“There needs to be more widespread investment in the development and exploration of all critical mineral resources”
Benchmark Mineral Intelligence (Benchmark) is a world leading clean energy supply chain price reporting agency (PRA) and market information provider headquartered in London, UK, certified by IOSCO. Its analysts provide a full range of industry information, from cobalt, lithium, nickel, anodes, cathodes, to battery packs and electric vehicles, covering the upstream, midstream, and downstream of the lithium– ion battery value chain. The MMTA spoke to Benchmark Mineral Intelligence’s George Miller and Cameron Hughes about the group’s forecasts for lithium-ion batteries production and the raw materials key to the energy storage technology.
MMTA: What is Benchmark’s outlook for lithium-ion battery capacity over the next decade?
By 2025, we anticipate over 3300 GWh of lithium-ion battery production capacity globally, and by 2030, we anticipate over 5400 GWh of lithium ion battery capacity, compared to approximately 1000 GWh of battery production capacity present in the market in 2021.
How does this compare to capacities for other battery types?
This far surpasses production capacity in any other battery type, to the extent that even technologically competitive technologies may be outcompeted given the significant economies of scale and cost benefits achieved by the rise of mass production of the lithium- ion battery.
What is the regional picture for lithium-ion battery capacity over the next decade?
In 2021, approximately 80% of global lithium ion battery production capacity resided within China, at just over 800 GWH, which was a magnitude larger than production capacity in any other region. By 2025, cell manufacturing will begin to localise closer to growing end markets for EVs, with 26% of global capacity set to be located outside of China, with growth primarily in the European and North American regions.
What will be the battery raw materials requirement to meet this demand?
To support the rise in battery capacity, by 2025 there will be an expected 221% increase in both lithium and graphite demand, 267% rise in nickel demand, and a 120% rise in cobalt demand.
How might supply chains need to adapt to supply these volumes?
George Miller: Investment into the downstream and midstream of the supply chain is looking strong in capacity terms, yet investment in the upstream raw material production capacity is yet to truly rise in step with the forecasted growth in demand from the lithium ion battery industry.
In turn, there needs to be more widespread investment in the development and exploration of all critical mineral resources.
Moreover, this needs to be more equally distributed in terms of geography for respective regions to have fully secure lithium ion and EV supply chains – as indicated by the COVID-19 pandemic and resulting global supply chain disruptions over the past two years, increased proximity of mining and manufacturing to the end market can only help in terms of ensuring supply chain stability, and reducing emissions incurred in transport of these critical raw materials.
Given a forecasted deficit in the lithium market balance by the end of 2022 and for the near-term, considerable additional investment needs to go towards bringing new lithium supply to market. To ensure this happens, the industry ought to also examine new types of deposit, extraction techniques, and diversify the location of these sites in order to fufil the appetite of the lithium ion growth story.
Cameron Hughes: Continued investment in cobalt mining will be necessary, with the DRC’s cobalt output already set to almost double by 2030, despite already producing more than 70% of the global supply.
However, various risks associated with a market dominated by a single trade flow will force the supply chain to diversify away from DRC cobalt to ensure demand requirements are met. This can be expected through investment in other regions, such as Indonesia, while also reducing cobalt usage in lithium ion batteries.
MMTA: What proportion of battery raw materials demand could be met with secondary/recycled material?
Whilst recycling is currently not making a meaningful impact on raw material supply, the next ten years will be of paramount importance in terms developments in equipment design, process intensification, and waste minimisation.
We expect recycling to become more commercially widespread towards 2030, past which point recycled material will begin to make more of an impact in terms of cell feedstock supply.
By 2030, we anticipated recycled supply to comprise around 11% of global lithium market supply, 15% of global cobalt supply, and 5% of global nickel supply.
Could raw materials availability have an impact on battery chemistries over the next decade?
GM: The market share of various battery chemistries is more likely to be determined by consumer and automaker demand than the upstream of the supply chain, however most battery chemistries are set to be impacted by raw material shortages, potentially restricting operational rates at production facilities, throughout the decade.
In the near term, a forecasted lithium supply deficit will place pressure on all battery chemistries in terms of operational utilisation, whilst a structural undersupply of relatively environmentally friendly, battery-suitable nickel could limit production for NCM and NCA chemistries, especially those with higher nickel content, towards the end of the decade.
CH: Cobalt availability is already having an impact on battery chemistries, with cell producers eyeing the switch to high-nickel, low-cobalt cathodes; a shift which will be accelerated by forecasted deficits towards the end of the decade. It is also important to note, despite the projected reduction of cobalt per battery cell, cobalt demand is set to grow throughout the decade as the EV market grows exponentially.