Lithium is not the most important element in lithium-ion batteries

Lithium has recently been called the “white oil,” and deservedly so. Lithium-ion batteries are becoming the backbone of the energy transition.

However, there is one mineral without which there will be no energy revolution. And the trillion-dollar electric car market will cease to exist. It is graphite, the key element that forms the anode of lithium-ion batteries. In 2019, the global market for graphite was valued at $14.9 billion. By 2027, it will reach $22 billion, and possibly much more.

Each battery for electric vehicles contains 20-30% graphite. This means that the demand for graphite will grow along with the demand for electric cars. And while electric car manufacturers have been busy sourcing lithium around the world, there have been concerns about graphite shortages.

About 90% of the graphite anodes used in batteries come from China. With demand for electric vehicles skyrocketing, it’s time to take a closer look at one of the key processors of this mineral, Graphex Group Ltd. The company has been in existence since 2008 and has been developing graphite processing methods since 2013. It is an experienced manufacturer with large long-term contracts in China.

Graphex is now looking to expand into the U.S. and European markets. Its president, John DeMaio, is working to make the company an integral part of the supply chain being created to support the western electric vehicle industrial complex being built. Graphex believes the graphene market will grow at an average annual rate of 29 percent over the next five years.

“The pace of electric vehicle sales will increase dramatically,” states IHS Markit. – The tipping point will be in 2027. That’s when electric cars will reach production cost parity with internal combustion engine vehicles in China. After that, production of electric cars will begin to increase like a snowball.

This means that the market for graphite for lithium-ion batteries will begin to expand rapidly. On average, each electric car requires up to 70 kg of graphite (the Tesla Model S requires even more). For every one million electric cars, about 75,000 tons of natural graphite will be needed.

In 2019, the demand for spherical graphite in China alone was 200 thousand tons. A year later, it will be 240,000 tons. And by 2028, graphite demand will increase to 1.9 million tons. In September 2021, the International Energy Agency (IEA) predicted that the electric mobility and low-carbon energy sectors will require 25 times more graphite per year by 2040 than today.

The important point is that there are no graphite mines in the U.S.; all of the mineral is imported. In 2018, U.S. manufacturers purchased 40,000 metric tons of graphite. And now the Tesla Gigafactory in Nevada alone needs about 35,200 tons of spherical graphite a year. And that gives Graphex a huge opportunity.

Since most of the graphite is mined in China, battery manufacturers around the world use Chinese raw materials. Asian battery manufacturers are even more dependent on China: They use raw material from China as well as recycled mineral. However, neither in the U.S. nor in Europe is there any meaningful recycling of graphite.

Graphex produces 10 thousand metric tons of spherical graphite a year. Now, the company says it is getting ready to expand its production to 40,000 metric tons per year. Raw material costs $500-800 dollars per ton, with a selling price of about $2,700-2800 dollars. The company says gross margins are maintained at 27-28%. This is a prime example of how graphite production can be one of the best places to look for opportunities in the lithium-ion battery supply chain.

Lithium-ion batteries (global market)

The global market for lithium-ion batteries reached $31.36 billion in 2019, analyst firm ResearchAndMarkets estimated. Experts did not specify the dynamics and only reported that sales of such batteries are on the rise.

According to the researchers, the growth of the market for lithium-ion batteries is primarily due to the supply of high-density cells for them. Such components allow devices to work longer without recharging.
The size of the global lithium-ion battery market reached $31.36 billion in 2019

Most lithium-ion batteries used in portable electronics use cobalt at their core, which provides the highest energy density of any other commercial solution. The specific energy density of lithium-ion batteries is 100-265 W/kg or 250/670 W/L, which is one of the highest on the market.

Decreasing prices for lithium-ion batteries contribute to the growth of their sales. Analysts estimate that the cost of such batteries in 2013 was $650 per kWh, and in 2018 the figure dropped to $176.

The cheapening is due to the use of new materials, manufacturing processes and increased investment from manufacturers.

ResearchAndMarkets cites the following companies as leaders in the lithium-ion battery market:

• A123 Systems;
• Automotive Energy Supply Corp;
• LG Chem;
• Panasonic;
• Samsung SDI;
• Toshiba;
• BYD;
• Automotive Energy Supply Corp;
• Amperex Advanced Technology;
• Johnson Controls.

One of the main issues holding back the rapid growth of the lithium-ion battery market, the study says, is safety. Such devices store large amounts of energy, leading to the risk of explosion or fire. The U.S. Federal Aviation Administration (FAA) reported 206 incidents of lithium-ion batteries exploding at airports between March 1991 and January 2018. [1]

The battery is dead: What’s happening in the energy conservation market

Batteries are fundamentally important for the future of electric cars and energy in general. RBC Trends has looked into how the industry works and what its main problems are

In the traditional power industry (thermal power plants, nuclear power plants, hydroelectric power plants), the most important component of the systems was the turbine which converted the energy from the source into the mechanical energy for its further use. However, with the development of renewable wind and solar energy, energy storage systems, which will effectively store the generated energy, are at the forefront. The cars of the future will also not be able to do without efficient batteries.

