Big western carmakers are spending millions on advertising new electric models in Europe and the US. Electric vehicle (EV) adverts dominated commercials during the recent US Super Bowl, one delegate to the Argus Metals Week conference in London this week said.
But behind the advertising gloss, the commodity markets for raw materials going into EV batteries paint a less assured picture. Can the markets deliver enough affordable and timely nickel, cobalt and lithium battery materials as EV uptake accelerates over the next decade?
“Where does the nickel for EV batteries come from?” asked Anthony Milewski, chief executive and chairman of battery metals investment group Conic Metals. He claimed the mining industry has suffered from material underinvestment. Other delegates pointed to the need for strategic investment by the industry as the equity and capital markets’ appetite for mining projects remains limited at best. Recycling would also need to develop to help fill the supply gap, delegates heard.
From a metals standpoint, EV batteries look first and foremost like a nickel growth story, although battery chemistries with varying combinations of nickel, lithium, cobalt and manganese are evolving.
Nickel demand from the battery sector is expected to surge to about 40pc of total consumption over the next three decades, from 4-5pc at the moment, said Jeremy Martin, chief executive of Horizonte Minerals, a developer of nickel projects in Brazil. Nickel would become a two-tier market supplying the stainless and battery industries, he said.
But he noted the 8-10 year lead times needed to bring new mines into commercial production to meet new demand. Nickel prices are notoriously volatile and this can hamper investment, Martin said. Three-month nickel prices on the London Metal Exchange have dropped by about 30pc since August last year.
Lithium and cobalt prices also remain volatile as EV growth projections sway sentiment. The Argus price assessment for lithium hydroxide minimum 56pc fob China price assessment has fallen by 30pc since February last year, as surging interest in developing lithium projects has led to projections of oversupply, despite rising demand from the battery sector.
Lithium prices are not expected to rise significantly over the next 2-3 years, Argus Consulting’s Mark Seddon told the conference.
Cobalt prices have also been volatile on the back of interest from investors attracted by the EV story. The Argus duty unpaid Rotterdam price assessment for 99.8pc chemical grade metal is down by 60pc from its peaks in April 2018.
Cobalt, mostly produced as a by-product of base metals production, also faces multiple reputational and regulatory challenges such as issues over sustainability and artisanal mining, the conference heard. Cobalt “thrift” is leading to the reduction of cobalt content in some battery chemistries, one delegate noted.
But batteries still account for 52pc of cobalt consumption, industry association Cobalt Institute’s president, David Weight, said. “Recycling is going to play a major role in meeting supply going forward,” he told the conference.