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Battery Metals, Cobalt, Montcalm, Nickel

Shortages flagged for critical EV materials lithium and cobalt

As the world moves to meet stringent targets for cutting carbon emissions — partly by phasing out internal-combustion engine cars — demand for lithium, cobalt and nickel vital for electric vehicle batteries will soar, raising the prospect of shortages.

High lithium prices have failed to spur investment in new capacity due to lower long-term contract prices, while the problem for cobalt supply is that it is mainly a byproduct of copper, meaning investment decisions are based on copper prices.

For nickel, new projects in Indonesia, which has the world’s largest reserves, mean the likelihood of major shortfalls may only come into play towards the end of this decade.

Lithium

Electric vehicle batteries can use lithium carbonate or lithium hydroxide, but the industry typically talks of lithium carbonate equivalent (LCE) which contains both.

LCE prices on the spot market have risen above $12,000 a tonne, more than double the levels seen in November last year and the highest since January 2019, Benchmark Mineral Intelligence (BMI) says.

Those levels are high enough to incentivise investment in new capacity, but annual or longer term contracts signed in the last quarter of 2020 with lower prices are a barrier.

BMI’s George Miller forecasts a LCE deficit of 25,000 tonnes this year and expects to see acute deficits from 2022.

“Unless we see significant and imminent investment into large, commercially viable lithium deposits, these shortages will extend out to the end of the decade,” Miller said.

The location of more than 60% of processing capacity in China is a concern as it could pose a risk to electric vehicle supply chains in the United States and Europe.

Roskill’s analysts estimate lithium carbonate equivalent demand will rise above two million tonnes by 2030, a more than 4.5 fold increase from 2020.

Cobalt

Cobalt content in batteries has been cut significantly in recent years, but soaring sales of EVs mean demand for the minor metal is expected to rise overall, leaving deficits.

Analysts at Roskill forecast cobalt demand will rise to 270,000 tonnes by 2030 from 141,000 last year.

Indonesia’s high pressure acid leach (HPAL) projects will help cover some of the shortfall.

But the problem remains that cobalt is mostly a byproduct.

“It’s difficult to invest in cobalt specific capacity because it is a byproduct. There isn’t a mechanism within which supply can react to demand and prices,” said George Heppel, a consultant at CRU.

“If we look out to the mid-2020s, we could really do with another Katanga.”

Glencore expects its Katanga mine in Democratic Republic of Congo to produce 30,000 tonnes of cobalt this year.

CRU forecasts cobalt demand from electric vehicles to account for more than 120,000 tonnes, or nearly 45% of the total, by 2025 compared with nearly 39,000 tonnes, or 27%, in 2020.

The world’s largest cobalt producer is the Democratic Republic of Congo, which is taking steps to develop controls and traceability of artisanal material to make it acceptable to those worried about human rights abuses.

Nickel

Concerns about nickel supply for battery chemicals dissipated after Chinese nickel pig iron (NPI) producer Tsingshan Holding Group said it would convert NPI into matte, which can be used to make chemicals for batteries.

“There are now projects totaling 300,000 tonnes per annum to convert NPI into a product that can be turned into sulphate for batteries,” Macquarie analyst Jim Lennon said.

“That nickel is on the verge of a surpercycle is hype. It will be over-supplied until at least the mid-2020s.”

Lennon also expects Indonesia’s high pressure acid leach (HPAL) projects to produce between 400,000-600,000 tonnes of nickel a year for much of this decade.

Global nickel supply is estimated at around 2.6 million tonnes this year. Of that about two-thirds will be used by stainless steel mills, most of them in China, while electric vehicles account for less than 10% of consumption.

Tsingshan said in March it would supply 100,000 tonnes of nickel matte to customers.

“There are other operators in Indonesia who could follow Tsingshan,” said BoA Securities analyst Michael Widmer, who expcts NPI supply to contribute to surpluses in 2024 and 2025.

Source: Mining.com
Battery Metals, Cobalt, Nickel

Study predicts over 400% increase in copper, lithium, nickel battery demand

BloombergNEF has upped its predictions for annual demand for lithium-ion batteries by more than a third from its previous forecast on the back of expectations for rapid growth in the passenger vehicle segment.

