FEATURE: Raw material supply a challenge to meet battery demand

As the Western world looks looking to increase battery making capacity, one challenge facing the industry is raw material supply and whether there will be enough to meet demand by 2030.

Battery maker Northvolt does not believe there will be enough raw material supply and refineries to supply the planned gigafactory capacities planned by 2030.

"This is exactly the eco-system that needs to be developed during the upcoming decade, not only to increase raw material supply but also the sustainability and reliability within that supply," Northvolt's director of communications and public affairs for the Nordics region Anders Thor told S&P Global Commodity Insights.

Northvolt has a broad strategy to ensure it had sufficient supply for its plants, he said, including setting up regionalized streams of raw material, or exploring and developing alternative materials, while recycling was key.

"Our goal is that by 2030, at least 50% of the raw materials we use for battery production should come from recycled materials," Thor said.

There is a need to diversify the raw materials being used in supply chains and use other materials, like sodium-ion, for appropriate applications, while government support is vital, AMTE Power CEO Kevin Brundish said.

Graphite producer Talga said challenges included a shortage of suitable deposits, ease of access to mining and availability of refinery capacity.

"There is a current push to speed up the permitting process for critical raw materials projects and while such changes would help, they would not solve the problem entirely," it said.

Talga plans to expand its initial battery anode project in Sweden from 19,500 mt/year to around 100,000 mt/year to meet around 10% of European anode demand by 2030, it said, adding that it was also conducting geological exploration to enable further expansions beyond 2026 to meet long-term demand.

On the other hand, clean battery developer Freyr Battery believes there are enough raw materials, related materials projects and overall capacity to meet the supply requirements in the coming decade, CEO Tom Einar Jensen said.

"We expect both supply and demand to grow tremendously, and naturally, we anticipate that there will be periods of temporary imbalance," he said. "Despite some volatility, we expect the future average raw material prices to be lower than they are today."

Platts, part of S&P Global, assessed seaborne lithium carbonate and lithium hydroxide at $76,000/mt CIF North Asia and $83,800/mt CIF North Asia Nov. 10, up 124.85% and 164.35%, respectively, since the start of 2022.

In Jensen's opinion, lithium could present the greatest challenge, as many projects in Europe and the US are "generally always off from commercial production."

However, Freyr has already secured most of the raw materials for its Customer Qualification Plant and for the initial phase of its Giga Arctic factory, while continually qualifying new materials and new suppliers.

Sufficient cobalt

The Cobalt Institute believes there will be enough cobalt to meet demand by 2030, although it will require investment, continued diversification and recycling, its president Adam McCarthy said.

Supply diversification could come from untapped reserves in Australia, while cobalt could also be sourced from tailings ponds from historical nickel and copper mining in Australia, the Democratic Republic of Congo and South America.

Recycling is also a growth sector, with around 10% of global cobalt supply currently recycled and that is set to grow with more recycling and more batteries coming to the end of life, McCarthy said.

"Policies to support and encourage and sometimes mandate recycling will be helpful," he said.

In the short to medium term there is expected to be some tightness in supply, but this will ease if investments continued to take place in new mines and processing facilities, he said.

"Just from land-based mining and recycling and seeing what else we can find in tailings, there is enough supply to meet demand -- we're pretty confident about that," McCarthy said.

Different battery chemistries will also have an impact on cobalt demand, although he expects demand to increase anyway, due to rising battery manufacturing.

"People talk about substitution of cobalt out of batteries...but the bottom line is that those technologies, besides LFP, are in their infancy and are not ready for mass market or being produced to scale," McCarthy said.

"We don't see cobalt-containing batteries going away any time soon -- once the competition is there, we'll be recycling so much, substitution will not likely be an issue in 10-15 years' time."

Refining gap

Meanwhile, the lack of conversion and refining capacity in Europe is also an issue, AMG Lithium Global Director Sales and Marketing Andre Majdalani said.

"Unfortunately, you can take it further upstream and wonder, how little is being done to start mining local deposits -- not that they would fully satisfy Europe's demand, but they would certainly help increase Europe's resilience," he said.

AMG is concentrating on Europe to start and plans to serve local cathode manufacturers with battery-grade lithium hydroxide from its refinery in Bitterfeld-Wolfen, Germany, which it is on track to commission in the second half of 2023.

It is planning to build five 20,000 mt/year lithium hydroxide modules that will be flexible in terms of feedstock, he said, reaching a capacity of 100,000 mt/year by 2030, when Europe's requirement is expected to be more than 550,000 mt/year.

Freyr's Jensen said he believed raw material shortages, particularly for lithium, could be alleviated by building out greater refining capacity in Europe, which would enable sourcing from a wider range of raw material suppliers.

However, McCarthy did not see the lack of refineries in the Western world being an issue, with it expecting Western governments to ensure investments in refining for all critical minerals to tackle China's dominance.

"For cobalt today, around 65% globally is refined in China, but the next biggest refinery is Finland with around 13% of global refined supply at Kokkola," he said.

There are investments in Europe and in Canada, in particular, and there is a political imperative to build refineries, as there are concerns about security of supply, meaning governments have to make it happen, McCarthy said.