Battery metal operations are worth developing despite backlash over high carbon emissions and water use, executives and analysts said June 20–22 at Fastmarkets' 15th Lithium Supply and Battery Raw Materials conference in Las Vegas.

The accelerating energy transition will require a rapid increase in producing key metals such as lithium and nickel, but the metals' extraction and processing methods can cause environmental damage.

Converting low-purity, nickel-containing limonite ores into battery-grade materials through high-pressure acid leaching emits 19 metric tons of CO₂ equivalent per metric ton of nickel, according to the International Energy Agency. That is almost double the amount of CO₂ compared to the traditional processing of nickel sulfide into battery-grade Class 1 nickel.

Traditional lithium brine operations often lower water tables and disrupt local water ecosystems as they extract the salty water and use the fresh water in processing.

However, the benefits of meeting increasing demand from the electric vehicle sector while increasing local economic opportunities should be weighed against possible environmental harm, according to executives with Australia-based Nickel Industries Ltd. and Galan Lithium Ltd. and US-based Westwin Elements Inc.

"Coming from a US perspective, I don't think progress should be delayed substantially right now," KaLeigh Long, founder and CEO of Westwin Elements, said at a panel discussion. "We have no refining production, and so we have to balance and recognize that at least at equal priority, if not more, is getting these facilities up and running ... not to be pummeled with more regulation." The company is building a nickel and cobalt refinery in the US.

Supplies of Class 1 nickel have fizzled due to historical underinvestment in nickel sulfide mining projects during a period of low prices in the mid- to late 2010s, Ralph Grimble, operations director at market intelligence group SFA (Oxford), told S&P Global Commodity Insights. As a result, more companies are refining low-grade nickel to meet EV demand.

Nickel Industries is part of a wave of companies investing in processing Indonesia's abundant reserves of limonite. The Southeast Asian country was the second-largest producer of primary nickel as of 2021, behind China, with an output of 870,000 metric tons, according to a May analysis by Commodity Insights. Indonesia is expected to increase production to 1.9 million metric tons in 2027.

"It is a bit hypocritical in a way to suddenly point, having had the benefit of 100 years of the industrial revolution, which was fired by coal, at emerging economies and [say], 'You can't do that,'" Justin Werner, managing director of Nickel Industries, said at a panel.

Indonesia's energy sector emitted approximately 600 million metric tons of CO₂ in 2021, making the country the world's ninth-largest emitter, according to the IEA. The emissions issue compounds environmental concerns in Indonesia that include deforestation and proper tailings disposal.

Lithium producers extracting from brine are facing pressure to adopt direct lithium extraction (DLE) technology, which reinjects the brine into the ground after extracting the lithium through various processes. However, DLE methodology has only been used commercially outside of China by US-based Livent Corp. at its Salar del Hombre Muerto facility in Argentina, which combines evaporation ponds with the DLE process.

Galan Lithium is a junior exploration company developing brine operations in Argentina, where the debate over local water use is heating up as the country develops more than 20 lithium projects.

"We are a small company," Juan Pablo Vargas de la Vega, managing director of exploration at Galan Lithium, said in an interview on the conference sidelines. "If we were doing DLE, all of the social [benefits] of our project would be late ... [and] jobs are needed today as well. So it's a balance."

Some executives at the conference also cautioned against allowing environmental damage in the name of extracting battery materials.

"I still believe that we should make sure that whatever we do to achieve that goal [of the energy transition] does not defeat the purpose," Quentin Lamarche said during a panel discussion. Lamarche is co-managing director of TechMet Mercuria, a marketing and supply chain management company and a unit of TechMet Ltd.

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