Me­tals crunch risks slam­ming brakes on e-ve­hi­cle boom

Nickel short­age may soon weigh on Tesla and other in­no­va­tors, writes Olivia Rudgard in San Fran­cisco

The Daily Telegraph - Business - - Technology Intelligen­ce -

Tesla’s quar­terly earn­ings calls are rarely dull. The most re­cent one was no ex­cep­tion. In July, chief ex­ec­u­tive Elon Musk made a di­rect plea to the min­ing in­dus­try for an el­e­ment he said he was des­per­ate to get his hands on.

“Tesla will give you a gi­ant con­tract for a long pe­riod … if you mine nickel ef­fi­ciently and in an en­vi­ron­men­tally sen­si­tive way,” he said.

The com­pany is due to un­veil new bat­tery tech­nol­ogy at its highly an­tic­i­pated “bat­tery day” to­day.

What­ever tech­nol­ogy it will an­nounce, it is cer­tain to still need nickel and lithium – two el­e­ments that are not al­ways easy to get.

Their grow­ing scarcity is weigh­ing on the en­tire elec­tric car in­dus­try. De­mand for nickel is ex­pected to rise six-fold by 2030.

“All of us in the in­dus­try have known that there is an abyss com­ing,” says Martin Vy­dra, pres­i­dent and di­rec­tor of Giga Me­tals, which is aim­ing to be­come a ma­jor sup­plier of cobalt and nickel through a pro­posed min­ing project in Bri­tish Columbia, Canada. From the Arc­tic wastes of north­ern Siberia to the trop­i­cal is­lands of Aus­trala­sia, nickel de­posits can be found around the globe – but min­ing them in suf­fi­cient quan­tity and with­out dam­ag­ing the en­vi­ron­ment rep­re­sents a big chal­lenge.

Of the 2.1m tons of re­fined nickel that are pro­duced an­nu­ally, only 400,000 tons are in a form that can eas­ily be con­verted into nickel sul­phate, re­quired for elec­tric car bat­ter­ies. De­mand is ex­plod­ing, with elec­tric car sales tak­ing off in Europe, and nickel con­sump­tion by the bat­tery mar­ket pre­dicted to hit half a mil­lion tons by the late 2020s.

Nickel min­ing projects have shifted to be­come more fo­cused on nickel la­t­erites, largely based in In­done­sia, which are eas­ier to find than the his­tor­i­cally more fre­quently mined form of nickel sul­phide, but these re­quire more money to re­fine.

Nickel also comes from projects in Mada­gas­car and the Philip­pines, but there is grow­ing un­ease about the re­li­a­bil­ity of these sup­ply chains, es­pe­cially since refin­ing ca­pac­ity is dom­i­nated by China. At the mo­ment, the bat­tery mar­ket is dwarfed by other uses for the metal, such as the pro­duc­tion of stain­less steel, so is hav­ing a limited im­pact on prices and de­mand. But the ur­gent need to build longer-range and smaller, lighter bat­ter­ies is push­ing man­u­fac­tur­ers to­wards for­mu­las with a greater nickel den­sity. Au­tomak­ers like Musk fear a loom­ing crunch.

A flurry of re­cent nickel projects in Canada and Euro­pean coun­tries, in­clud­ing Fin­land and Nor­way, are promis­ing, but not enough to head off the ex­pected price crunch within the next decade. Musk has ex­pressed a de­sire to phase out cobalt from Tesla’s bat­ter­ies, cit­ing its high cost and eth­i­cal con­cerns over the Demo­cratic Repub­lic of the Congo’s ar­ti­sanal mines, but in June signed a long-term deal with Glen­core to source the metal.

Al­most three quar­ters of the world’s cobalt comes from the DRC, and the rest is scat­tered from sources around the globe. This means it is vul­ner­a­ble to lo­cal po­lit­i­cal and lo­gis­ti­cal is­sues.

Ear­lier this sum­mer, prices spiked be­cause of Covid-19 lock­downs at South Africa’s sea­ports, which are the main ex­port points of cobalt hy­drox­ide from the DRC and Zam­bia.

Phas­ing out cobalt is a safety is­sue, be­cause re­duc­ing its lev­els makes a bat­tery more likely to spon­ta­neously burst into flames, and also re­duces life cy­cle ca­pac­ity. A shift to solid-state bat­ter­ies makes the elim­i­na­tion of cobalt more likely, be­cause of the lower risk of over­heat­ing. “In 10 years, is there a pos­si­bil­ity cobalt could be elim­i­nated from lithium-ion bat­ter­ies? I would say that might be a pos­si­bil­ity,” says Vy­dra.

But ma­jor bat­tery man­u­fac­tur­ers, in­clud­ing LG Chem and SK In­no­va­tion, have re­peat­edly promised that new low-cobalt for­mu­la­tions would soon be com­mer­cially vi­able, and re­peat­edly missed their own tar­gets. Cobalt­fo­cused projects are still go­ing ahead, in­clud­ing a Bill Gates-backed ini­tia­tive by start-up KoBold Me­tals.

“These tech­nol­ogy changes, which are quite com­monly talked about by bat­tery com­pa­nies and peo­ple in the sup­ply chain as rel­a­tively easy to do, they’re re­ally not, they’re very chal­leng­ing,” says Cas­par Rawles, of Bench­mark Min­eral In­tel­li­gence.

Robin Goad, pres­i­dent and chief ex­ec­u­tive of For­tune Min­er­als, a Cana­dian min­ing com­pany look­ing to es­tab­lish a project in the coun­try’s North­west Ter­ri­to­ries, said he was “quite con­fi­dent” in pre­dict­ing a short­age of cobalt within the next five years.

“Hav­ing a North Amer­i­can sup­ply, where we have the rule of law, where we have very strin­gent en­vi­ron­men­tal reg­u­la­tions as well as so­cial li­cences to op­er­ate, and hav­ing trans­parency from the min­ing ac­tiv­ity right through to the pro­duc­tion of the cobalt chem­i­cals, is very de­sir­able,” he said.

For all three el­e­ments, a ma­jor prob­lem is a lack of in­vest­ment in get­ting them out of the ground.

In­vestors are likely to be scared off by dis­as­ters in­clud­ing the bank­ruptcy of Ne­maska Lithium last year, hav­ing spent C$411m (£242m) fail­ing to launch a mine in Que­bec.

Low prices also make things tough. Buzz around bat­tery and TV de­mand pushed cobalt prices up in 2016 and 2017, but they fell in 2018 and have re­mained low since. Lithium prices have also fallen be­cause of a glut of sup­ply and China’s cut in sub­si­dies for elec­tric car com­pa­nies.

“It’s hard for these com­pa­nies to at­tract cap­i­tal, even though they could have very vi­able projects. When the prices are low, in­vest­ment money goes else­where,” says Rawles.

This raises the prospect of de­mand spik­ing and the sup­ply fail­ing to ma­te­ri­alise. Min­ing is a slow-mov­ing in­dus­try. A mine which moves from dis­cov­ery to de­vel­op­ment in seven years is con­sid­ered a speedy project.

Musk’s prom­ise in July to give “gi­ant con­tracts” to nickel-min­ing com­pa­nies may go some way to re­as­sur­ing the in­dus­try of fu­ture prof­its. But in such a slow-mov­ing sec­tor, it’s un­likely to stave off a short­age.

‘In 10 years, is there a pos­si­bil­ity cobalt could be elim­i­nated from lithium-ion bat­ter­ies? I would say that might be a pos­si­bil­ity’

‘These tech changes, which are quite com­monly talked about by bat­tery com­pa­nies as rel­a­tively easy to do, they’re re­ally not’

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.