Testing the metal of the electric vehicle revolution

Interest in battery metals has boomed in recent years. Battery technology has progressed significantly in the last 15 to 20 years due to the growing power demands of modern portable consumer electronics and the increasing adoption of renewable but variable power generation. In the last three years, rising metal demands for electric vehicles have caused constraints of material supplies to become a significant concern.

by Michael Giblin, Analyst at S&P Global Market Intelligence

Since 2010, growth in the EV market has been increasing steadily worldwide, and as the technology was adopted and promoted in China, the growth rate began to increase exponentially. This market surge, as well as technology advances in nickel-manganese-cobalt, or NMC, and nickel-cobalt-aluminum, or NCA, batteries and their enthusiastic application in EV powertrains saw a massive increase in cobalt demand specifically.


Electronics are powering cobalt market

Cobalt has seen sharp changes in the supply/demand dynamics as it is far less abundant than the other main components of batteries. Along with iron, nickel and manganese are significant components in steel manufacture — and steel manufacture is the main demand driver for these metals. Cobalt, however, is only used in small amounts in metallurgical products, which until recently, was the largest end-use of cobalt.

Battery demand for cobalt has grown in the last decade due to demand in electronics. With the large increase in EV adoption in Asia, Europe and North America and the Chinese government policy of encouraging the adoption of NMC batteries, the demand for and the price of cobalt soared in 2016.

Cobalt is used to improve the stability of batteries and increase the output of the cell. Unlike lithium or nickel, cobalt is rarely the primary product of an operation; therefore, the mined cobalt supply has usually depended on the market for the mines’ primary commodity – generally copper or nickel. The majority of mines producing cobalt as a by-product are nickel sulfide or limonite deposits that are geographically dispersed.

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However, the copper belt in the Democratic Republic of the Congo, or DRC, is globally unique due to its copper-cobalt deposits. The cobalt concentration in mined ores in the DRC is significantly higher than elsewhere. Despite having relatively few cobalt producers, the DRC accounts for well over half of the global production, which is set to increase significantly in the coming years.

Reports of children working on artisanal mine sites have raised questions regarding the ethical sourcing of cobalt. Instances of minors working on artisanal mines are of serious concern to end-users of cobalt products and have resulted in increased scrutiny of cobalt supply chains, from artisanal mines to refiners via traders and intermediaries and from suppliers in general. The vast majority of cobalt mining in the DRC, however, is conducted in large industrial operations by multinational companies such as Glencore, Eurasian Resources Group, China Molybdenum and Jinchuan.

Cobalt — and copper — supply is expected to increase significantly in the DRC, driven by large industrial sites such as Glencore’s Kamoto project and Eurasian Resources Group’s Metalkol RTR project. Artisanal activity is also expected to increase given the demand from traders buying heterogenite, a cobalt oxide mineral, for immediate export, frequently to China.



Surging demand for lithium

The common metal in current Li-ion battery technology is lithium. Lithium ions move from the anode to the cathode during use, producing the charge. Three Latin American countries, Bolivia, Argentina and Chile, host the majority of the global lithium reserves, followed by Australia and China.

Australia is currently the largest source of lithium globally, with production coming from hard-rock mining of spodumene-bearing pegmatites. While most existing Australian operations produce a spodumene concentrate, direct-shipping ore for export to Asia is also produced. Recently there have been calls to develop a local battery product-processing hub to add value to these mined lithium products before they are exported from the country.

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While the majority of lithium reserves are in Latin America, production in this region is exclusively from brines sourced from salt lakes, or salars. Supply growth in the region has lagged, but this could potentially change in the coming years with significant increases being touted by the large lithium brine producers in the region, SQM and Albemarle.

Bolivia, which hosts the largest reserves globally, does not yet have a producing project. About 39 million tonnes of lithium oxide are hosted in a single deposit, the Uyuni Salt Flat. Efforts are continuing to bring this source into production.

 

Nickel sulfate as a final product?

Nickel is widely utilised in the current generation of battery designs, and a higher nickel content in batteries allows for a greater energy density. Increasing the nickel content in NMC batteries has been a design priority for manufacturers – reducing the cobalt content. While the higher energy density is beneficial to increasing the range of an EV, the increased nickel content in batteries also reduces the stability of the battery. The release of NMC811 batteries, with eight parts nickel, one part manganese and one part cobalt, with new EV models has been delayed by some manufacturers to 2019.

