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Mining and Electric Vehicles: Lithium, Nickel, Cobalt

Summary:
By Lambert Strether of Corrente. Readers, every so often I mention the famous New Yorker article about a reporter who accompanies a group of locals into a swamp to find a bird, thought to be extinct, but whose song may have been heard. After many many pages, the upshot: They didn’t find the bird. I’m afraid this post is like that. Among the many unanswered questions about electric vehicles (EVs) is whether we have enough of the necessary minerals — lithium, cobalt, nickel — to manufacture their batteries. We are now at 91 lithium ion battery megafactories in the pipeline to 2028 #EV — Simon Moores (@sdmoores) July 5, 2019 (The vast majority of these factories are not in the United States[1]) Can we — I suppose as a species instead of a polity — keep all these factories running?

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By Lambert Strether of Corrente.

Readers, every so often I mention the famous New Yorker article about a reporter who accompanies a group of locals into a swamp to find a bird, thought to be extinct, but whose song may have been heard. After many many pages, the upshot: They didn’t find the bird. I’m afraid this post is like that. Among the many unanswered questions about electric vehicles (EVs) is whether we have enough of the necessary minerals — lithium, cobalt, nickel — to manufacture their batteries.

(The vast majority of these factories are not in the United States[1]) Can we — I suppose as a species instead of a polity — keep all these factories running? For how long?

Now, I was in Canada for the Bre-X scandal, “the most elaborate fraud in the history of mining,” which involved fake (“salted”) samples of gold; Bre-X had a market capitalization of $4.4 billion before the fraud was exposed. So I’m not disposed to take reporting on mineral reserves on faith, and most of the sources I read seemed to be talking their book. (Those in the Naked Capitalism readership who are minerals fans will correct me on this.) I had hoped to begin from the material characteristics of lithium, nickel, and gold, from which the mining technique would follow, and combine that with the location of deposits to come to some sort of rough estimate of supply, and of the risks involved.

For example, lithium (Li) is so reactive that it never occurs freely in nature. It dissolves in brine, so one approach is to look for subsurface brines under dry lake beds, pump the brine into evaporation ponds, and when the brine is sufficiently concentrated, extract the lithium and then pump the result back under the lake bed. This is the approach used for the world’s largest lithium deposits, in the “Lithium Triangle” (Argentina, Chile and Bolivia). By the Monroe Doctrine, we should be controlling that piece on the board, but Germany and China seem to be doing the investing. So, that looks a lot like fracking re-injection to me, an environmental risk, and there’s geo-political risk as well.

Cobalt (Co), like lithium and nickel, is only found in chemically combined form, as a metallic-lustered ore, most often as a by-product of copper and nickel mining in the Congo, where there are also seams of cobalt close to the surface. As a result, there are “artisanal miners” — what a phrase — who scour the mine tailings for shiny cobalt, or dig informal shafts. Here there are political risks, the Congo being what it is, and public relations risks, since artisanal miners are often children, and who wants a supply chain (that’s undeniably) tainted by child labor?

Nickel (Ni) is mined worldwide (Indonesia, the Philippines, Russia, New Caledonia, Australia, and Canada, among others. “Nickel mining occurs through extractive metallurgy, which is a material science that covers various types of ore, the washing process, concentration and separation, chemical processes and the extraction process.” So we don’t have artisanal nickel mining, and the environmental effects are no more than normally bad for “extractive metallurgy”, which is awful. Given the countries where it’s mined, the political risks seem minimal[2].

But — and this is the longest windup ever, I feel like Luis Tiant — that approach is simply too complicated, and doesn’t lead me to the question of supply. So I’m going to move ahead to a topic-based review of the literature. This is a topic I hope to return to, so I hope readers will, as it were, provide me with some paths through the swamp, or even give me a line on the bird.

It’s Not Clear We Have the Necessary Lithium, Cobalt, and Nickel

From the UK’s Natural History Museum:

There are currently 31.5 million cars on the UK roads, covering 252.5 billion miles per year.

If we wanted to replace all these with electric vehicles today (assuming they use the most resource-frugal next-generation batteries), it would take the following:

  • 207,900 tonnes of cobalt – just under twice the annual global production
  • 264,600 tonnes of lithium carbonate (LCE) – three quarters the world’s production
  • at least 7,200 tonnes of neodymium and dysprosium – nearly the entire world production of neodymium
  • 2,362,500 tonnes of copper – more than half the world’s production in 2018

Even if we only wanted to ensure an annual supply of electric vehicles, from 2035 as pledged, the UK would need to annually import the equivalent of the entire annual cobalt needs of European industry.

For the UK alone. As John Petersen points out in Seeking Alpha:

Bernstein Research analyzed the incremental technology metal requirements for an ~88% transition from ICE to EV. This table summarizes their conclusions and compares those requirements with the current global production base for each technology metal:

Mining and Electric Vehicles: Lithium, Nickel, Cobalt

While aluminum doesn’t present insurmountable issues and increasing graphite and lithium production from modest current levels is theoretically possible, doubling nickel production over a period of 17 years would require herculean effort and doubling copper production would be almost impossible. Since cobalt is a byproduct of copper mining in the Congo and nickel mining in other parts of the world, the only path I’ve seen that has a chance of growing to meet anticipated demand is sub-sea mining. While extensive work in the 1970s proved that sub-sea mining was technically feasible, the only commercial sub-sea operations are diamond mines in offshore Africa.

And we’re on deadline.