Types of energy systems

A variety of technologies are available to capture energy, store it, and use it later. Electric and thermal energy storage systems are considered the most common. Such systems come in several types:

Electrical equipment

The greatest growth rate of energy storage over the past decade has come from electrical systems such as batteries and capacitors. Capacitors are devices that store electrical energy in the form of a charge stored on metal plates. When a capacitor is connected to a power source, it stores energy and releases it when disconnected from the source. A battery, on the other hand, uses electrochemical processes to store energy. Capacitors can release stored energy at a much faster rate than batteries because the chemical processes take longer.

Mechanical

Mechanical energy storage systems use basic physics ideas that convert electrical energy into kinetic energy for storage and then convert it back into electrical energy for consumption. Such systems are large hydro-storage dams, mechanical flywheels, and compressed air storage.

Thermal

Thermal energy storage allows thermal energy to be stored and used later to balance the need for energy between day and night or when the seasons change. The most common are hot or cold water tanks or molten salts, ice storage, and cryogenics.

Chemical

Typically used in hydrogen storage. They use electrical energy to separate hydrogen from water through electrolysis. The gas is then compressed and stored for future use in hydrogen-fueled generators or fuel cells. This method is rather energy-intensive. Only 25% of the energy is saved for the end use.

Different industries and technologies use different types of batteries with different chemical compositions. Lithium-cobalt batteries, which are lighter and have a high voltage for fast charging, are used in smartphones and other consumer electronics. More robust and larger lithium titanium batteries are installed in public transport, particularly in electric buses. Power plants use low-capacity but fire-safe lithium-phosphate cells.

Canada voiced the country’s prospects in the market of lithium-ion batteries

Canada’s prospects in the lithium-ion battery market were assessed by Simon Moores, director of Benchmark Mineral Intelligence, Mining.com reported on Feb. 22.

Canada is well positioned to become one of the global leaders in the lithium-ion battery market, but regulators and miners need to recognize and support that potential, Benchmark Mineral Intelligence director told the House of Commons.

Canada is rich in lithium, graphite, nickel, cobalt, aluminum and manganese, key ingredients needed to make batteries for electric vehicles.

By organizing battery production, Canada could have more opportunities to assemble electric cars and rebuild its own automotive sector.

Canada’s auto industry has declined over the past two decades. The country has lost five assembly plants and about 30 percent of its car production to the United States and Mexico.

Raw material from recycled lithium-ion batteries delivered to a customer for the first time

Last June, the Canadian company Li-Cycle proposed a new two-step process for recycling lithium-ion batteries that can recover 80%-100% of the materials they contain.

The Li-Cycle process in the first step involves “mechanical size reduction,” that is, shredding the batteries. This process does not require discharging the batteries, which reduces labor and operating costs. The second step in recycling is the process of hydrometallurgy, “wet chemistry.” Valuable components such as lithium carbonate, lithium, cobalt, copper, aluminum, graphite, iron, if we’re talking about iron-phosphate batteries, are extracted from the crushed metal.

The technology is environmentally sustainable – it produces no “solid waste stream,” provides minimal/zero water consumption, and is not associated with the emission of any harmful substances into the atmosphere.

In early January 2020, the company announced that it had made its first commercial shipment of recycled material to an unnamed customer.

“Energy Metals Concentrate was obtained from old lithium-ion batteries recycled at the Li-Cycle facility in Ontario, Canada. It contains key energy metals such as cobalt, nickel and lithium. The company says it is “one of the few in the world capable of extracting critical materials from lithium-ion batteries in a sustainable and safe manner.”

BloombergNEF predicts there will be 540 million electric cars in the global fleet by 2040. In addition, the volume of energy storage systems based on lithium-ion batteries is projected to grow at an extremely high rate. According to many experts, lithium-ion technology will dominate the market for a long time to come. Consequently, the volume of waste batteries will also grow.

Tidying up after Musk: How Tesla’s former tech director makes money on old lithium-ion batteries

Engineer Jeffrey Brian Straubel, who helped Ilon Musk turn Tesla into an auto industry giant, sees the future in electric cars. And he believes in the incredibly lucrative market for precious metals recovered from old batteries

Four years ago, Tesla CTO Jeffrey Brian Straubel was actively engaged in boosting lithium-ion battery production at a plant near Reno, Nevada. It was then that he caught fire with the idea of creating a company that would specialize in recycling waste generated during battery production. The engineer realized that metals could be extracted from such waste and other spent electronics and then recycled into usable lithium, cobalt and graphite to make new lithium-ion batteries.

Straubel realized that if you could figure out how to inexpensively recycle waste on a large scale, you could really change the world. On the one hand, recycling would increase the amount of recyclable rare and valuable metals. On the other hand, the environmental damage caused by mining could be reduced, and toxic substances from old lithium-ion batteries could be kept out of landfills.

