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The Coming Shortfall in Battery Metals Could Have Dramatic Implications

The push to a lower carbon world will result in many challenges that will need both financial and technological innovation to solve. The move to electric vehicles (EVs) is a significant part of the push and an area fraught with challenges, as Brady’s Tasja Botha discovered while moderating a webinar recently in conjunction with Reuters titled “The Battery Metals Boom – Meeting the Supply and Demand Challenge”. She interviewed Michael Willoughby of Standard Chartered and John Burba of International Battery Metals about some of these challenges. I recently watched the session and found it extremely interesting.

The starting point of the discussion was that by 2030, 30% of all vehicles globally are targeted to be EVs. The problem with this is simply that according to the guests, if you put all known Lithium extraction facilities into production, there will still be a 1-million-ton shortage in that metal created by those EVs and their need for batteries.

Michael Willoughby felt that this was a conservative estimate and expects a lot more switching to EVs in the next few years. As John Burba said, he could think of no other commodity in which such a huge shortfall was projected.

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This shortfall in production ought to be set against current production to see just how serious it is. 2018 global Lithium production was 85,000 tons whereas 2.5m tons are required to put that many EVs on the road. Indeed, total global reserves are currently only 14 million tons! Bear in mind, the total required production is ONLY for EVs so in fact, the shortfall may well be higher.

With this sort of starting point, the discussion gets interesting. Points covered include,

  • The need for finance both in terms of CAPEX, investment and in improving how miners operate currently both in terms of processes and environmental and social impacts,
  • Where the financing may come from and under what circumstances,
  • The need for technological innovation both for cleaner operations, extraction methods and processing as well as exploration and prospecting,
  • The impacts of Battery metal extraction and processing methods which have neither been environmentally or socially acceptable. This includes a discussion of the water needs of some current extraction methods and the impact that has had on indigenous populations in Chile, for example, who now have no water supply and must be resettled,
  • What some alternative ways to process and extract these metals may be, and
  • A look at recycling and why so far, recycling has proven inefficient with costs higher than the virgin metals, among other topics.

The projected shortfall in battery metals is not often discussed in the media nor by the politicians who seek to drive the energy transition that relies on batteries to take place at all in the timescales envisioned. The result could be that considerably fewer people have access to private transport in the future due to its prohibitive cost (shortfall means significantly higher prices), or a period of financial and technological innovation.

I have always been an advocate of human ingenuity especially when backed by a financial incentive and as a Geologist by training, I have a degree of faith that alternative reserves will be discovered once the effort is made. However, part of the problem alluded to by the guests is that the current industry players are once bitten, twice shy, having made considerable investments in mining certain metals in the past on promise of shortfalls only to deliver excess production and lose money.

The Brady/Reuters webinar can be viewed on YouTube.