Battery Production Is Not Green

Wired:

“Like any mining process, [lithium mining] is invasive, it scars the landscape, it destroys the water table and it pollutes the earth and the local wells,” said Guillermo Gonzalez, a lithium battery expert from the University of Chile, in a 2009 interview. “This isn’t a green solution – it’s not a solution at all.” But lithium may not be the most problematic ingredient of modern rechargeable batteries…. Unlike most metals, which are not toxic when they’re pulled from the ground as metal ores, cobalt is “uniquely terrible,” according to Gleb Yushin, chief technical officer and founder of battery materials company Sila Nanotechnologies.

I understood about artisanal mining and child labor, but I didn’t understand that children were handling a toxic material.

Battery Recycling Isn’t a Thing

It’s difficult. From Engineering.com:

Whereas lithium batteries are said to be 95 per cent recyclable, the practice of recycling them is more easily said than done. Throughout their lifespan, lithium batteries undergo irreversible damage, meaning that they can’t simply be repurposed. Instead, they need to be entirely taken apart, the lithium extracted, and then re-manufactured. But even this is an oversimplification.

Battery manufacturers incorporate several additives into the electrolyte liquid in the Li-ion battery. The purpose of these additives is to improve the battery in many ways, such as by speeding up the manufacturing process, or making the battery more durable in hot and cold weather. But when manufacturers keep the battery cocktail a secret, repurposing the precious minerals contained within becomes difficult and, therefore, expensive.

Moreover, the electrolyte mixture is the component of the battery that has been known to explode when handled incorrectly, for instance, if it is subjected to high temperatures. This means that any attempt at creating a recycling process will need to find a way to ensure that the batteries are dismantled in a safe manner.

With these difficulties in mind, it’s not surprising that recycling rates for lithium battery is really low; only 2 per cent of lithium batteries in Australia are recycled, with the rest left to rot in landfills. But the problem does not necessarily come from members of the public carelessly tossing their cracked iPhones into the trash.

It might be argued that sustainable recycling infrastructure should come from the car companies—a process that is still not cost effective compared to market lithium costs, and therefore provides little incentive. “Recycled lithium is as much as five times the cost of lithium produced from the least costly brine based process,” Waste-Management-World stated. Even with our best efforts, recycled lithium is not pure enough to produce batteries, and the material ends up being used for non-battery purposes.

Recycling will be a big problem. From CFact:

Most electric vehicles in use today are yet to reach the end of their cycle. The first all-electric car to be powered by lithium-ion batteries, the Tesla Roadster, made its market debut in 2008. This means the first generation of electric vehicle batteries have yet to reach the recycling stage. An estimated 11 million tons of spent lithium-ion batteries will flood our markets by 2025, without systems in place to handle them.

It doesn’t seem likely that the externalities of disposing of, let alone recycling, lithium-ion batteries have gotten much attention in the EV industry, let alone from regulators. I’m picturing an enormous pile of batteries catching on fire somewhere, but I have a vivid imagination.

The Prevalance of Magical Thinking

From the recent Benchmark Minerals Intelligence conference:

“Sarah Maryssael, Tesla’s global supply manager for battery metals, told a closed-door Washington conference of miners, regulators and lawmakers that the automaker sees a shortage of key EV minerals coming in the near future, according to the sources.”

Update: Reuters updated their story to that a Tesla spokesman said: the comments were industry-specific and referring to the long-term supply challenges that may occur with regards to these metals.

With EVs at 2% of the market, I suppose in the short term there are no problems, yes. However:

[Tesla] rarely comments on supply problems at the mineral level [odd] and when it has in the past, it mainly brushed off concerns.

That’s partly because cobalt has been the main concern for many automakers and Tesla’s use in cobalt in its proprietary [i.e., not recyclable in the general case] battery chemistry is somewhat limited.

Nickel and copper are the most common minerals in its batteries, but there are also the most commonly mined.

It’s interesting that they are now warning that there could be shortages. It’s another indication that the growth in the industry is going to happen fast in the next few years with so many different mass market EV programs in the work.

Those are good problems to have because they indicate that we are going in the right direction and they are somewhat easily solvable. They just require investments.

“They just require investments.” And investment is a zero-time task!

Conclusion

I wish I felt I had my arms round the material completely, but no doubt that will come with future study. (EV stans, don’t @ me.) Do any of the old codgers in the readership remember Saturday Night Live’s sketches on Toonces the Driving Cat? This video is seconds long:

That’s what the EV discourse reminds me of. For most of the time Toonces was on the road, past results did indeed predict future performance (“we are going in the right direction”). Until they didn’t! Was the only requirement “more investment”? No. Cats like Elon Musk shouldn’t be driving anything!

NOTES

[1] Simon Moores, Managing Director of Benchmark Mineral Intelligence: “Right now, the US produces 1% of global lithium supply and only 7% of refined lithium chemical supply, while China produces 51%. For cobalt, the US has zero mining capacity and zero chemicals capacity whilst China controls 80% of this second stage.” It’s not clear that ramping up domestic production will be easy, especially on public land. And developing a nickel mine, at least, can take a decade.

[2] Making this statement from Tesla all the more odd: “Tesla claims that the nickel in its vehicles is 100% reusable at the end of life, but refused to disclose to the Guardian where the nickel in its car batteries is sourced from. In a statement a Tesla spokesperson said suppliers were ‘three or four layers removed from Tesla. It is obviously quite difficult to have perfect knowledge about everything that happens this far down in the supply chain, but we’ve worked extremely hard to gather as much information as possible and to ensure that our standards are being met.'” If there’s nothing to deny, why all the deniability?

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