RE:RE:Warren Irvin on CobaltSummary
Extracts relative to Cobalt in particular, from
the source and authors shown below, are identified here by ElJ, for the convenience of Bboard colleague posters.
The identified extracts are provided in the context of current and planned initiatives by Electra:
Source:
The Conversation. Authors: Ho-Yin Mak, associate professor in operations and information management, Georgetown University; Christopher S Tang, professor of supply chain management, University of California, Los Angeles; Tinglong Dai, professor of operations management and business analytics, Carey Business School, Johns Hopkins University. - Today, the US domestic EV supply chain is far from adequate to meet its goals. The new US tax credits are designed to help turn that around, but building a resilient EV supply chain will inevitably entail competing with China for limited resources.
- China took the lead in the EV market through an aggressive mix of carrots and sticks. Its consumer subsidies raised demand at home, and Beijing and other major cities set licensing quotas mandating a minimum share of EV sales.
- China also established a world-dominating battery supply chain by securing overseas mineral supplies and heavily subsidising its battery manufacturers.
Short term: What can be done now? - Six of the 10 bestselling EV models in 2022 are already assembled in the US, fulfilling the Inflation Reduction Act’s final assembly location clause. The Hyundai-Kia alliance, which has three of the other four bestsellers, plans to open an EV assembly line in Georgia. Volkswagen has also started assembling its ID.4 electric SUV in Tennessee.
- The challenge is batteries. Besides the Tesla-Panasonic factories in Nevada and planned in Kansas, US-based battery manufacturers trail their Chinese counterparts in both size and growth. For the US to scale up its own production, it needs to rely on strategic partners overseas. The Inflation Reduction Act allows imports of critical minerals from countries with free trade agreements to still qualify for incentives, but not imports of battery components. This means overseas suppliers like Korea’s 'Big Three' – LG Chem, SK Innovation and Samsung SDI – which supply 26% of the world’s EV batteries, are shut out, even though the US and Korea have a free trade agreement. (Note: See LG’s battery plants partnership plans with GM and Honda, below)
- The Korea Automobile Manufacturers Association has asked Congress to make an exception for Korean-made EVs and batteries. In the spirit of 'friend-shoring', the Biden administration could think of a temporary waiver as a stopgap measure that makes it easier for Korean battery makers to move more of their supply chain to the US, such as LG’s planned battery plants in partnerships with GM and Honda.
Medium term: Diversifying lithium and cobalt supplies - In addition to lithium, cobalt is needed for high-performance battery chemistries. The Democratic Republic of the Congo is where 70% of the world’s cobalt is mined, and Chinese companies control 80% of that. The distant second-largest producer is Russia. The Biden administration’s 'friend-shoring' vision has a chance only if it can diversify the lithium and cobalt supply chains.
- GM has reached an agreement with mining giant Glencore to mine and process cobalt in Western Australia for its Ohio battery plant with LG Chem, bypassing China.
- A way to avoid cobalt altogether(in some applications) also exists: lithium-iron-phosphate batteries are about 30% cheaper to make because they use minerals that are easy to find and plentiful. However, LFP batteries are heavier and have less power and range per unit(especially in colder climates).
- For years, Chinese companies like CATL and BYD were the only ones making LFP batteries. But the patent rights associated with LFP batteries expire this year, opening up an important opportunity.
Long term: US critical mineral production - Replacing overseas critical materials with domestic mining falls under long-term planning. The scale of current domestic mining(of “critical EV materials”) is minuscule, and new mining operations can (currently) take seven to 10 years to establish because of the lengthy permitting process. There are cobalt resources in Minnesota and Idaho.
- End-of-life battery recycling is essential to the sustainability of EVs. The industry has been kicking the can down the road on this, as recycling demand has been miniscule thus far given the longevity of batteries. Yet, as a proactive step, the Inflation Reduction Act specifically permits battery content recycled in North America to qualify for the critical mineral clause.
Please consider reading the complete article, with its various charts, if these extracts are interesting,
Peace,
Good Decision-making to All,
ElJ