Critical Minerals Alliances 2022 - September 12, 2022
With even the most basic models boasting sophisticated driver-assist, navigation, infotainment, diagnostics, and other advanced digital systems being fed power from oversized versions of the lithium-ion batteries found in your laptop or smartphone, electric vehicles are becoming personal computers that you can drive.
While this puts a whole new spin on the term mobile computing, riding around in a zero-emissions vehicle with enough processing power to put your PC to shame, especially autonomous models that are estimated to have the computing power of 200 laptops, means that EVs need a lot more critical minerals than their internal combustion engine forebearers.
Setting aside the aluminum and steel common to both, the International Energy Agency estimates that the EVs of tomorrow require more than six times the minerals and metals than ICE vehicles of yesteryear.
Between the electric motors, lithium-ion batteries, cutting-edge infotainment systems, and high-strength alloys, the average EV requires roughly 25 of the 50 minerals and metals that have been deemed critical to the United States.
Beyond the critical minerals, electric cars, trucks, and SUVs need a little gold and silver for the circuit boards and critical electrical connections, and a whole lot of copper to wire everything together.
With global automakers expected to be producing roughly 30 million electric vehicles per year by 2030 and as many as 82 million by 2040, the burgeoning EV revolution is demanding that global mining companies rapidly scale up supplies for the gamut of industrial, precious, and critical minerals that go into these computers-on-wheels.
Automakers transitioning their assembly lines from the petroleum-fueled vehicles of the past to the electric cars of the future currently have a particularly ravenous appetite for the minerals and metals that go into the lithium batteries powering these modern transportation marvels.
With a growing number of smartphones, laptops, tools, kitchen gadgets, and plethora of other cordless electronics, lithium-ion batteries have become an integral component of how we live, work, and play. Adding how we travel to this list, however, is driving exponential growth in the demand for these rechargeable batteries, and the materials they are made of.
It simply takes a lot more energy to roll down the highway at 65 miles per hour than it does to call a friend, check your business email, or send a Tweet.
For example, the lithium-ion battery powering a standard range Tesla Model 3 weighs in at just over 1,000 pounds. That is equal to about 500 laptop or 8,000 smartphone batteries.
So, while our increasingly cordless world has driven enormous demand for lithium-ion batteries and the materials they are made of over the past two decades, this pales in comparison to what is going to take to trade in the roughly 1 billion ICE vehicles currently traversing global highways to the smarter EVs of the future.
"The supply chain is geared for making batteries for laptops and mobile phones, it is not geared for making batteries for the size of a car," said Simon Moores, founder of Benchmark Mineral Intelligence, a global leader in lithium battery supply chain analysis.
To scale up the lithium battery sector to meet the demands of the EV revolution, automakers and battery manufacturers are building gigafactories around the world – giga standing for the multimillion watt-hours of battery storage each one of these facilities will be churning out each year.
Benchmark is tracking more than 300 of these super-sized lithium-ion battery factories in various stages of development to meet EV demand.
Batteries out of these gigafactories mean giga-scale quantities of minerals and metals being fed in.
While each battery and automaker has its own special formula, the average lithium-ion battery powering a sedan-sized EV needs around 146 lb of graphite, 88 lb of nickel, 29 lb of cobalt, and 20 lb of lithium.
Based on current formulas and technologies, EV batteries alone would need around 12 billion lb of graphite, 7.2 billion lb of nickel, 2.4 billion lb cobalt, and 1.6 billion lb of lithium per year by 2040 in order to manufacture enough of these computers on wheels to meet global government and automaker goals.
This equates to five times more graphite, 20% more nickel, six times more cobalt, and seven times more lithium than was produced at every mine on Earth during 2021.
To scale up the gigafactory inputs at this scale, Benchmark's Moores says automakers will "need to become miners" – investing both their money and influence into ensuring there are enough materials to build their vision of getting everybody into a battery-powered computer on wheels.
This is not lost on automakers that are increasingly investing in the mining companies that will supply the building blocks of the EV revolution and lending their voice to a growing chorus calling for more mining in countries with strong environmental and human rights standards.
"We have to bring battery production here, but the supply chain has to go all the way to the mines," said Ford Motor Company CEO Jim Farley. "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?"
With battery metal prices skyrocketing, Tesla CEO Elon Musk is getting serious about mining – suggesting that the renowned electric automaker might need to get into the business of digging up the rocks with the minerals required to meet the demands of its growing EV production.
