The demand for battery minerals has risen sharply in recent years as countries around the world continue to increasingly rely on renewable energy and electric transportation. Although batteries contain many minerals, the term battery minerals is typically used for the metals lithium, nickel, and cobalt and the non-metal graphite. Copper is another major component of electric vehicles, used in electric motors, batteries, inverters, wiring and in charging stations. Looking forward, the availability of these minerals will directly impact our transition from fossil-fuel based technologies to cleaner options.
Overview of The Battery Metals Market
Demand for Batteries
Globally, the transportation sector outweighs demand for batteries compared to other industries, a trend that is expected to continue in the coming years. Of the 185 gigawatt hours (GWh) of total demand in 2020, transportation was responsible for 100 GWh, consumer electronics for 60 GWh, and stationary applications for the remaining 25 GWh. By 2030, the demand by transportation and consumer electronics is projected to reach 1,745 GWh and 130 GWh respectively.
EV Sector Outlook
Much of the demand in transportation is from electric vehicles (EVs). While widely used in consumer electronics, the quantity of battery minerals used in lithium-ion EV batteries is much higher. For example, a 60-kilowatt hour (KWh) NMC 811 (nickel (80%)-manganese (10%)-cobalt (10%)) battery uses 5kg lithium, 5 kg cobalt, 39 kg nickel, and 45 kg graphite. The higher nickel content improves the amount of energy a battery can carry, resulting in improved driving range. The anode of most batteries consists of graphite.
Want to learn more about EV Batteries? Check out the Kinvestor Network’s 5 Interesting Facts About EV Batteries.
Global EV battery demand doubled in 2021, backed by electric vehicle sales in China. Looking forward, besides an increase in users, researchers expect an increase in battery capacity to be the main driver of the industry, projecting that the typical EV battery will have a capacity of over 2,700 GWh by 2030.
Supply and Demand of Battery Minerals
The significant increase in demand for battery minerals in the last several years has also led to a boom in battery metals production.
Lithium
Global production of lithium from mines has jumped significantly over the last several years, from 38,000 metric tons (metric tons) in 2016 to 82,500 metric tons in 2020. Management consulting firm McKinsey expects the demand for LCE (lithium carbonate equivalent) to increase by 20% per year between 2020 and 2030, expecting that batteries will be responsible for 95% of lithium demand by 2030. However, the confirmed current supply of lithium will only meet demand until 2025, and the confirmed, secondary, and early-stage supply will meet demand until mid 2028, reports McKinsey.
Graphite
Both natural and synthetic graphite is used in lithium-ion batteries. Total graphite production increased slightly in 2021 compared to 2019, reaching an estimated 1 million metric tons in 2021. The International Energy Agency (IEA) expects graphite demand to grow 8 to 25 times between 2020 and 2040, leading to what BMI describes as a projected graphite shortage starting this year.
However, global governments are working to ensure that the graphite supply can meet growing demand. Earlier this year, graphite and other battery materials were included by the U.S. government in a list of critical minerals classified as “essential to national defense” under the Defense Production Act (DPA) of 1950. Graphite is also listed as a critical mineral by Canada and the European Union.
Cobalt
EV batteries play a significant role in the global demand for cobalt. In 2021, 74% of EV batteries had cobalt-containing chemistries, reported the Cobalt Institute. Cobalt demand rose by 10% per year between 2013 and 2020, and by 2020 batteries used 57% of total mineral consumption. There was a 22% (31.6 kiloton) year-over-year increase in demand for cobalt in 2021, reaching 175 kt. The cobalt demand is expected to continue to grow 13% per year for the next five years, with EVs responsible for half of the demand by 2026.
While cobalt has long been an essential part of the lithium-ion batteries that give electric vehicles the range and durability needed by consumers, electric vehicle manufacturers have begun to find ways of phasing the mineral out of EV batteries because of its high cost, environmental impact and that much of it is sourced from conflict areas. However, there are issues, such as technological barriers, that will make this transition difficult. The U.S. Department of Energy (DOE), through the Vehicle Technologies Office, has committed to a multi-year, multi-thrust program to address all the scientific and engineering issues with eliminating most of the cobalt in EV batteries.
Nickel
The battery market is a small but growing section of the global nickel market. In 2020, it represented 6% of nickel consumption; stainless steel was the largest, with 72%. Nickel production has increased steadily in the last few years, from 2.5 million metric tons in 2020 to 2.7 million metric tons in 2021. According to the Nickel Study Group, a 2021 surge in use of the mineral led to a shortfall of 168,000 tonnes.
As EV manufacturers move away from cobalt, moves to include more nickel to boost energy density and extend driving range initially saw a shift from NCM 111 to 532 (50% nickel, 30% cobalt, 20% manganese) and 622. Many automakers are now looking at 811. However, looming nickel supply shortages could affect the EV battery market as global demand could grow to four times its current demand in the next 30 years.
