EVs drive demand
Annual global lithium-ion battery demand is expected to sur-pass 1 TWh (1,000 GWh) for the first time this year. Demon-strating the scale of growth in this sector, this compares with just 70 GWh of demand in 2015. This growth has predomi-nantly been driven by the Electric Vehicle (EV) sector, which now accounts for almost 80% of lithium-ion battery demand. In 2015, total annual EV sales were approximately 600 thou-sand units, accounting for less than 1% of total vehicle sales worldwide and responsible for less than 40% of battery de-mand. The biggest end-use of lithium-ion batteries in 2015 was in portable electronic devices, such as mobile phones and laptops. This year, annual EV sales are expected to reach 17 million units, almost 30 times higher than they were in 2015, and account for 20% of total global new vehicle sales. This dramatic growth has largely been centered on China, where EV sales surpassed internal combustion (ICE) vehicle sales for the first time earlier this year. Meanwhile, EV adoption is now rapidly accelerating in other markets, such as Eu-rope and North America.
Lithium-ion battery demand by end-use and EV sales
*ESS – Energy Storage Systems
Despite recent headwinds, this growth trajectory is expected to continue moving forward as government policy, improving economics of EV ownership, increasing availability of EV models and charging infrastructure all incentivize increased adoption of EVs. By 2030, we expect EVs to account for almost 50% of new vehicles sold globally.
This growth will be the major driver behind increasing demand for lithium-ion batteries. This has major implications for the raw materials used within these batteries.
The flow of lithium ions from anode to cathode, and vice versa, is what creates the electrical current in a lithium-ion battery. Hence, lithium is the key raw material used in all lithium -ion batteries. As a result, the growth in lithium-ion batteries has been responsible for a rapid rise in demand for lithium. In 2015, total annual lithium demand was 180 thousand tonnes lithium carbonate equivalent (LCE), with only 35% of this demand coming from the battery sector. That demand has risen by more than six times since 2015 and is expected to surpass 1 million tonnes for the first time this year. Now, almost 90% of lithium demand comes from the battery sector.
Future battery materials demand projection 2030-2040 Chart by Visual Capitalist, Benchmark Mineral Intelligence
This rise in demand has necessitated a similar rise in supply, with new mines coming online in traditional lithium producing countries such as Australia, Chile, Argentina and China, and elsewhere, such as Brazil, Zimbabwe and Canada. This growth trajectory is expected to continue moving forward, with lithium demand expected to reach 5 million tonnes LCE by 2040, more than 5 times current levels. To meet this demand, we estimate there will need to be $188 Bn of investment in new lithium supply.
Lithium demand from batteries vs other end-uses
Global nickel demand and market share by sector
Lithium is just one of many critical raw materials in battery supply chains. One of these other key raw materials is nickel. This metal is used in the cathode of certain types of lithium-ion batteries which are often used in electric vehicles, specifically nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminium (NCA) batteries. Nickel’s biggest demand sector is stainless steel, which currently accounts for almost 70% of global nickel demand. However, the battery sector is increasingly accounting for a greater proportion of nickel demand. In 2015, battery demand accounted for 4% of total nickel de-mand, this is now up to 17%.
Global nickel demand and market share by sector
Battery demand for nickel is expected to continue to grow into the future. By 2040 we expect almost half of nickel demand will be from this end-use, requiring more than 3 mil-lion tonnes of nickel annually. This is 6 times higher than current annual demand from the battery sector. Like lithium, there will need to be significant investment in new nickel supply in order to meet this demand. We estimate that $119 Bn of investment will be needed in new mine supply to meet growing demand for nickel from batteries.
Cobalt is another critical metal used in these supply chains. Cobalt is used in NCM and NCA batteries commonly used in electric vehicles and also in lithium-cobalt-oxide (LCO) batteries, which are the main lithium-ion battery type used in portable devices such as mobile phones and laptops. The use of cobalt in these devices means that even as far back as 2015, batteries were the biggest end-use of cobalt, accounting for almost half of demand. However, the rise in adoption of EVs using cobalt containing battery chemistries means that this metal is now also increasingly linked to the EV market. This year, cobalt demand from batteries used in EVs will account for 60% of total cobalt battery demand, this is up from just 2% in 2015. By 2040, cobalt demand is forecast to triple from current levels and surpass 600 thousand tonnes globally.
Cobalt is largely produced as a by-product from mines targeting other metals. In particular, copper mines in the Democratic Republic of the Congo and nickel mines in countries such as Indonesia, Russia and Canada. As a result, cobalt supply can benefit from investment targeted at pro-duction of these other metals. Nevertheless, we estimate that cobalt supply will require $13 Bn of investment by 2040 to meet demand from the battery sector.
Market share of cobalt battery demand by end-use 2015-2024
Lithium, nickel and cobalt are just three of the critical raw materials used in lithium-ion battery supply chains.
To achieve the aims of the green energy transition and continue to grow the EV sector, there will need to be significant investment in the supply of other key raw materials alongside recycling, mid-stream battery component capacity and battery manufacturing capacity itself.
For more information on any of these areas, please visit www.benchmarkminerals.com
By Adam Webb, Head of Battery Raw Materials
Benchmark Mineral Intelligence
