With batteries key to bringing a clean energy economy within sight, demand for the mineral that fills most of them—lithium—is soaring, posing a challenge for producers trying to ramp up supply, and calling into question some of the frothiest optimism for market adoption of electric vehicles.
It’s true that batteries are providing the technology bridge between renewable generation and loads ranging from cars, to entire power grids, to (one day, perhaps) air travel. The rapid transition has driven enthusiastic predictions that drive-away prices for electric vehicles will fall below those for gas-fueled ones early in the next decade, so that fossil guzzlers begin to fade away entirely in the 2030s.
Financial Post columnist Peter Tertzakian suggests a dash of reality on the most breathless of those forecasts. “I’m a believer that lithium-ion batteries are going to power a lot of cars,” he writes. But that very success spells a problem. “Battery-powered cars are potentially coming to market far faster than the back-end resource industries needed to supply them.”
Noting that it takes “the equivalent of 15,000 cell phone batteries to make one battery for an electric car,” Tertzakian warns that “ramping up raw material inputs to build millions of car batteries a year fills the back of the envelope with scalability issues.”
Supplying the lithium and other mineral ingredients that go into most batteries “will require vast global supply chains of extraction, refining, distribution, and recycling, not to mention the financial infrastructure to trade the commodities and bring them to market in a responsible, safe, and consistent manner at affordable prices to the consumer,” the columnist writes. “Greenfield projects often require billions of dollars to establish operations, roads, loading facilities, power lines, distribution channels, and other supply infrastructure.”
Compounding that problem are the “above-ground” risks associated with the unstable nations where many raw deposits of key inputs to battery manufacture are found. “For example,” Tertzakian notes, “60% of the world’s current cobalt supply comes from the Democratic Republic of Congo (DRC), a country that is in the same distinguished peer group for business risk as Syria, Iraq, and Somalia.”
“Prices of lithium carbonate, the primary base chemical produced by the industry, more than doubled in the five years to 2016,” Bloomberg reports, citing UBS Group figures. U.S. prices averaged $14,250 per metric ton in July.
Reuters cites forecasts that global lithium demand will reach 785,000 tonnes by 2025, more than three times what will be produced this year. “We don’t see any price fall in the next three years,” said Simon Moores, managing director of London consultant Benchmark Mineral Intelligence.
“When you look at all the battery plants being built and the plans for EVs, even if only about 25% of those are realized, we’re still going to be short of lithium,” he adds. “It’s a unique, once-in-a-generation situation.”
The chase is producing a scramble to lock in mineral supplies in places less unstable than central Africa. Western Australia, Bloomberg notes, is one area becoming a “hub” for lithium mining investment. The state’s Greenbushes, “the world’s biggest hard-rock lithium mine,” is “being expanded to more than double annual capacity.” Three new mines are being developed in addition to the four already in operation.
But as Tertzakian also points out, “batteries need many different raw material supply chains to ramp up; petroleum cars only needed oil.” The same is true of the photovoltaic panels that many futurists count on to charge fleets of electric cars and trucks, to avoid simply shifting fossil-fuel pollution from tailpipes to power station chimneys.
Most of those minerals, Renewable Energy World observes, “can be found or produced in Canada.” The country has as many as 19 of the minerals needed for solar panels, including silica, indium, silver, selenium, and lead. (Engineers are trying to isolate lithium, too, in the surprising resource of tar sand/oil sand waste.)
But “if we don’t couple climate mitigation infrastructure with responsible mining, we’ve got a train wreck coming,” warned Alan Young, director of the Ottawa-based Materials Efficiency Research Group. “We’re either going to have interruptions of supply or we’re going to build clean energy on dirty mining.”