When most people think about the composition of batteries used in modern electric vehicles such as those produced by Tesla, or the batteries that keep our smartphones powered up, the word Lithium comes to mind. In fact, these batteries are so prevalent in modern life, that the word “lithium-ion” has become a household term. What most do not know, is that lithium-ion batteries are comprised of several metals, or at least the oxides of several metals including cobalt, nickel, and lithium.
Each of these metals is in fairly short supply across world markets, mainly because they are extremely hard to extract from the earth as the ore from which they originate contains a relatively low amount of the metals thus requiring hundreds of tons of ore be mined to produce a single ton of metal. Once minded from the earth, the procedures involved in the refining processes are not only highly toxic but are quite damaging to the environment. If those two issues did not complicate things enough, the ore deposits are often found in countries that are wrought with conflict, corruption, and humanitarian issues.
“Sarah Maryssael, Tesla’s global supply manager for battery metals, told a closed-door Washington conference of miners, regulators, and lawmakers that the automaker sees a shortage of key EV minerals coming in the near future, according to the sources.”
For years now shortages in the lithium supply have caused massive price fluctuations causing consumers to be wary of electric vehicles because they feared a batter replacement might cost them more than their vehicle did originally. Fortunately, that market seems to have stabilized greatly since companies like Tesla and Samsung have increased market demand. At the moment, there seems to be a small surplus of Lithium, causing the market to level out as a result. If producers continue to maintain this surplus is another question altogether. That brings us to the other two metals, nickel, and cobalt.
Refined nickel nodules 99.9% pure (right) beside a class-1 99.99% pure nickel cube.
Photo Credit: Alchemist-hp
Cobalt is mainly mined in the Democratic Republic of the Congo, a region of significant political instability, but for the most part, the production seems to be steady, with the materials fairly high price remaining mostly stable. Nickel, however, is the secret no one wants to talk about. Despite it being a fairly common, widely used metal, its worldwide production is had been relatively flat for the past several years despite a steady increase in demand. Just in the first half of 2019 alone, nickel prices rose by more than a third, with prices expected to increase even more.
Maryssael added, “According to the sources, that Tesla will continue to focus more on nickel, part of a plan by Chief Executive Elon Musk to use less cobalt in battery cathodes. Cobalt is primarily mined in the Democratic Republic of the Congo, and some extraction techniques – especially those using child labor – have made its use deeply unpopular across the battery industry, especially with Musk.”
One of the causes for this has been a lack of mine expansion due to environmental concerns, among other political issues. The Sumitomo Metal Mining Company of Japan recently told journalists that they are facing a deficit in production of almost 51,000 tons for the 2019 calendar year. That’s really bad news, as industry analyst expects the worldwide demand for “class-one nickel”, the highest purity grade, to increase by a factor of almost 16-times the demand we are seeing today in 2019. By 2030 industries across the world will consume more than 1.8-million tons, of class-one nickel. This is a much bigger issue than just a lack of batteries for electric vehicles. Nickel is used in a lot of different manufacturing processes. Stainless steel production uses a lot of the available nickel that is produced. Nickel is used as a bonding agent in chrome-plated metals, and it's used heavily in the aerospace industry for exotic metal alloy production.
This has led companies like the First Quantum Minerals Ltd in Australia to make plans to reopen mines that have been closed for years. Other mineral companies around the world are pouring hundreds of millions of dollars in exploration looking for new deposits that are mineable, a task which is not as easy as it once was due to new environmental restrictions worldwide. Some analyst are predicting that unless nickel production increases significantly within the next 10-years, demand will greatly outpace production sometime by 2035. If that wasn’t enough Cobalt production could be outpaced by 2030 if a political conflict does not cause production to halt.