Fortune Minerals Limited

10/15/2021 | Press release | Distributed by Public on 10/15/2021 07:11


Reuters - October 13, 2021

Summary Carmakers investing heavily in battery cell production Investment in raw material extraction has lagged Firms vie for supplies ...

with exclusive supply contracts. So far, lithium has mainly come from Australia and Chile, cobalt from the Congo, and graphite from China.

Major carmakers like Volkswagen, Daimler and Stellantis have been racing to secure battery cell supplies in Europe, but may face a bigger challenge as they seek to go electric - finding enough battery raw materials…Failure to obtain adequate supplies of lithium, nickel, manganese or cobalt could slow the shift to electric vehicles (EVs),make those vehicles more expensive and threaten carmakers' profit margins…"There is a serious question as to whether supply can keep up with demand across the battery supply chain," says Daniel Harrison, an auto analyst at Ultima Media…"Nobody saw that as a problem," says von Dalwigk. "The thinking was that we can import battery cells."…This was followed by EU funding programmes worth billions and major battery plant announcements by car manufacturers and suppliers. Volkswagen alone plans six battery plants in Europe, while Daimler will build four with partners…Recently, battery cell factory announcements have come thick and fast, and EIT InnoEnergy now lists almost 50 planned projects in the EU…If all those plans become reality, local production should meet demand around 2030. About 640 gigawatt hours (GWh) would be available, enough for average annual production of 13 million cars…By 2030, Ultima Media estimates global worldwide supply at 2,140 GWh, with demand at 2,212 GWh…The problem lies with raw materials like lithium, nickel, manganese and cobalt…Market experts from Benchmark Mineral Intelligence (BMI) speak of "the great raw material disconnect" - high investments in cell factories, but missing investments in raw material extractionWithin a year, the price for lithium carbonate has more than doubled, explains Caspar Rawles, head of price and data analysis at BMI…In the case of cobalt, where the largest deposits are located in Democratic Republic of the Congo and are sometimes extracted under miserable working conditions, an increase in price is also expected…At the very beginning of the supply chain, it takes around seven years for new mines to be developed…"Europe is not the only region that is raising its e-car targets and reducing CO2 emissions," said Rawles…A global race is under way…The automotive industry is currently experiencing painful production disruptions due to the shortage of semiconductors…Some carmakers, including Volkswagen, are trying to secure the supply of raw materials with exclusive supply contracts…So far, lithium has mainly come from Australia and Chile, cobalt from the Congo, and graphite from China. The largest processors of cathode and anode material are also located there, and in Japan…But imports can become more expensive due to tariff increases in trade disputes and interrupted by logistics problems, as a tanker accident that blocked the Suez Canal recently showed…And long journeys are bad for those focused on making batteries with as few CO2 emissions as possible.