could ultimately outstrip commercially available reserves.

Last month, for example, a group of scientists in the U.K. led by the Natural History Museum’s head of earth sciences, Professor Richard Herrington, warned that meeting the country’s 2050 EV target would require a quantity of metals far beyond the scope of today’s global mining operations.

“We would need to produce just under two times the current total annual world cobalt production, nearly the entire world production of neodymium, three-quarters the world’s lithium production and at least half of the world’s copper production,” said the researchers.

Other sources have dismissed such concerns, however, and called the analysis misleading.

“What many studies and predictions fail to take into account is the use of technology and innovative processes that will be in place well before 2050,” said Jayson Dong, policy officer at the European Association for Electromobility.

Existing and potential reserves of metals “will be able to meet the demand,” he asserted. Nevertheless, he called for investment and regulation to support battery recycling and second-life applications.

Logan Goldie-Scot, head of energy storage at Bloomberg New Energy Finance, said the Natural History Museum analysis “is quite misleading because it’s looking at a long-term future demand target and not assuming any change on supply.”

That is not how any resource industry has ever evolved, he said. “There is a huge amount of investment and scaling up happening for lithium, nickel [and] cobalt at the moment,” he commented.

Bloomberg New Energy Finance’s de-risked lithium supply estimate “is enough to comfortably supply global battery demand until the mid-2020s, at least,” said Goldie-Scot.

“Beyond that, you don’t tend to see new supply announcements more than a few years out, which is why you’re not able to predict which mine will be providing lithium in 2035.”

Source : greentechmedia
Anand Gupta Editor - EQ Int'l Media Network

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