BNEF predicts annual demand for lithium-ion batteries will pass 2.7 terawatt-hours per year by 2030 – a 35% increase from the analytics company’s forecast made last year. Passenger vehicles will represent 72% of the overall market as sales race to 14 million by 2025 from just over 3 million last year.

BNEF expects China to extend its lead in the battery supply chain — particularly processing and refining. The country accounts for almost half of new lithium hydroxide projects coming online this year and has 55% of the world’s nickel sulfate market and 80% of the global market for cobalt sulfate, according to the report.

The Asian nation also accounts for 95% of the world’s manganese sulfate production and almost all of the graphite used in producing materials for anodes. Despite its dominance in the supply chain, the electric car market is expected to grow fastest in Europe with Germany expected to represent 40% of total sales by 2025 versus 25% for China.

“Diversifying the global supply chain would require significant investment from regions such as Europe and North America.”

Chemistries

BNEF says automakers wary of rising raw materials costs could switch to lithium iron phosphate (LFP) batteries, which are significantly cheaper to manufacturebut come at the expense of lower range. This would enable the electrification of transport to continue unabated, says the firm:

“LFP’s share of stationary storage deployments in 2030 jumps to 53% in this outlook from 23%, at the cost of the highest nickel chemistries.”

Lithium

BNEF believes lithium carbonate and hydroxide should be sufficiently supplied until at least 2025, but hydroxide could face a shortage by 2027, as demand for high nickel chemistries surges:

“One key risk is that some 35% of the projected supply growth from now until 2025, will come from integrated spodumene-to-hydroxide converters in Australia.

“These projects are expensive and have a history of delays. Should the commissioning of these Australian converters be delayed there may be a shortage of hydroxide by 2025.”

Lithium prices have been on a tear this year, with carbonate climbing 71%, hydroxide 91%, and spodumene feedstock 58%. BNEF expects all prices to continue their rally but gradually plateau as more supply comes online through 2022.

Nickel

The nickel sulfate market is expected to remain balanced in the medium term and in the near term prices should hover around the $18,000 a tonne mark:

“Domestic demand in China was relatively low as some automakers are shifting to LFP chemistries. This will have limited impact in the adoption of nickel-rich battery cathode chemistries, and as such, the nickel sulfate market may slip into a 128,000 metric ton deficit as early as 2024.

“At the start of the year, BNEF predicted that the nickel market will move into a two-tier system for nickel pricing to further incentivize investment into additional Class 1 battery-grade nickel supply. At the end of the first half of 2021, there have been no concrete developments toward this much-needed change in the dynamics of pricing in the nickel market.”

Cobalt

BNEF expects the cobalt market to move into a small surplus of around 3,300 tonnes this year on the back of increasing large-scale and artisanal mining production. The DRC is responsible for some two-thirds of global output, which is predicted to rise to about 166,434 tonnes in 2021.

From above $50,000 a tonne in March, a two year high, cobalt metal prices could average $45,000 per tonne by the end of the year:

“With the market projected to be relatively in surplus this decade, BNEF expects prices will hold at an average of $44,000 per ton up to 2025.”

Manganese

Manganese production in top producer South Africa in April more than tripled as covid disruptions eased, but BNEF says mining operations in the country are plagued by challenges associated with haulage, electricity reliability and port operations.

The manganese battery supply chain will experience the strongest growth through 2030, with the market increasing in size by a factor of more than 9. Manganese sulfate prices have risen 30%, from $867 per tonne in January to $1,128 in June, and are expected to continue to strengthen over the course of the year:

“With the manganese sulfate market currently projected to be in a deficit, prices are likely to rise to support new refinery projects in order to meet demand by 2024.”

Graphite

Graphite demand from lithium-ion batteries, according to BNEF, is set to grow by 37% year on year to just under 447,000 tonnes in 2021, increasing fourfold by the end of the decade.  Commercial vehicles will represent the fastest growth, with year-on-year demand doubling in 2021.

Source: Mining.com