PRESSING DEMAND FOR RARE METALS

Demand for cobalt, lithium and copper for energy storage batteries, batteries for electric vehicles but also wind turbines and solar panels is exploding. The ecological transition is changing us from a dependence on hydrocarbons to a dependence on metals necessary to generate, transport and store electricity. It is not only electric vehicle batteries that consume these metals, but the whole range of electricity generators, particularly those for climatic electricity, but also interconnections, and finally batteries.

A transition to Electric Vehicles (EVs) will have an impact on the demand for several raw materials.

1. Cobalt:  Most cathodes of lithium-ion batteries contain cobalt. Cobalt is often produced as a by-product of copper and nickel production in numerous deposits across the globe. Most prominent is the deposit in the Democratic Republic of Congo (DRC), where 51% of global cobalt production is mined through the copper-mining industry. More than 50% of world cobalt consumption is Chinese and battery production accounts for 50% of world cobalt consumption, it is mainly Chinese, and given the progress made in this field over the past 15 years will probably remain located in this region in the future. 99% of Chinese cobalt comes from the Democratic Republic of Congo. China is almost the only battery manufacturer of the future, and it is logical to have access to more than 50% of world production.  By 2050, demand for cobalt will take up all known sources today. Due to this high concentration of cobalt from the DRC, coupled with the increase in demand for this material in lithium-ion batteries, supply-risk concerns are likely to continue.  The increasing demand and subsequent rising prices are motivating battery developers to reduce the amount of cobalt needed to manufacture EV batteries. It should also be noted that the process for cobalt extraction raises serious ecological, ethical and human rights concerns, so reducing dependency on it as demand for batteries rise is one of the greatest challenges. 
2. Lithium:  Lithium is an essential element for EV traction batteries and in view of the anticipated increase in demand for EVs, it is expected that demand for lithium, or more specifically the lithium carbonate that is used in lithium-ion batteries, will start to increase significantly. In 2015, around 40% of lithium carbonate equivalent (LCE) production was used for lithium-ion batteries and demand is expected to triple by 2025. By 2025 demand for lithium carbonate equivalent will increase to 200,000 tons for EV batteries alone, which equates to the total global supply today. With the abundance of this material, although recycling lithium is technically feasible, it is considered by many to be not yet economically viable. Due to the high recycling costs and the low and volatile price of lithium, recovery and recycling of lithium from lithium-ion batteries is almost nonexistent . The majority of the world’s lithium refining facilities are in China, enhancing China’s dominant power in the lithium-ion battery value chain . Most known reserves of lithium are found in South America,(in the Andean triangle-Chile, Argentina, Bolivia)  accounting for 69% of global reserves but also in Australia . In the South American region, lithium is extracted through a process whereby waters rich in lithium salts are pumped from aquifers to the surface and evaporated in lakes. This form of lithium production requires high volumes of water and most mining is currently concentrated in areas where water is scarce. Improved lithium recycling may reduce the need for lithium mining  and the associated water-scarcity risks that lead to social and environmental problems.
3. Nickel: Nickel is a key component of lithium-ion batteries and is the metal used in the highest quantity in lithium-ion cathodes. Currently, 2 million tonnes of nickel are sold worldwide annually. Key producing countries are the Philippines, Russia, Canada and Australia. If electric vehicles reach 10% of the global car fleet, demand for nickel within the batteries would increase to around 400,000 tonnes . As increasing numbers of EVs hit the roads, demand for nickel will increase significantly. Since 2016, there has been a gradual increase in the price of nickel. As more vehicles that are electric continue to hit the market, the price of nickel will likely continue to increase
4. Aluminium:  Aluminium is an internationally commodity traded in different forms (primary aluminium, downstream and secondary aluminium). The EU produces approximately 7% of all primary aluminium but remains a net importer with the main trade partners being Norway, Russia, Switzerland and the United Arab Emirates . Aluminium is used in several components of electric vehicles. It makes up the body of these vehicles, the battery and casing, and the brake component . In the majority of EV battery packs, aluminium is used in the casing that carries the battery cells. The amount of aluminium, compared to other materials in the battery pack, is substantial . As such, the growth in the EV market will likely mean an increase in demand for aluminium . Given the transition to electric vehicles, demand for this metal will rise and could have an impact on price. Primary aluminium production has much higher emissions than secondary (recycled) production. Since aluminium is used in large quantities in the battery casing, recycling EV batteries has clear climate benefits. Although other materials, such as cobalt and nickel are more important for battery recycling from an economic point of view, recycling aluminium has significant CO2-reduction potential.

