Pure lithium

Global developments in a nutshell

For the rest of this century, most of the world’s needs for critical minerals can be accommodated from mined resources in democratic countries and 95% recycling of battery content.  China and the European Union have policies in place to optimize electric vehicle (EV) battery recycling.

Australia towers above the rest as a source of half of global lithium resources.

Canada and the U.S. provide financial support for advancing critical minerals activities.

Howbeit, China’s critical mineral importation practices are admittingly problematic.  The antidotes are critical mineral deposits and policies of democratic counties plus EV manufacturers being sensitive to such concerns as integral parts of their public DNA image.

Too, South American lithium extraction practices pose large-scale unresolved environmental perils.

Global Supplies

The World Bank surmises that the demand for battery-related critical minerals will increase by 500% by 2050.  For lithium and graphite, production expansion could go as high as 4,000%.

Transport & Environment (T & E), an influential non-profit European organization, concluded that there is enough lithium and nickel in democratic countries to accommodate the electric vehicle (EV) needs of 14 million EVs in 2023 and 21 million in 2025.  As indicated in subsequent sections, government legislation and the supply chain criteria of the EV manufacturers are means to address human rights and environmental issues.

Recycled battery materials too will eventually play a major role on the critical minerals supply side, given 95% of EV battery content can be recycled with existing technologies.

Combining recycled and new sources of lithium, including lithium from salt brine, no shortage of supplies is expected.   Research indicates that, with a high amount of battery recycling, the supply of critical minerals will accommodate global transportation electrification through to 2100.  This scenario would see EVs accounting for 50% of lithium reserves and 55% for cobalt.

Some recycling firms and facilities are in place, most are planned.  And there are many existing EV manufacturers’ agreements with recyclers.  With mined lithium prices having risen 80% in 2022, recycled materials offer economic, as well as environmental advantages.

By 2040, optimizing recycling would reduce projected demand for mined lithium by 25%, cobalt and nickel 35% and copper 55%.

Half of new battery content for Sweden-based Northvolt batteries will come from recycled materials.  Northvolt aims to capture 25% of the European EV battery market by 2030.

Tesla hopes battery recycling will eventually supply 92% of the raw materials for new batteries.

To boot, high levels of recycled content results in 64% less emissions than that of a battery produced with 100% mined materials. 

China

Countries which offer abundant potential deposits of critical minerals are sometimes confused with predominance in the battery supply chain.  This is where China comes in.

China only has 10% of the global lithium raw resources.

Nonetheless, China accounts for half of the rare earth minerals supply chain in the world and 80% of global EV battery production.  Nearly two thirds of global lithium-ion battery production is manufactured in China.

Australia

Australia is the world lithium champion, providing 50% of the raw materials.  Indeed, Australia is on the verge of a boom due to its large deposits of lithium.

It also has large nickel, copper and cobalt deposits.

Australian lithium export earnings are expected to reach US$16 billion in 2022-2023, up from US$5 billion in 2021-2022.  The projection for the coming fiscal year would position lithium as the sixth largest Australian resource and energy commodity export.

Anticipated annual lithium production growth is 18% per year.  That would see production growing from 335,000 tonnes of lithium carbonate equivalent (LCE) in 2021–2022 to 399,000 tonnes in 2022–2023 and 470,000 tonnes in 2023–2024.

The country’s nickel production projection for 2022-2023 is 188,000 tonnes, a leap from 157,000 tonnes for 2021-2022.  The latter prediction aside, based on EV sales growth estimates, nickel content for batteries may increase by 42% in 2022.

On copper, Australia is the sixth largest exporter, while the country is believed to have the world’s second largest reserves.  The copper export projection is 895,000 tonnes in 2022-2023, making for export earnings of US$13 billion.  Copper exports brought in US$12 billion to the nation in 2021-2023.

Not surprising that many critical mineral stakeholders have arrangements to access Australia’s mine resources.

Three-quarters of Tesla’s lithium supplies come from Australia.

China’s CATL, the world’s largest battery manufacturer and Great Wall Motor Co. Ltd, the eighth biggest vehicle manufacturer in China, have a contract for spodumene — partly-processed lithium — with Australia’s Pilbara Minerals Ltd.

In 2022, Korea’s SK Innovation, the fifth largest EV battery producer, procured a 10% stake in Lake Resources in Australia for battery-grade lithium.  Production may start in 2024.