As nickel uses are primarily in steel and alloy manufacture, demand from batteries has had little impact on the demand/supply picture in recent years. While battery demand may continue to be a minor component of nickel demand overall, only about 50% of nickel production is in a form that is suitable for use in battery applications. This demand will most certainly increase significantly in coming years.

Nickel supply suitable for battery uses fall into two categories: sulfide and limonite. Sulfide deposits are the larger of the two. However, they have been seeing gradually decreasing output, with few new deposits coming online to replace mature and depleting ones. Limonite deposits constitute about 15% of the global supply, and output is increasing gradually. Processing ore from this deposit type requires high-pressure acid leaching, or HPAL, technology. This type of processing is challenging to manage due to the use of high pressures and temperatures combined with corrosive chemicals.

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New upcoming nickel HPAL operations are indicating that they may produce nickel sulfate as their final product, along with cobalt sulfate. These sulfates are the ideal feedstock for battery manufacturers. While cobalt sulfate does not seem to be demanding a price premium, nickel sulfate is, which places such projects at an advantage over conventional sulfide producers.

Current developments in battery technology

Risks in the cobalt supply chain, including material costs and supply concerns, continue to encourage development in battery technology. NMC batteries have seen a number of developments since their adoption, and reducing the cobalt content has been a long-running approach. The equal proportions of metals in the earlier NMC111 batteries were changed to the current NMC532 and NMC622 ratios, reducing the cobalt and manganese content in favor of nickel, and the NMC811 battery is currently in the process of being commercially deployed. The NCA batteries used in Tesla vehicles also feature a reduced cobalt content, which Elon Musk has highlighted in response to concerns about cobalt-sourcing risks.


Are there viable alternatives to cobalt in Li-ion batteries?

Other battery technologies remain in the wings or in development. These include lithium titanate, or LTO, batteries. Battery technology is frequently discussed in terms of the nickel, cobalt or other metal content of the cathode. LTO batteries differ from other Li-ion batteries in that lithium titanate is used to coat the anode in place of graphite. LTO batteries have displayed significantly higher cycle lives and very rapid charging in addition to being more suitable for low-temperature environments. LTO batteries, however, compare unfavorably to NMC batteries in their energy density and voltage output, which may limit their attractiveness for more widespread application in EVs.

Increasing cobalt supply in coming years — with an expected 12% CAGR to 2021 — the ability and plans for capacity and production increases from both hard-rock and brine lithium sources, and the relatively small effect of battery demand on the overall nickel market indicate that supply constraints will be manageable in the short term.
— Michael Giblin, analyst at S&P Global Market Intelligence

Lithium iron phosphate, or LFP, batteries were an early leader for use in EVs. More recently, NMC batteries became the preferred option as Chinese new energy vehicle, or NEV, credits have, from 2018, favored new vehicles that utilize batteries with higher energy densities and vehicle ranges. Going forward, LFP batteries may be combined with LTO battery features to provide an idealized battery for certain uses.

LMO batteries featuring lithium manganese oxide have been a mainstay of the EV industry for a number of years. LMO batteries are rarely used in isolation anymore and tend to be used in combination with NMC battery technology. This allows automakers to take advantage of the best features of both; however, the resulting cars still don’t have the driving range exhibited by NMC or NMA battery EVs.

 

Developments in technology could alter mineral demand

Research continues on other battery technologies such as solid state, lithium air or lithium sulfur batteries, all of which place less reliance on scarcer metals. However, these battery technologies are as yet commercially unproven and are unlikely to reach commercialisation in the next 10 years.

Many questions have been raised on whether material supply restrictions will affect the future supply and demand of EVs. Increasing cobalt supply in coming years — with an expected 12% CAGR to 2021 — the ability and plans for capacity and production increases from both hard-rock and brine lithium sources, and the relatively small effect of battery demand on the overall nickel market indicate that supply constraints will be manageable in the short term.

Longer term, a variety of battery technologies are available, and perhaps suitable, for different use applications, i.e., public transport versus consumer vehicles, large commercial vehicles versus two-wheelers, or consumer electronics versus grid-scale energy storage. The variability of battery technology allows manufacturers to select the battery designs that best suit their product, meaning there may not be a one-fits-all battery type of the future.

Product designers will base their decisions on the cost, life, power density and charging times of the battery units. While supply risk management and technology performance will be issues that miners and end-use manufacturers will have to navigate, these need not halt further development and adoption of mobile or static energy storage solutions.