Increasing competition over battery metals and critical minerals

By Meret Linnarz, Core Writers’ Group

Rare metals and materials are essential to the production of batteries currently used in electric vehicles, wind turbines as well as consumer electronics. They are crucial for the automotive industry’s transition into a cleaner, more environmentally conscious future. Compounds such as cobalt, lithium, manganese, and nickel are extremely difficult to mine and effectively distribute on a global scale. Nonetheless, broad availability throughout the market is necessary to meet the ever-growing global demand for batteries.

Despite a temporary drop in demand during the pandemic, projections indicate that the demand for lithium will overtake the available supply as soon as 2025. Lithium is useful for battery production as it is highly reactive, considerably more lightweight than previously used metals (e.g. lead), and has a very high recharge capacity. Accordingly, lithium can be used in both current and future battery production. According to the World Economic Forum, lithium is largely mined in Australia, Chile, and China and has seen a global production increase of 96.5k tons since 1995. Battery production uses up to 74% of the global lithium supply, and demand continues to grow. Supply security would require effective collaboration between suppliers and manufacturers on a global scale, improved infrastructure, and resource/market diversification.

Monopolisation of global rare metal extraction presents another serious issue. China, for example, has $5.6B of lithium assets in other countries alongside its domestic mines. Such monopolisation represents a challenge to industries looking to transition to greener operations and must be addressed on a government level if climate goals are to be met.

Europe too struggles with battery metal shortages. In recent years, no rare materials have been extracted in Europe (with China holding 98% of the European market), but in January 2023 the Swedish mining company Luossavaara-Kiirunavaara Aktiebolag discovered over 1 million tons of rare metals in Kiruna, Northern Sweden. The discovery of these rare oxides will contribute significantly to the construction of renewable technologies such as wind turbines and electric vehicles, reducing European dependency on foreign trade partners. While providing cause for hope, the discovery of the rare metal deposit in Sweden does not however provide an immediate solution to Europe’s supply problems.

The EU targets for a speedy transition to green energy will likely require more resources than those currently available to the European market, which places the cost decline that the renewable energy transition has experienced in the past few years in serious jeopardy. Diplomatic tensions with Russia, where a significant share of the world’s nickel and platinum are mined, or China, which produces lithium and graphite, also very likely threaten the stability of supply lines. Moreover, Russia’s invasion of Ukraine has stunted potential plans to improve the supply infrastructure, particularly in Europe. With no signs of de-escalation in the region, hopes of including Ukraine in the sector’s build-out have been postponed indefinitely.

To tackle the growing challenges the battery industry faces, governments are introducing incentives to secure supply lines. In October 2022, US President Biden introduced the American Battery Materials Initiative, which focuses on recycling battery metals and improving international trade relations to secure a reliable influx of rare metals and materials. This incentive is significant not only for the energy market but also for the much-anticipated transition of the automotive industry towards electric vehicles. The White House emphasizes that an expansion of the battery industry will create jobs within the United States.

The National Climate Task Force, created by President Biden, confirms that the US aims to reduce greenhouse gas emissions by 50%–52% by 2030. To achieve this, President Biden aims to make half of all newly purchased vehicles electric by 2030. While there has already been a significant boom in investments for the domestic battery market, the US, like their European counterparts, will need to focus on securing long-term, sustainable access to battery metals through international trade to meet their climate objectives.

The World Bank predicts that global production of rare metals will need to increase by 500% to meet necessary targets for the energy transition. While recycling batteries helps substantially, the World Bank also predicts that another 3 billion tons of material will be required to keep global warming below 2ºC. In addition to its vast domestic supplies, China owns some of the world’s largest rare metal mines, including the Las Bambas Copper Mine in Peru, Morowali Industrial Park in Indonesia, and Sicomines Copper-Cobalt Mine in the Democratic Republic of Congo. These assets make China one of the most powerful players in global mineral processing, but with the recent upsurge in the growth of supply chains, other players are also entering the global markets. For example, Australia, already one of the world’s largest producers of lithium, is quickly expanding its foothold in cobalt and vanadium production. In addition, Australia’s membership in the Commonwealth and close ties to Europe make it a welcome investment for the Western powers. Furthermore, in late 2022 Innovations Network examined African markets as an alternative investment ground to Russia who is a significant producer of various rare metals. Since the start of the invasion, the ever-changing sanctions and diplomatic impasses have made Russia an unreliable trade partner for the West. African markets are likely to become significant international competitors if investments are made into a stable EV battery supply chain as well as mining infrastructure.

As the world struggles to maintain supply chains in tense times, technological advancements offer potential improvements to stabilize the growing demand for rare metals. This hope may lie in the batteries themselves. Newly produced EV batteries are designed to store more energy per kilogram, last longer, and are frequently recycled or ‘reincarnated’ after use. In fact, the rare metals extracted from recycled batteries perform just as well or better than freshly mined ore. Companies are ‘mining’ these recycled metals, which tend to be over 90% effective, and returning them back into the market. This process is not only effective but better for the environment as well.

One battery recycler, Redwood Materials (Nevada, USA), already runs a ‘non-polluting’ battery operation that is nearly emission-free. In 2021, the company was already generating income, drastically increasing capacity and producing up to 45,000 EV battery packs. Now they are working to create a circular supply chain within the US by offering recycled cathode and anode compounds to create sustainable batteries. Alongside recycling initiatives such as Redwood Materials, which contribute to stabilizing the demand for metals, scientific advancements present alternative chemical structures to those on the market now. ‘Novel electrolytes’ can be used to create rechargeable alkalines such as manganese-zinc and manganese-aluminum combinations, both of which contain compounds that are easier and cheaper to find (as well as less toxic). Such alternative combinations can diversify the market and, along with battery recycling and a steady transition towards more energy-efficient vehicles, grant relief to fragile and overloaded supply chains.

The road forward, for the European market and its international counterparts, may be a three-pronged approach that focuses on effective recycling and reincarnation of already existing batteries, subsidized scientific research into new and cleaner metal combinations, and an active and coordinated approach to forming lasting trade ties with countries rich in mineral resources.