Battery metals supply shortageThis post is from the Aussie board- hotcopper- and it talks to the general status of battery metal supply. Yesterday I came across another post which literally reported car manufacturers who were reducing their vehicle production becuase of unavailability of material supply. Remember the real surges in EV demand begin NEXT year and there are already demonstrable shortages. I will try to hunt for that post and post it here.
BPL an oil stock just got bought out for a 27% premium. Materials companies SHOULD be becoming more valuable and CRE is a materials company.
Metals used in electric car batteries to be in short supply
An ore stockpile at an Australian lithium mine. Pic: Colin Murty
- By MILES COSTELLO
- THE TIMES
- 2 HOURS AGO MAY 8, 2019
- 1 COMMENT
Drivers are being urged to buy clean, environmentally friendly cars, but fears are growing that the rush to go green is about to squeeze the supply of some of the motor industry’s vital metals and minerals.
The alarm was raised in Washington last week by Tesla, the electric car company run by Elon Musk, 47, the billionaire technology entrepreneur.
Sarah Maryssael, its global supply manager for battery metals, warned a conference that after years of underinvestment in the mining industry, materials used to make the batteries that power electric vehicles could rapidly be in short supply. That, in turn, could cause their prices to rise sharply.
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Metals and minerals used in rechargeable batteries include copper, graphite, cobalt, lithium and nickel. Industry analysts worry that the rising interest in electric vehicles, particularly in China, which accounts for half of the world’s demand, could lead to increasing supply problems and higher prices. Lithium is also used in smartphone batteries, putting yet more pressure on demand.
It comes as major firms like Australia’s Wesfarmers seek to take advantage of the demand for lithium. It recently announced plans to buy lithium company Kidman Resources for $776 million.
Tesla’s warning has been echoed by experts on all sides of the mining industry. Yuen Low, metals and mining analyst at Shore Capital, said that there was the “potential for a shortage” in some of the metals used in electric vehicle batteries. He said that a lithium shortage was possible, although more companies were searching for the metal.
“There’s probably a bigger structural shortage of nickel,” he said. “You need a certain grade - class one - and that accounts for half of supply. The consensus is that there will be a shortage of supply in a few years’ time, when most people are expecting the price to be driven by electric vehicles.” In the past two years, the price of a tonne of nickel has risen from about $US8000 to more than dollars $US12,333.
Yet increasing the supplies of metals, even those known to be available, can be a lengthy process. Eric Norris, president of Albemarle Corporation’s lithium business, the world’s largest producer of the mineral, told Bloomberg last week: “It has been decades since a lithium refining facility has been built in the United States. Any new project will take time to develop, as the regulatory bodies determine required permits, potential community impact, et cetera.”
Analysts at Barclays estimate that producing the rechargeable battery accounts for 60 per cent of the cost of an electric vehicle, even though manufacturing changes involving, for example, the use of less cobalt have brought costs down by 75 per cent since 2010.
“We believe the smarter carmakers have already locked down raw material supply to the early 2020s,” a group of the bank’s specialist analysts said in a recent note. “Based on our analysis, there could be a 112,000-tonne cobalt supply shortage by 2025.”
The likely shortfall could drop to 31,000 tonnes if a battery that uses even less cobalt is adopted by all carmakers.
The price of cobalt fell from a record high of $US95,250 a tonne in March last year to $US34,500 a tonne at the end of last week as traders anticipated falling demand.
Nor are electric vehicles the sole driver of rising commodities prices. The rising prices of other metals has been underpinned, in part, by increasingly stringent vehicle emissions legislation, particularly in Europe and China. These include palladium and platinum, sought after for their use in catalytic converters, which clean up petrol and diesel-powered internal combustion engines.
Palladium is a by-product of platinum and nickel. Mined mainly in Russia and South Africa, about 80 per cent of it ends up in the catalytic converters to reduce harmful emissions such as carbon monoxide and nitrogen oxide. As with lithium, these metals are also used in other areas. Platinum and palladium are widely used in jewellery and electronics. The price of palladium overtook gold for the first time in 16 years last year as it became clear that production was unlikely to cater for demand.