A few countries control reserves of key inputs like cobalt, manganese, lithium, graphite
The supply of raw materials to produce rechargeable batteries — crucial to move to cleaner energy — is uncertain, a recent report by the United Nations Conference on Trade and Development (UNCTAD) said on June 25, 2020.
The report Commodities at a glance: Special issue on strategic battery and minerals, for facilitating research into battery technologies that depended less on critical raw materials and had potential to provide higher energy density.
It also suggested chalking out a strategy that would allow for dynamic monitoring of the raw material cycles, from mining through processing, refining, and manufacturing to recycling. This would facilitate early detection of supply risks. It would also enable development of mitigation strategies at either company or national level.
The report underlined lithium, natural graphite and manganese as critical raw materials for the manufacture of rechargeable batteries.
As electric vehicles (EVs) have gradually been integrated into global transportation, there has been a rapid growth in demand for rechargeable batteries. This will consequently lead to an increase in the demand for raw material used in manufacturing these batteries.
The security of supplies should be a concern for all stakeholders, the report said. That is because the production of the raw materials is concentrated in a few countries.
Over 60 per cent of the world’s cobalt is mined in the Democratic Republic of the Congo while over 75 per cent of global lithium is mined in Australia and Chile, according to the report. Any disruption to supply might lead to tighter markets, higher prices and increased costs of rechargeable batteries.
The demand of raw materials used to manufacture rechargeable batteries will grow rapidly as other sources of energy lose their sheen, the report said.
“Alternative sources of energy such as electric batteries will become even more important as investors grow more wary of the future of the oil industry,” UNCTAD’s director of international trade, Pamela Coke-Hamilton, said while launching the report.
In the past few years, the sales of electric cars have experienced a sharp rise. They increased 65 per cent in 2018 from the previous year to 5.1 million vehicles, the report said adding that they would reach 23 million in 2030.
With the increasing number of EVs, the demand for rechargeable batteries has also increased. The worldwide market for cathodes for lithium ion batteries, the most common rechargeable car battery, was estimated at $7 billion in 2018 and was expected to reach $58.8 billion by 2024.
Similar is the case with the raw materials. The cobalt market expanded rapidly, with demand rising above 100,000 tonnes for the first time in 2017. In 2018, demand surged by 25 per cent from the previous year to 125,000 tonnes, with about nine per cent accounted for by the EV battery sector, the report said.
Cobalt demand would reach 185,000 tonnes by 2023, with about 35 per cent accounting for the EV battery sector, the report said. Growth in demand for lithium had been significant since 2015, increasing by 13 per cent per year, it added.
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