The Limited Times

Now you can see non-English news...

The electric car devours the world's lithium

2022-03-05T03:50:21.848Z


The cost of raw materials has skyrocketed due to global shortages and this has led to the first increase in the price of batteries in a decade


The demand for lithium has no brake.

The change towards a more sustainable energy model, driven by the world's major economies, has triggered the appetite for this raw material.

Today it is consumed more than ever, but its production is lagging behind the needs of the market.

A dangerous cocktail that includes the lack of mining investments, the temporary closure of factories in China (due to the pandemic), the cancellation of exploitation projects and an unexpected success of the electric car has fueled doubts about the availability of the product.

And as in Newtonian physics, an action always corresponds to a reaction: the price of the metal has quintupled in the last 12 months, leading lithium-ion batteries (the soul of future mobility) to their first rise in a decade .

“Governments, auto companies, and energy companies have gotten serious about decarbonizing the economy,” says Chris Berry, founder of House Mountain Partners, a New York-based commodity consultancy.

Last year, while global sales of electric cars reached an all-time high (6.75 million units, 108% more than in 2020, according to EV-Volumes), lithium needs increased by 25% and production The world rose only 21.2%, according to statistics from the US Geological Survey.

"There is already a deficit in the market," says Caspar Rawles, chief data officer (CDO) of the British consulting firm Benchmark Mineral Intelligence.

This is due, in part, to a reduction in inventories and a lack of investment in the supply chain between 2018 and 2020, when the excess supply of the metal collapsed prices and stopped the inflow of new capital to the sector.

Will there be enough lithium for all electric cars?

That is the question that everyone in the market asks.

The global demand for this element will multiply by four in the coming years: it will reach two million tons by 2030, from the current 500,000 tons, according to estimates by S&P Global Market Intelligence.

For Kent Masters, executive director of Albemarle (an American mining expert in lithium), the forecast goes further: he expects that at the beginning of the next decade the needs for the metal will reach three million tons.

A survey carried out by Bloomberg among six firms specializing in the metal reveals that there is no consensus on how the offer will behave.

While some see a deficit equivalent to 13% of demand in 2025, others speak of a surplus of 17%.

What is certain is that more than 84% of all this raw material will go to the battery of an electric car, which by then we will see rolling normally on the roads of the main economies.

Electric vehicles will account for 75% of global passenger car sales by 2030, with China leading the way, followed by Europe and the US, a McKinsey analysis predicts.

The Chilean mystery

Given this, the pressure on the lithium industry increases.

Above all, in the face of the revocation of strategic projects in Europe and the doubts generated by political decisions in Chile —the world's second largest producer, with a quarter of the global pie, after Australia, which accounts for half—, which has just launched government with the leftist Gabriel Boric.

On this side of the world, in the Balkans, Serbia has revoked, last January, the Australian mining company Rio Tinto (one of the 10 main producers of the metal) all the permits to exploit a lithium project in the west of the country.

A strong and determined citizen opposition made the Government of Ana Brnabic back down from what would be the largest mine in the Old Continent and could supply a million electric cars a year with raw material.

“This is a blow to Europe… the region is currently dependent on imports from China,” Rawles highlights.

"Raw materials and digital components are going to condition the new automotive industry," says Arturo Pérez de Lucia, general director of the Business Association for the Development and Promotion of Electric Mobility.

Meanwhile, on the other side of the pond, in Chile, the country with the largest lithium reserves on the planet, analysts are suspicious of the new Chilean government's intentions to nationalize the mines and create a state company for this material.

Political uncertainties can throw off investments, Bank of America experts say.

"This puts the country at risk of missing out on the period of exponential growth in demand."

A river uprooted, gain of fishermen.

Argentina, Australia, Brazil, the Democratic Republic of the Congo and China —the latter country controls more than 78% of the lithium-ion battery production chain— have gotten down to work and have launched new projects and expanded operations already existing.

“There is the ease of financing developments, either with a capital increase or debt”, says Daniel Jiménez, a partner at the iLi Markets consultancy.

Getting hold of metal, however, is not an easy thing.

Time and patience are required.

For example, to forge a mine you have to invest between 7 and 10 years before you can market the material, while setting up a battery factory takes half that time.

“The lithium industry is a specialty chemicals market, not a commodity market,

which means that it is not just about getting the raw material out of the ground, but that it has to be processed”, Rawles highlights.

"Projects are delayed or don't make it to production due to technical issues."

This raises concerns among electric vehicle manufacturers and battery producers, who have felt the rise not only of lithium, but also of other key elements such as cobalt or nickel sulfate.

After a decade of steady declines, lithium-ion batteries cost 20% to 30% more than they did a year ago, according to Benchmark Mineral Intelligence.

And they are likely to continue to rise.

This supposes an additional cost of between 1,000 to 2,000 dollars for each vehicle.

In 2010, a lithium-ion battery cost about $1,100 per kilowatt hour.

For 2020, its price has been reduced to 137 dollars.

Carmakers expect electric vehicles to be competitive with combustion vehicles when the cost of batteries approaches $100 per kilowatt hour.


Source: elparis

All business articles on 2022-03-05

You may like

News/Politics 2024-03-01T04:23:44.478Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.