Critical metals that have become strategic are suffering a pandemic, everyone wants them in large quantities, for everything, everywhere and at the same time. There is a risk that there will not be enough for everyone.

If no policy related to these metals is put in place as part of the energy transition, it is bad news because the supply of these strategic metals is the most important part of the manufacturing cost of these batteries, around 60%.

It is not the sun nor the wind that produce electricity, but the materials embedded in solar panel systems and wind turbines that transform light and wind into electricity. A wind or solar plant is useless without the infrastructure of metals and materials that will transport and store electricity. We must find much more efficient climatic electricity as quickly as possible to make the most of these natural resources.

New Association

A new industry association (Rare Earths Industry Association (REIA) has been launched in Brussels with the aim of bringing together all the players in the supply chain of rare earth metals, which are vital to renewable and low-carbon technologies. The 12 founding members of REIA are : Grundfos (Denmark), Fujian Changting Golden Dragon Rare-Earth Co.,Ltd. (China), Brugger Magnet Systems (Germany), B&C Speakers (Italy), JL Mag Europe (Netherlands), Material Trading Company (Japan), Japan Society of Newer Metals, Talaxis (Singapore); Mkango Resources (UK);  RockLink (Germany), Institute of Urban Environment (China) and Carester (France).

The EU was by far the largest importer of China’s rare earth magnets in 2018, with 52% of exports. The US is the second largest with 17%.

The European Union is entirely dependent on imports for its rare earth supplies, most of them from China. Rare earths are included in the Commission’s list of critical metals and the Raw Materials Initiative, which aims to ensure the Union’s access to fair and sustainable supplies from abroad.

Recycling rare earths has also been high on the agenda. According to a 2018 report, €39 million of EU funds has been spent on research and development of rare earths recycling in the last decade. However, there are no industrial recycling plants in the pipeline.

The EU is as losing on all fronts, from mining and processing to recycling in rare earths, which something which is quite worrying.

Conclusion

Rare-earth metals are crucial to Europe’s prosperity because these are metals that are critical to a number of advanced manufacturing and innovation processes, such as alternative energy sources and cars. European demand for rare-earths will only grow as consumer preferences shift towards hi-tech, green products such as hybrid cars. Of all raw materials critical to EU manufacturing, rare earths have the highest supply risk. New supplies will be needed and this means mining. Germany, Greece, France Spain, Italy, Sweden, and Norway have immense quantities of these “Rare Earths”. Local politicians may struggle to get backing for new mining but the public interest in green technologies that rely on a sustainable supply should help. Greenland also has rich rare earth deposits – potentially a quarter of the world’s supply.

But Europe needs to do more than search for new sources. It urgently needs to improve material efficiency and lifespan, increase recycling, and boost research into technologies that could provide substitutes. Of these paths, the most rewarding is substitution, though this is a time-consuming process.

Much more funding, experimentation and development is needed to identify alternative to rare-earth elements and other materials critical to industry.

Approaches that are multi-disciplinary would also enable Europe to go beyond looking for substitute materials. Issues such as materials, product design, recycling, energy consumption, environmental impact, and socio-economic considerations are interlinked. Addressing them in the same research and development process could reduce the challenge posed by a scarcity of materials.

A clear strategic response to the scarcity of rare-earth metals, with support for research seen as a strategic necessity, would also have another benefit: it would help Europe counter the challenge posed by China’s dominant position.