Elec­tric car boom turbo charges rare met­als race

The bub­ble has not burst – lithium will be cru­cial for the growth in green ve­hi­cles for years to come, writes Hasan Chowd­hury

The Sunday Telegraph - Money & Business - - Technology Intelligence -

More than 11,000ft up in the An­des moun­tains of south-west Bo­livia lies Salar de Uyuni, a re­mote salt flat that is home to some of the world’s largest re­serves of lithium. Largely un­tapped, the seem­ingly end­less ex­panse of bright white salt plains are on the verge of a frenzy of ac­tiv­ity as a global scram­ble erupts to ex­tract the metal and se­cure sup­plies for lithium-ion bat­ter­ies – a ba­sic build­ing ma­te­rial for the elec­tricve­hi­cle in­dus­try.

Last month, Ger­many struck a deal with Bo­livia un­der which YLB, a state-owned chem­i­cals firm, will work along­side Ger­man in­dus­trial com­pany ACI Sys­tems to pro­duce 40,000 tons of lithium per year in Salar de Uyuni once op­er­a­tions be­gin in 2022.

With the In­ter­na­tional En­ergy Agency pre­dict­ing the num­ber of elec­tric ve­hi­cles on the road glob­ally to hit 125m by 2030, the rush for lithium and other bat­tery met­als such as cobalt is at­tract­ing play­ers old and new. Es­tab­lished player Albe­marle is bring­ing lithium mines on­line in Western Aus­tralia, while Erik Prince, the founder of US pri­vate mil­i­tary con­trac­tor Black­wa­ter, has plans to launch a $500m (£392m) fund fo­cused on bat­tery met­als.

But valu­ing re­sources like lithium, which sud­denly grab the at­ten­tion of global in­vestors, is never easy. Prices have proved ex­traor­di­nar­ily volatile, plung­ing 29pc last year from $158 to $111 per kilo­gram and prompt­ing many to ask: has the lithium bub­ble al­ready burst?

Brian Menell, boss of min­ing spe­cial­ist Tech­met, says it re­mains a sound long-term bet.

“Last year there was a de­gree of over ex­u­ber­ance in some of these mar­kets in­clud­ing lithium and cobalt that re­sulted in spec­u­la­tive hype, and the price ran fur­ther than the fun­da­men­tals jus­ti­fied,” he says. Ei­ther way, Menell, who has worked in the min­ing in­dus­try for 25 years, thinks the price cor­rec­tion is now over­done. Since found­ing Tech­met in 2017, he has made bat­tery and tech­nol­ogy met­als, such as lithium, cobalt and nickel, his sole fo­cus. They will be “the key in­gre­di­ents of the tech Brine pools from a lithium mine be­long­ing to Us-based Albe­marle on the Ata­cama salt flat in Chile

rev­o­lu­tion”, he says, claim­ing the in­dus­try is at a nascent stage but high de­mand for bat­tery met­als in fu­ture is in­evitable as in­dus­try and global gov­ern­ments seek to curb emis­sions to tackle cli­mate change and poor air qual­ity.

Adding an ex­tra geopo­lit­i­cal twist has been China, which has worked doggedly over the past 15 years to se­cure con­trol of the best re­sources of bat­tery met­als “while ev­ery­body else was sleep­ing”, ac­cord­ing to Menell.

The need for Western na­tions to se­cure a role has grown more ur­gent, he says. “The drive to counter or bal­ance China’s con­trol is one that is in the minds of gov­ern­ment agen­cies in the US and Ja­pan and to an ex­tent in Eu­rope.”

Dr Ben­jamin Jones, manag­ing con­sul­tant at CRU Group, says: “Lithium de­mand is set to dou­ble be­tween 2017 and 2023, driven pre­dom­i­nantly by growth in EV pro­duc­tion and sales. De­mand for bat­tery-grade lithium is fore­cast to triple over this pe­riod.”

By com­par­i­son, de­mand for cop­per is ex­pected to in­crease only 2-3pc per year. De­spite the dif­fi­culty ex­tract­ing lithium from lo­ca­tions such as Bo­livia, where rain­fall can cause flood­ing, Menell pre­dicts strong de­mand.

“There will be a mas­sive dis­lo­ca­tion over the next five, 10 and 15 years be­tween the de­mand for these met­als and the sup­ply, which will re­sult in … [them] out­per­form­ing other com­modi­ties by many mul­ti­ples,” he says.

Lithium comes from two chief sources: ei­ther a hard rock called spo­dumene found in Aus­tralia, or a brine that forms be­neath the high­alti­tude salt flats of Chile, Ar­gentina and Bo­livia.

Though down­ward pres­sure on price is likely to en­dure for a few years as the mar­ket en­ters a phase of “over­sup­ply” the metal re­mains in a good po­si­tion, he adds.

Tech­met is look­ing at hard-rock lithium projects in Africa, rather than brine-based ones. With a cur­rent glut of sup­ply, lithium-based bat­ter­ies look to be the main­stay for the fu­ture of the elec­tric-ve­hi­cle in­dus­try.

How­ever, not ev­ery­one is con­vinced. Ear­lier this week, a law­suit was filed against Tesla af­ter the death of an 18-year-old pas­sen­ger in Florida was linked to a de­fec­tive bat­tery, rais­ing ques­tions over the safety of lithium-ion tech­nol­ogy, which is highly flammable.

New tech­nolo­gies are be­ing ex­plored. Flow bat­ter­ies, which use a metal called vana­dium, have emerged as a con­tender. Solid-state bat­ter­ies, an­other al­ter­na­tive, carry re­duced risk and have been of par­tic­u­lar in­ter­est to Sir James Dyson, who is build­ing his own tech­nol­ogy.

How­ever, Menell pre­dicts flow bat­ter­ies be­ing di­rected more to­wards grid stor­age, and at­tempts to bring new tech­nol­ogy to the trans­porta­tion in­dus­try could prove very ex­pen­sive.

“In my view, in the next 10-15 years lithium-ion bat­ter­ies will dom­i­nate for elec­tric ve­hi­cles,” he says. “At the mo­ment, it’s prob­a­bly $30bn, $40bn go­ing into lithium-ion bat­tery man­u­fac­tur­ing ca­pac­ity in China and else­where in the world, and ev­ery car com­pany in the world has a pro­gramme for their fleet to be dom­i­nated by lithium-ion bat­tery-driven ve­hi­cles.”

And with China keen to clean up its air pol­lu­tion, de­mand in the Far East re­mains ro­bust. “Al­though pol­icy tar­gets have been reined in, Chi­nese reg­u­la­tors still re­quire rapid im­prove­ments in the en­ergy den­sity of EV bat­ter­ies.

“This will sig­nif­i­cantly im­pact the com­pet­i­tive land­scape for dif­fer­ent bat­tery tech­nolo­gies in the years ahead,” says Jones.

Prices may bounce around in the short-term, but one thing is clear: the world will need a lot of lithium.

A woman drives a Re­nault Twizy two-seat elec­tric car in Rome. Lithium-ion bat­ter­ies are likely to dom­i­nate as the power source for elec­tric ve­hi­cles for the next 10-15 years, says Brian Menell

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