GM has invested in Queensland Pacific Metals of Australia to secure cost-competitive supplies of cobalt and nickel.

This year, Stellantis and GME Resources entered into an agreement on battery-grade nickel and cobalt sulphate products from the NiWest Nickel-Cobalt Project in Western Australia.

Ford and LG Energy Solution (LGES) and others also have critical materials agreements with Australian suppliers.

U.S. 

Two U.S. legislative initiatives and significant domestic lithium deposits favour mining critical minerals in the U.S.  The combination of these ingredients could give the U.S. an advantage over Canada for private and public investment money.

The Inflation Reduction Act (IRA), spanning over the next ten years provides tax credits for North American content applying to all stages of the battery production and supply chain, such that one can stack up the credits (add them up).  The stacking up tax credit ceiling is 40% before 2024, and rises to 80% after 2026.

This is complemented by consumer rebate eligibility criteria to the effect that specified percentages of critical minerals extraction, processing or recycling must occur in North America.   The percentage prerequisites are a 40% before 2024 and 80% after 2028.

The other legislative masterstroke is the Bipartisan Infrastructure Law (BIL) covering 2022 to 2026.  It allots US$7 billion to the U.S. battery supply chain, including recycling.  Advanced transportation technologies are eligible.

Nevertheless, actual implications of these two legislative products are not clear.  Guidelines are incrementally being developed.  This has the automakers are still reviewing the possibilities.  Evidently, domestic critical mineral interests stand to benefit.

At the top of the U.S. critical minerals heap, Canadian-owned Lithium Americas has applied for a permit to extract lithium in Thacker Pass in Nevada.  The company says the area has the largest lithium deposit in North America and could accommodate all U.S. demand, through to 2068 or longer.

California too has a huge battery materials potential which some estimate to be equal to one-third of current lithium demand.  The state’s Imperial Valley could produce $860M worth of lithium annually.

Canada

Canada’s Budget 2022 allots $3.8 billion over 8 years for backing Canada’s Critical Minerals Strategy.  This strategy does not level the playing field with the U.S. IRA and BIL support for a vast plethora of green economy content.  Hence, the Canadian government is reviewing how it might match the U.S legislative initiatives for inclusion in Budget 2023.  This is more about economic development than sustainable development, or staying in the game.

In any case, Canada is well-placed to be one of the many critical minerals suppliers.

The largest battery production investment in Canada, the $5 billion Stellantis joint venture with LG Energy Solution (LGES) for Windsor, Ontario will likely result in new critical mineral sourcing in Canada.

With its multiple contracts with vehicle original equipment manufacturers (OEMs), LGES has signed supply agreements with 3 Canadian mining companies. They are Electra Battery Material Corp on the Ontario Temiskaming Shores for cobalt sulphate; Avalon Advanced Materials of Thunder Bay for battery-grade lithium hydroxide; and Manitoba’s Snow Lake Lithium.  The latter aspires to be the world’s first all-electric lithium mine and a supplier for 5 million EVs over the next decade.

As for Tesla, it has an agreement with Vale to supply low carbon nickel from its refinery in Long Harbour, Newfoundland, with the raw materials to come from the Voisey Bay mine in Labrador.

Volkswagen, which has its own in-house battery firm, PowerCo, during an August 2022 visit to Canada, indicated an interest in identifying Canadian raw material suppliers, refiners and processors. The goal is to assure critical minerals and battery components for the 25 battery electric vehicles Volkswagen will be offering in North America by 2030.  As well, Canadian critical minerals may serve the needs of its US$18 billion in PowerCo investments for setting up 6 European EV battery plants.  If the European plans are fulfilled, PowerCo could become the world’s second largest EV battery producer, after China’s CATL.

Then there’s Quebec mining landscape, rich with all the raw materials for battery manufacturing, lithium, graphite, cobalt and aluminium.

For lithium, the Australian-owned Sayona Mining lithium (spodumene) base in Quebec may be the biggest in North America.  Its Abitibi region lithium hub, more than 450 km northwest of Montreal, consists of the recently acquired North American Lithium (NAL), 75% and 25% owned by Sayona and its partner Piedmont Lithium respectively, plus the Authier Lithium Project.  Both mining sites near Val d’Or will supply ore to the NAL concentrator in La Corne, Quebec, to produce lithium hydroxide or lithium carbonate, beginning early 2023.  The NAL concentrator annual production capacity may eventually reach 226,000 tonnes.

