mining

The current coronavirus pandemic may have thrown a wrench into the gears of many industries, but — against the backdrop of skyrocketing materials supply needs in the context of the green energy transition — Europe continues to forge ahead with the buildout of its large-scale battery gigafactory capacity. 

According to London-based Benchmark Mineral Intelligence, whose analysts forecast that at least European 16 plants will be operational by 2030, there have been “some issues with cell producers in Europe struggling to ramp cell production in new facilities to meet demand, but in terms of construction timelines the plants to date have remained on schedule.” 

With the World Bank forecasting that production of metals and minerals like graphite, lithium and cobalt will have to increase by nearly 500 percent by 2050 to meet global demand for renewable energy technology, this development comes as no surprise.  Growing mineral resource pressures in the context of the low-carbon transition are also prompting global miners to shift their traditional focus, as evidenced most recently by Rio Tinto’s decision to invest almost $200 to move to the next development stage of the lithium-borate Jadar project in Serbia.

While China continues to hold the pole position as the world’s largest producer of lithium ion batteries, a continuation of the European gigafactory buildout at the above-referenced pace would put Europe at a total annual production capacity of 446 GWh and place the region in second place.  It would also perpetuate the “bystander status” into which the United States has maneuvered itself in the context of the global battery arms race.

Earlier this year, Benchmark Mineral Intelligence’s managing director and member of the ARPN panel of experts Simon Moores argued that  

“[i]n February 2019, there were 70 battery megafactories in the pipeline of which 46 are in China and 5 in the USA. Today there are 136 of these super-sized electric vehicle battery plants in operation or being planned: 101 in China and 8 in the USA. China is building a battery gigafactory (megafactory) at the rate of one every week; the USA at one every four months. In 2019, China produced 72% of the world’s lithium-ion batteries whereas the USA only 9%.”

Testifying before the U.S. Senate in June of this year, Moores renewed his call for decisive U.S. action by invoking the U.S.’s successful creation of a widespread semiconductor industry in the 1980s:

“The lead that the USA built in semiconductors and computing power due to companies like Fairchild Semiconductor and Intel Corporation has sustained the USA’s dominance in global computing for over 5 decades.

Likewise, those who invest in battery capacity and supply chains today are likely to dominate this industry for generations to come.

It is not too late for the US but action is needed now.”

While U.S. policymakers are increasingly aware of the urgency of our nation’s critical mineral needs — a case in point being the formation of a bipartisan “Critical Materials Caucus” in the U.S. House of Representatives late last month) — political calculations in a watershed election year won’t make it easy for reform-minded lawmakers to chance the status quo. 

However, a look at Europe’s forging ahead with its gigafactory buildout should serve as a reminder that the rest of the world won’t wait for us.

Earlier this month, Elon Musk, founder and CEO of tech giant Tesla, made headlines with his call on global mining companies to boost production of nickel, a key component in EV battery technology.

“Any mining companies out there … wherever you are in the world, please mine more nickel,” he said, adding “Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way. (…) Don’t wait for nickel to go back to some high point you experienced five years ago (…).”

Against the backdrop of Musk’s call to action to miners, Shane Lasley, publisher of Metal Tech News, entertains the question of whether Tesla gigamines might be added to the front of the company’s supply chain in a new piece for the publication.

Lasley argues that while Musk’s offer seems to imply that his preference would be for the mining sector to supply nickel, there are “subtle clues” indicating that he would be willing to set up a Tesla mining operation if needed.

Providing context, Lasley writes:

“While Tesla can easily expand battery production by simply building more gigafactories and squeezing more efficiencies out of the enormous facilities already in operation, getting the raw materials to these factories could be the challenge.

This is because Tesla is not the only EV and lithium-ion battery company driving massive new demand for nickel, graphite, lithium, cobalt, and manganese. Every major automobile manufacturer on Earth is rolling out new electric and hybrid models, and new players are emerging in both the EV and lithium-ion battery sectors.”

With the World Bank forecasting that production of metals and minerals like graphite, lithium and cobalt will have to increase by nearly 500 percent by 2050 to meet global demand for renewable energy technology, it comes as no surprise that EV manufacturers are kicking their search for raw materials into high gear. However, as Lasley points out, “there have been no reports of automakers getting directly involved in the business of mining … at least not yet.”

Musk hinted at the possibility of throwing Tesla’s hat into the mining business ring in 2019, but so far, seems to intend to lean on miners to provide necessary supplies. That may change, however, because as Musk stated last year, “[Tesla will] do whatever we have to, to ensure that we can scale at the fastest rate possible.”

Those of us interested to find out more, should probably create a calendar item for September 22 — Battery Day.

Writes Lasley:

“Slated to be held in Freemont, California on Sept. 22, Battery Day is an event where Tesla is expected to showcase its batteries and introduce new technologies. And, given Musk’s prelude, we are likely to learn a lot more about the company’s plans to source the minerals and metals at the front end of its gigafactory supply chain.”

Read Lasley’s full piece here.

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