A Looming Shortage of Lithium and Cobalt? Depends on Electric Cars, Politics, and Battery Chemistry
Some analysts are predicting that, by 2050, the demand for the metals essential for lithium ion batteries may be in short supply.
Joining the trend of shortages in the electronics industry, from NAND flash memory to IC packaging, is a possible looming scarcity of lithium and cobalt.
Some analysts are predicting that, by 2050, the demand for the metals essential for lithium-ion batteries may be in short supply.
Competing for the materials are producers of batteries for smartphones, tablets, laptop computers, and an electric vehicle industry which has seen significant growth globally.
The shortage won’t be due to a lack of raw material but rather a lack of mines available to meet demand. Lithium can be found across the globe in North America, South America, Europe, Africa, and Asia, but nearly half of the global lithium supply comes from Argentina, Bolivia, and Chile.
Unfortunately, a perfect storm of policies that make investment difficult, and regional unpredictability, have made it difficult to prepare for a ramp up to meet global demands for lithium. For example, in Chile the laws limit lithium production to under 80,000 metric tons, though there's been recent speculation over whether changing Chilean politics could increase production soon. Over the next 10 years, an additional 800,000 metric tonnes will be required to meet projected demands.
Lithium brine pools in Chile. Image courtesy of Reuters.
A Game of Battery Chemistry
In 2009, 26% of the world’s lithium supply was used for batteries, and in 2015 that increased to 38%. Nearly 20 mining and production sites are currently planned or under construction globally, but the first of these will not begin production until 2019.
Further, there is resistance in some of these areas on introducing more mining operations, due to the damage it causes to the environment.
However, a shortage of lithium may not have that great of an impact on actual costs of batteries—a 300% increase in lithium cost would only raise the price of batteries by 2%. What will be expected to impact battery prices, however, is the possibility of a shortage of cobalt, in which nearly 42% of global supplies are used for batteries.
Once again, cobalt is primarily found in regions of instability. Two-thirds of the global cobalt supply is in the Democratic Republic of Congo, where policies, corruption, and instability prevent the investment needed to keep up with world demand. The Congo has also imposed high taxes and royalties on mining operations, driving up prices. There are also issues in the region with the use of child labor.
If prices of cobalt rises 300%, the reflection in the cost of batteries would be around 13%, which would be felt a little more by consumers.
Some Potential Solutions in Battery Recycling, New Technologies
There are some solutions underway that could make the dependency on the world supply of lithium and cobalt a little less severe.
It’s absolutely possible to recycle both lithium and cobalt from batteries, although the process has been long considered to be expensive, inefficient, and overall not worth the effort. However, there are companies that are preparing for the EV industry to take off and to cash in on the recycling of batteries, finding innovative ways to make the process cost-effective.
American Manganese, based in Vancouver, Canada, “mines” cobalt and lithium from failed batteries, costing roughly $0.30/pound. The materials then can be resold for up to $20/pound. The process involves an automated system that removes the casing and then soaking the battery cells in a chemical solution that causes the lithium and cobalt to precipitate. One of the challenges the company faces is the lack of standardization in battery packaging across companies, making the process slightly more difficult.
It is estimated that up to 10% of the world’s supply of Lithium and Cobalt could come from recycled materials by 2025.
There is also increasing interest in new battery technologies—solid-state batteries in particular. SSBs promise to be more stable than lithium Ion (for example, they probably won’t catch fire on impact), be more compact, have higher energy density, and fare better in more extreme temperature gradients. Many SSBs will also use more readily available, more economical, and more environmentally friendly metals such as sodium. A consortium of car companies which includes Toyota and Honda are even working together to try and materialize SSBs for EVs.
BMW is reportedly working on solid state battery technology. Image courtesy of BMW Blog.
Tied into the Fate of the Electric Vehicle Market
It’s also possible that the predictions about supply and demand of lithium and cobalt may not come to fruition.
As is sometimes the case when shortages occur, the momentum to produce may instead flood the market and bring down prices.
Another factor is that part of the appeal of electric vehicles were subsidies offered by many states. Up to 25 states used to offer tax breaks or some sort of incentive for switching to electric vehicles—but, in 2017, this number was reduced to only 16. Many electric vehicles are sold at a premium in the first place, so the lack of substations or incentives could make them inaccessible enough to slow down their adoption.
We may need to wait a few more years to really know which way the industry will go.