Copper
In 2021, The United States consumed approximately two million metric tons of unmanufactured copper and approximately 1.8 million metric tons of refined copper, according to a Statistica report. Worldwide resources of the important and valuable metal are estimated at more than 870 million tonnes, with annual copper demand coming in at 28 million tonnes. However, recent concerns about copper shortages have raised questions about the future of copper supply, and by 2025 the demand for copper could outpace our current supply. A new S&P Global report entitled The Future of Copper: Will the Looming Supply Gap Short-circuit the Energy Transition? projects that by 2035 global copper demand will nearly double from 25 million metric tons today to about 50 million metric tons in order to supply technologies that are critical to achieving net-zero by 2050.
Interested in learning more about copper? Check out the Kinvestor Network’s 5 Incredible Facts About Copper.
Major Reserves, Producers, and Processors of Battery Minerals
The reserves, production, and processing of battery minerals is spread globally; however, countries like China and Australia feature prominently in multiple sectors:
Reserves
Chile had the highest reserves of lithium (9.2 million metric tons) in 2021, followed by Australia (5.7 million metric tons), Argentina (2.2 million metric tons), China (1.5 million metric tons) and the U.S. (0.9 million metric tons). Turkey led the world in graphite reserves in 2021 with 90 million metric tons, followed by China (73 million ), Brazil (70 million metric tons), Madagascar (26 million metric tons), and Mozambique (25 million metric tons). With 200 million metric tons in 2021, Chile also had the highest copper reserves in the world.
With 21 million metric tons of nickel reserves each, Indonesia and Australia were the top producers in 2021. South Africa, Russia, and Canada are other countries with sizable reserves. The Democratic Republic of Congo (DRC) is the clear leader in cobalt reserves, with about 3.5 million metric tons (nearly 50% of the total) in 2021. Australia (1.4 million metric tons), Indonesia (600,000 metric tons), Cuba (500,000 metric tons), and Philippines (260,000 metric tons) made up the other top five cobalt producers.
Production
Australia was the largest lithium producer in 2021 with 55,000 metric tons, followed by Chile with 26,000 metric tons, and China producing 14,000 metric tons. China is the global leader in mine production of graphite, with 820,000 metric tons in 2021. Other smaller producers include Brazil (68,000 metric tons), Mozambique (30,000 metric tons), Russia (27,000 metric tons), and Madagascar (22,000 metric tons).
The Democratic Republic of Congo dominates global cobalt production with 120,000 metric tons (over 70% of total production) in 2021. Indonesia ranks first among the top nickel producers with an output of one million metric tons. The Philippines (370,000 metric tons), Russia (250,000 metric tons), New Caledonia (190,000 metric tons), and Australia (160,000 metric tons) represent the .
Chile, Peru, and China are the largest producers of copper, producing 5.6 million metric tons, 2.2 million metric tons, and 1.8 million metric tons in 2021, respectively.
Processing
When it comes to processing battery materials, China dominates the market. In 2020, the country processed almost 58% off the global lithium supply and 65% of the supply of cobalt. Besides lithium and cobalt, China also processes over 30% of nickel and nearly 75% of graphite. Other countries and regions with notable processing capacities include Indonesia (nickel), Europe (cobalt), Japan (nickel), the U.S. (graphite) and Russia (nickel).
Besides mining and material processing, China also leads EV battery manufacturing. The country has 80% of the total anode material processing capacity, 70% of the cathode capacity, and over 75% of the battery production. South accounts for 15% of cathode production and Japan for 14% of anode production. China is responsible for over half of global EV production, while Europe has over quarter of the capacity. The United States accounts for only 7% battery and 10% of EV production.
Top Battery Metals Stocks
Albemarle Corporation (NYSE: ALB)
Albermarle is a U.S.-based global chemicals company specialising in lithium, bromine and catalysts. The lithium products of Albemarle include reagents for lithium batteries, lithium carbonate, plastics, and other products.
Sociedad Química y Minera de Chile (NYSE:SQM)
Chilean chemicals company Sociedad Química y Minera operates in multiple segments. In 2019, it was the second largest lithium producer globally with 17% market share. The lithium products SQM offers include lithium carbonate, lithium derivatives, and more.
Glencore PLC (OTC: GLNCY)
A leader in the mining and commodities industries, Switzerland-based Glencore turns over various minerals. The company is a leading producer of cobalt, producing some 31.3 thousand metric tons in 2021.
Vale S.A. (NYSE: VALE)
Vale S.A. is a Brazil-based metals and mining company operating through its base metals and ferrous minerals divisions. Producing 167,000 metric tons in 2020, it was the second largest nickel producer globally.
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