"Price of lithium has gone to insane levels!" Musk tweeted on April 8. "Tesla might actually have to get into the mining & refining directly at scale, unless costs improve."
Ingredients for the lithium batteries powering the EV revolution are not the only mined materials keeping auto executives up at night. Responsible and secure supplies of the rare earth elements that transform the electricity stored in those batteries into motion – at the same time delivering high-fidelity sound from the state-of-the-art infotainment system – are also high on the priority list.
When it comes to EVs, the biggest use for rare earths is in the motors that silently deliver enough torque to the ground to rocket a Ford Lightning, the electric version of the classic F-150 pickup, from 0 to 60 in about 4.4 seconds.
While automakers are looking at alternatives for EV motors, there are no options currently available that deliver this kind of power to the ground as effectively and efficiently as those equipped with powerful rare earth magnets.
The problem is these magnets are almost exclusively made in China, a country not highly regarded for its environmental protections, which has been known to leverage its near-global monopoly of these tech elements for geopolitical purposes.
While mines outside of China, including MP Materials Corp. Mountain Pass operation in California's Mojave Desert, are beginning to produce rare earths, the Middle Kingdom still dominates the ability to separate the mix of 14 rare earths produced at these mines into the individual elements critical to a broad array of modern technologies and then upgrading some of the REEs into the powerful permanent magnets the electric automakers need and want.
Looking to bypass China, General Motors has cut a deal to buy rare earth materials and magnets to be produced at a new facility MP Materials is building in Texas.
This 200,000-square-foot rare earth metal and magnet manufacturing plant, which is slated to begin ramping up production in 2023, will initially have the capacity to produce roughly 1,000 metric tons of finished neodymium-iron-boron magnets per year, enough for approximately 500,000 EV motors.
MP Materials Chairman and CEO James Litinsky says the involvement of automakers is vital to establishing a sustainable and secure supply of rare earth magnets.
"Restoring the full rare earth supply chain to the United States at scale would not be possible without U.S. manufacturers like GM recognizing the strategic consequence and acting with conviction," he said.
GM's conviction includes several similar partnerships aimed at creating scalable, resilient, sustainable, and North American-focused supply chains for the materials needed to build at least 1 million EVs in North America alone.
"We are building a resilient and sustainable EV manufacturing value chain in North America, from raw materials to cell manufacturing to electric drive motors and beyond, further accelerating GM's vision to support a mass market for EVs," said Shilpan Amin, vice president of global purchasing and supply chain at GM. "Our work with MP Materials is another bold step forward that will help ensure that we meet our goal to lead the EV industry in North America in more than just sales."
Further details of efforts to establish a mines-to-magnets rare earth supply chain in North America can be read at Seven world transforming rare earths in this edition of Critical Minerals Alliances.
Whether it is the minerals and metals needed for lithium-ion batteries, the rare earths that transform energy stored in those batteries into motion, or the array of other minerals critical to manufacturing electric vehicles that are as much about computing power as horsepower, the International Energy Agency urges swift investments into mines and other suppliers of these critical raw materials.
In its "Global EV Outlook 2022" report, IEA points out that demand for lithium is projected to increase sixfold to 500,000 metric tons by 2030 if enough batteries are going to be manufactured for EVs and to store enough intermittent renewable energy to meet the climate pledges of global governments. This means that the equivalent of 50 new average-sized lithium mines would need to be developed over the next eight years.
Benchmark Mineral Intelligence, the foremost authority on lithium-ion battery supply chains, estimates that US$42 billion of investment will need to be made in the lithium sector by 2028 to meet the forecast 2030 demand.
While lithium is experiencing the largest percentage growth due to the previously small market, the tonnage of graphite, nickel, and even cobalt being demanded for lithium-ion batteries eclipses the namesake metals.
Considering the long lead times for permitting and developing a mine, especially in countries with strong environmental standards, global commodity experts agree that investments in the suppliers of rare earths, battery raw materials, and other critical EV minerals need to happen quickly to meet the downstream demands.
"Pressure on the supply of critical materials will continue to mount as road transport electrification expands to meet net zero ambitions," IEA wrote. "Additional investments are needed in the short term, particularly in mining, where lead times are much longer than for other parts of the supply chain."
If the required large mining investments are not made soon enough, a shortage of energy minerals will likely mean that global climate targets will not be met, and the costs of building the low-carbon electric grids and the EVs that plug into them will be higher than hoped.