Early 2023, a Sayona agreement with Tesla was signed to supply Tesla with 125,000 tonnes of spodumene concentrate between mid-2023 and the end of 2025.

Under development by Sayona are three other lithium projects.  One is the Tansim Lithium Project, also near Val d’Or.  The other two are Moblan Lithium Project and Lac Albert Lithium Project in the Eeyou-Istchee James Bay region.

All Sayona Mining lithium claims together could amount to 35% of lithium resources in North America.

One other lithium stakeholder, Nemaska Lithium Whabouchi Mine Inc., is constructing Whabouchi Lithium Mine Project, 1000 km north of Montreal.  Land at the Bécancour industrial park was acquired in January 2023 to build a lithium hydroxide production edifice.

As for Quebec graphite, Nouveau Monde Graphite (NMG) aims to become the greatest green graphite producer in the world.  NMG is a fully integrated graphite producer, from the mine to the market, covering the entire supply chain to produce carbon-neutral graphite battery anodes for lithium batteries.  NMG has initiated construction of the Matawinie Mine Project, in Saint-Michel-des-Saints, 150 km north of Montreal.  Once NMG has completed its Bécancouer facility, 150 km northeast of Montreal, it will purify the graphite, thus closing the loop on the entire value-chain from the graphite ore to the final coated anode material, coated spherical purified graphite (CSPG).  The company optimizes its graphite purification capability with its own thermo-chemical technology that uses hydro power.  With this technology, the company will churn out the world’s only low cost zero carbon footprint high quality battery anode material.  This technological solution will improve performance and increase battery life.

In October 2022, NMG signed its first agreement with battery manufacturers, Asian giants Panasonic Energy and Mitsui.  An offtake agreement is expected by 2023.  The agreement with Panasonic Energy covers the production of anode active materials at the Bécancour, Quebec facility.  Panasonic will evaluate material samples.

Turning to Saskatchewan, the recently acquired Prairie Lithium Corporation by Arizona Lithium (AZL), is home to the highest quality inferred lithium brine in Canada.  With the acquisition, AZL now has a proprietary direct lithium extraction technology plant in Saskatchewan that removes lithium from brines and ore bodies.

One other Canadian critical mineral stakeholder is Vital Minerals with its rare earth Nechalacho mine, east of Yellowknife, Northwest Territories.  Production started in 2021.  In April 2022, an agreement was reached to bring the minerals to a Saskatoon extraction plant, then on to a Norwegian supplier, Reetec AS, for distribution to automakers by German auto parts firm Schaeffler by 2024.  The Reetec Saskatoon facility began operations in September 2022. Volkswagen, GM and Honda are among Schaeffler clients.

And Canada has a huge potential to supply cobalt to the EV sector.  This potential especially applies to Newfoundland and Labrador, Quebec and Ontario.

The preceding examples of Canada’s potential to be a global major player in critical minerals constitute the tip of the iceberg.

And the above does not include all critical mineral initiatives in Canada, recycling as well.

The green-transition.ca article dedicated to battery recycling presents portraits of Canada’s 2 battery recycling firms, Lithion Recycling in Quebec and Li-Cycle in Ontario.

Democratic Republic of Congo (DRC): Cobalt and lithium

China, the world leader in battery production, doesn’t have any cobalt.  The DRC is the biggest supplier of cobalt to China, 80% of DRC cobalt is exported to China.  But China is an exception.

The U.S. IRA comes to grips with this by excluding from eligible battery content percentages, critical minerals from the DRC and other countries.  Critical minerals from China get removed from the qualified content list, beginning 2025.  This has far-reaching implications for the global critical minerals sourcing landscape.

As indicated earlier, lithium supplies from democratic countries is not a problem and Canada has plenty of cobalt.  The latter has yet to be fully tapped into for solving the DRC cobalt problem, but the IRA could change that.

For EV manufacturers too, DRC cobalt is an issue.  Environmental and social responsibility are critical elements for the marketing of their EVs.  This has led these OEMs to both assure their cobalt supplies are not associated with human exploitation and poor environmental practices.

Volkswagen and BMW, are turning to third parties to trace the origins of cobalt in the DRC.  The goal is to protect human rights/safety assurance, child labour, corruption and war-related matters.

BMW, BASF and other partners are engaged in Cobalt for Development project in the DRC.

In parallel, the OEMs are attempting to reduce cobalt content in batteries at-large.

