EV cart ahead of critical minerals horse
Material shortfalls may derail American e-mobility ambitions Metal Tech News – November 24, 2021
Last updated 11/23/2021 at 3:46pm
Does the United States' electric vehicle ambitions put the cart before the horse? Or, more precisely, place the EVs ahead of the raw material supply chains needed to build them?
The Biden administration wants half of all vehicles sold in the U.S. to be electric by 2030. This comes at a time when the European Union has called for a complete transition away from fossil-fuel-burning automobiles by 2035, and China is making its own massive push into the EV sector.
This envisioned electric vehicle revolution, however, is not as simple as tasking engineers to draw up designs for awe-inspiring new vehicles and then retooling auto factories to drop in electric motors instead of internal combustion engines and battery packs in the stead of gas tanks.
From strictly an automaking perspective, a 10- to 15-year transformation from manufacturing the petroleum-powered vehicles that have been the mainstay of the automotive sector since its founding more than 130 years ago to the electric cars, trucks, and SUVs of the future is revolutionary but doable. Coming up with enough minerals and metals to build the envisioned electric mobility future, however, is a much higher hurdle that will test the meddle of the governments, automakers, and people behind the EV revolution.
This is because the 13 million new EVs forecast to be put on global highways each year by 2026 are going to require massive new supplies of the cobalt, graphite, lithium, manganese, nickel, and other materials to manufacture the batteries that power them and rare earths for the highly efficient motors that drive them.
This need for vast new sources of battery materials and rare earths is not completely lost on the automotive sector that has largely gotten behind the e-mobility transition.
In a September interview with Detroit News, Ford Motor Company CEO Jim Farley addressed the disconnect between global EV ambitions and the mines that will supply the materials to build these low-carbon dreams.
"We have to bring battery production here, but the supply chain has to go all the way to the mines," Farley said. "That's where the real cost is, and people in the U.S. don't want mining in their neighborhoods. So, are we going to import lithium and pull cobalt from nation-states that have child labor and all sorts of corruption, or are we going to get serious about mining?"
How serious does the U.S. need to get?
According to S&P Global Market Intelligence estimates, EVs manufactured in the U.S. will demand nearly 150 gigawatt-hours of battery capacity by 2025, a roughly 750% increase over the 20 GWh of batteries that went into American EVs last year.
Roughly 30,000 metric tons of cobalt, 165,000 metric tons of graphite, 125,000 metric tons of lithium, and 95,000 metric tons of nickel will be needed each year to manufacture these batteries.
In comparison, all sectors of the U.S. economy consumed approximately 8,700 metric tons of cobalt, 35,000 metric tons of mined graphite, 2,000 metric tons of lithium, and 200,000 metric tons of nickel during 2020, according to the United States Geological Survey.
This means that the batteries powering EVs will singlehandedly increase U.S. cobalt consumption by roughly 260%, graphite by 470%, lithium by 2,500%, and nickel by 50%.
It is a similar story for the neodymium and praseodymium – two in the suite of 17 rare earth elements – used for permanent magnets that make EV motors and wind turbine generators more efficient.
The price of neodymium has rocketed 280% over the past year, from US$69.10 per kilogram in November 2020 to US$193.70/kg today.
Likewise, praseodymium has shot up 289% from US$67.05/kg to US$194/kg over the same span.
More concerning than this nearly tripling in the price of these magnet rare earths is the shortage of supply that it represents – a shortfall that could limit EV production or compel automakers to use less efficient motor alternatives.
The costs of minerals and metals demanded by the EV sector are expected to continue to climb as the U.S., EU, China, and the rest of the world compete for the same raw materials.
While U.S. automakers, policy leaders, and mining companies have begun to address the skyrocketing need for the minerals and metals critical to the EV revolution, many market experts believe these initiatives may be too little, too late.
"Policymakers and industry actors are working to secure a healthy EV mineral supply chain; however, those efforts might pale in comparison to the scale and pace of mineral demand growth," Reed Blakemore penned in "The role of minerals in realizing US transportation electrification goals," a November report by the Atlantic Council.
Caspar Rawles, chief data officer for Benchmark Mineral Intelligence, agrees with these findings by the Washington, D.C. think-tank.
"At the moment the investments are falling short to ensure stable supply of battery raw materials, and investments are lacking for regional mid-stream processing capacity such as chemical refining, pre-cursor and cathode or anode," Rawles told Metal Tech News in an email.
Beyond just the inability to manufacture enough batteries, the looming critical raw materials supply-demand imbalance could make EVs too expensive for many consumers.
In a global effort that was started by Tesla Inc., battery and automakers have been pushing the lithium-ion battery manufacturing costs below US$100 per kilowatt-hour of storage, considered a benchmark for making EVs affordable for the masses.
The U.S. Department of Energy Vehicle Technologies Office estimates that this effort has driven lithium-ion battery costs down by 87%, from US$1,237/kWh in 2008 to US$157/kWh this year.
This rapid downward trend, however, seems to be at its end.
"Benchmark's domestic Chinese battery-grade lithium carbonate price has risen 357% year to date on extremely strong demand and a lack of supply response, this combined with other rising inputs cost including nickel, cobalt, power, shipping, and reagents has threatened the first year-on-year battery price increase ... in the modern lithium-ion battery era," Rawles penned in the email.
These battery price increases are compounded by the fact that the transition to electric transportation is a global phenomenon that catapults U.S. automakers into fierce competition for raw materials on the international stage.
"Regional players in the U.S. and EU will need to act now to start to lock up supplies of minerals in long-term supply deals to secure the minerals they will need at the most competitive price," Rawles added.
To ensure that the U.S. has the minerals and metals needed to meet its transportation electrification goals, the Atlantic Council has three primary recommendations for the Biden administration and lawmakers on Capitol Hill:
• Aim for an overabundance of mineral supplies by investing in best-in-class domestic mineral resources and expertise while collaborating with partner countries to grow capacity throughout the mineral supply chain.
• Encourage cross-industry partnerships to reinforce the EV value chain from mine to road.
• Place sustainability at the forefront of the EV mineral conversation to establish the centrality of mineral resiliency, taking action to ensure verifiable environmental stewardship, sustainable investment practices, and good governance at home and abroad.
"The Biden administration's goals for electric vehicle deployment will have a transformative impact on the broader decarbonization and economic goals of the United States," Blakemore penned in the Atlantic Council report. "Minerals will be critical to make that transformation successful, and policymakers should not forget their importance as the policy pathways for EV deployment fall into place."
Otherwise, make sure the mining sector workhorse is pulling America's EV ambitions cart.