Lithium and cobalt are about to face a shortage? Depends on electric car, politics and battery chemistry

Some analysts predict that by 2050, the essential metal demand for lithium-ion batteries may be in short supply.

Competing with these materials are smart phones, tablets, notebooks and battery manufacturers in the global electric vehicle industry, which have seen significant growth worldwide.

The shortage will not be due to the lack of raw materials, but to the lack of demand. Lithium is found worldwide in North America, South America, Europe, Africa and Asia, but nearly half of the world's lithium power comes from Argentina, Bolivia and Chile.

Unfortunately, a perfect policy storm makes investment difficult, and regional unpredictability makes it difficult to prepare for the growth of global lithium demand. For example, in Chile, the law limits lithium production to less than 80,000 metric tons, although it has recently been speculated whether Chilean political changes will increase production quickly. In the next 10 years, an additional 800,000 metric tons will be needed to meet projected demand.

Battery chemistry game

In 2009, 26% of global lithium battery supply was used for battery supply, and in 2015 it increased to 38%. Nearly 20 mining and production bases around the world are currently under construction or under construction, but the first one will not begin production until 2019.

In addition, due to environmental damage, some areas encountered resistance in introducing more mining operations.

However, the shortage of lithium batteries may not have a significant impact on the actual cost of the battery - a 300% increase in the cost of lithium batteries will only increase battery prices by 2%. However, it is expected that the price of the battery will be affected by the shortage of cobalt, of which nearly 42% of the global supply is for batteries.

Cobalt appears again in unstable areas. Two-thirds of the world's cobalt supply is located in the Democratic Republic of the Congo, where policies, corruption and instability hinder the investment needed to meet global demand. The Congo also imposes high taxes and royalties on the mining industry, pushing up prices. There are also problems with the use of child labour in the area.

If the price of cobalt rises by 300%, the battery cost will be reflected at around 13%, and consumers will feel more.

Some potential solutions for battery recycling, new technologies

Some solutions are underway that may make the world's lithium and cobalt supply less dependent.

It is entirely possible to recover lithium and cobalt from the battery, although this process has always been considered expensive, inefficient, and generally not worth the effort. However, some companies are preparing for the electric vehicle industry to take off and obtain funds for battery recycling, looking for innovative ways to make the process cost-effective.

American Manganese, based in Vancouver, Canada, “digs” cobalt and lithium from a failed battery at a price of about $0.30 per pound. The material can then be resold for up to $20/lb. This process includes an automated system that removes the outer casing and then soaks the battery unit in a chemical solution that causes precipitation of lithium and cobalt. One of the challenges facing the company is the lack of standardization of battery packaging by companies, making this process a bit more difficult.

It is estimated that by 2025, 10% of the world's lithium and cobalt supply may come from recycled materials.

There is also growing interested in new battery technologies - especially solid-state batteries. SSBs promise to be more stable than lithium-ion batteries (for example, they may not cause fires), are more compact, have higher energy densities, and are better at more extreme temperature gradients. Many SSBs will also use metals such as sodium that are easier to obtain, more economical, and more environmentally friendly. The automotive industry alliance, including Toyota and Honda, has even worked together to try and realize the SSB of electric vehicles.

Close to the fate of the electric car market

Supply and demand forecasts for lithium and cobalt may also not be realized.

Sometimes in the event of a shortage, production momentum may instead flood the market and lower prices.

Another factor is that the attractive part of electric vehicles is subsidies provided by many states. Up to 25 states have offered incentives for tax breaks or conversions to electric vehicles - but in 2017, this number was reduced to only 16. Many electric vehicles are sold at high prices first, so the lack of substations or incentives may make them inaccessible, slowing adoption.

We may need to wait a few years before we really know where the industry is heading.

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