Volkswagen is one such company.  Battery recycling will contribute to reaching this objective.

GM, working on improved performance batteries with LGES, believes it can lower cobalt content by increasing the use of aluminium and nickel.

Regarding lithium, BMW has sustainability standards requiring that lithium extraction suppliers be certified by the Initiative for Responsible Mining Assurance.

South America

Chile is the second largest producer of lithium, accounting for 22% of global supplies.

Among U.S. lithium imports, 36% comes from Chile.

The downside is Chile’s lithium is mined from salt lakes, lithium-containing water, called brine, that is under arid basins, resulting in 2-year long evaporation procedures in ecosystems not fully understood.  The evaporation ponds of lithium mines in the country overlay huge areas of the Atacama desert. These evaporation techniques direct tens of millions of litres of water into the air, up to 383.5 tonnes of water for every tonne of lithium carbonate.  The consequences are depletion of scarce groundwater resources, degradation of wetlands, habitats for animal species and protected areas.  Indigenous communities’ access to potable water and farming practices are acutely fouled-up.

The largest contribution of Chile to critical minerals is that of copper for which the country ranks number one is the world.

With respect to Chile’s neighbour, Argentina, it may be home to over 20% of lithium reserves, but mining of this critical mineral for EVs and battery production is only beginning to take off, particularly in the Catamarca province.  Only two lithium mines are currently in operation, however, another dozen are planned, while other sites are in the “consideration” stages.

The environmental concerns of mining lithium in Argentina are similar to that of Chile.

A process dubbed direct lithium extraction (DLE) has promise to significantly reduce water consumption, but the technology remains nascent.

The U.S. firm, Lilac Solutions, believes its DLE concept has what it takes for mining lithium in salt lake mines.  Lilac has the financial backing of BMW, Bill Gates’ Breakthrough Energy Ventures and Jeff Bezos.

Bolivia, which also has large lithium deposits, faces the same lithium environmental challenges.  For this reason, the government is holding back on lithium mining.  For now, Bolivia has contracts for DLE pilot projects.

Meanwhile, BMW and BASF are financing a study on the impacts of lithium mining in Latin America. 

The takeaway

The bad news is much of critical minerals activity escapes environmental, human rights and/or other ethical issues.  Sadly, this is true for too many projects of the mining industry, for all kinds of minerals.

This is true for critical minerals mined in the DRC.

And the humongous evaporation processes used to extract lithium reserves in South American salt lake mines come with large-scale environmental degradation.  Hope lies with the combination of the lithium industry on the continent yet to be fully exploited and the well-financed processes under development to drastically reduce water consumption.

The good critical minerals news is fivefold.

First, democratic developed countries can supply all the essential critical minerals for the global electric vehicle battery production sector.

Among democratic countries, Canada will be a major player, largely benefiting from the U.S. IRA tax credits for North American content.  But Canada faces a lot of competition from U.S. Australia and South America.

Second, democratic countries are closing the battery production gap with China.  That is the only plausible option for addressing China’s dreadful practices.

Third, the global EV manufacturing sector, sensitive about their image on environmental and human rights considerations, does not want its products to be muddied with being associated with unethical critical mineral activities.

Fourth, EV battery contents are 95% recyclable with existing technologies.

Finally, the U.S. Union of Concerned Scientists (UCS) produced a lifecycle comparison of an EV to an internal combustion vehicle, from the mines to end of vehicle life, taking into account aggregated U.S. electricity sources.  However, the UCS calculation does not reflect the rapidly changing American electrical power landscape, renewables having represented 83-84% of new electrical generation capacity in 2021.  Also not integrated in the UCS analysis, is IRA support for the U.S. power sector to become 100% carbon free electricity by 2035 plus 95% EV battery recycling with existing technologies.  Notwithstanding these omissions, the UCS balance sheet determined a 50% reduction in emissions in favour of EVs.

Ongoing, the Russian invasion of Ukraine having contributed to high fuel prices, inflation and the European energy crisis continues to accelerate the migration to EVs, as well as renewables and clean tech at-large.  BP Chief Economist, Spencer Dale, summed up the climate and other environmental implications quite well with his remark that the war had “permanently dented fossil fuel demand.”

In the final analysis, the rapid increase in demand for critical minerals related to the transition to EVs is net positive, though it is recognized that many challenges are not yet resolved.

If a perfect solution was required before making a step forward, we would still be in the stone age.  And imperfect solutions are always the object of improvements.

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