In 2020, Straubel founded Redwood Materials in Carson City. He positioned his project as a “next generation metals recycling company.” At the time, Straubel was still working at Tesla, of which he is one of the founders, along with Ilon Musk and three other engineers.

“Electrification everywhere is gaining momentum, which is driving demand for lithium-ion batteries,” Straubel, 45, says. “Our mission at Tesla was to help accelerate this process and generate excitement around electric cars. It’s great to see it happen, but it’s happening even too fast and ahead of supply chain capabilities,” adds the engineer.

In 2020, Tesla sold about 500,000 electric cars, each of which requires thousands of lithium-ion batteries. Sales of Tesla vehicles are expected to grow by 50 percent in 2021. Demand for lithium-ion batteries is also on the rise, as both auto industry giants like General Motors and Volkswagen, and relatively small automakers like Lucid and Rivan are actively pursuing plans to ramp up vehicle production. In this regard, the prices of key raw materials for lithium-ion batteries, including cobalt (up 69% in the last 12 months) and lithium (up 127% in the last 12 months) are skyrocketing.

Straubel is happy to share the first good news: after just one year of operation, Redwood Materials is able to recover tons of recyclable metals from waste and used electronics. And the cost of this process is lower than the total cost of mining metals in the mines.

“Most people seem to expect the opposite. They think recycling costs too much today, but will probably become cheaper in the future. In fact, metal recycling today is competitively priced,” Straubel says. “Our goal is to get recycling to be even more price competitive. Then we could increase recycling,” adds the founder of Redwood Materials.

Does your portfolio need a lithium-ion battery?

According to the company’s plans, Tesla (NASDAQ:TSLA) should reach a production level of 500,000 vehicles per year in 2020. In the first quarter of 2020, just under 90,000 cars were produced. But Tesla isn’t the only one making electric cars. Almost the entire auto industry of the world is beginning to move away from the internal combustion engine.

Next year, Volkswagen’s plant in Zwickau, Germany, plans to produce exclusively electric cars. The automobile concern has decided to keep up with the times and produce more than 20 million new generation cars by the beginning of 2027. Electrification has also caught up with another German carmaker, BMW (DE:BMWG), which promises to create about 25 new electric car models by 2023. In November, Ford (NYSE:F) began taking orders for the Mustang Mach-E, an all-electric car of the legendary model that Ford plans to make by 2022. And Britain’s Jaguar Land Rover from Tata Motors (NYSE:TTM), intends to prequalify as an electric car manufacturer in the next 10 years. This implies that the electric car industry is entering a new round of development, on a much larger scale.

One of the main elements of any car, in addition to the motor, is a battery or battery. Almost all electric cars use lithium-ion batteries because they have a huge advantage over other batteries:

• high energy storage density;
• higher voltage;
• self-discharge – up to 6%;
• relatively long service life – at least 10 years – etc.

In 2017-2018, the growing number of electric cars has already provoked an incredible demand for lithium, and cars suddenly began to compete with laptops and smartphones for raw materials for lithium-ion batteries. The price of lithium in 2017 was as high as $20,000 per ton. After this surge in demand for lithium, companies producing this raw material more than tripled production, but cheaper oil meant that subsidies for electric cars took a back seat and demand for lithium did not rise to the level it was supposed to. And the lithium market became oversupplied. As a result, the price of lithium fell and is now at its lows, around $5600 per ton.

The coronovirus pandemic and the oil situation became a powerful new impetus for the renewed growth in demand for electric cars. European countries’ “green” policies and Asia’s technological drive toward electric cars are also contributing to the global scale of the industry. Which may increase demand for lithium-ion batteries and demand for lithium.

The most prominent and well-known example of explosive growth in the lithium-ion battery sector is Tesla’s $5 billion “gigafactory” in Nevada. Investment bank Berenberg estimates that the sector would need to increase battery production by an order of magnitude to grow to 1,165 GWh of capacity in 2026.

Right now, lithium-ion batteries can be found almost everywhere from tablets to medical equipment, the international space station and air transport, in addition to electric cars. In 2019, the three scientists who developed the lithium-ion battery were awarded the Nobel Prize in Chemistry.

To make up for the lack of supply in lithium-ion batteries, companies in the Asian market are seeking primarily to do so. Despite all the hype surrounding Tesla, the U.S. company does not produce the batteries itself, but buys them from its partner Panasonic (T:6752).

Contemporary Amperex Technology (SZ:300750), China’s largest manufacturer of fuel cells, lithium-ion and lithium-polymer batteries for electric vehicles and energy storage systems. The company is one of the world’s top three battery manufacturers.

The next producer of these batteries is China’s BYD (SZ:002594), which itself makes electric vehicles (Warren Buffett’s Berkshire Hathaway (NYSE:BRKb) owns a large stake in the company). In May 2020, BYD announced that it would begin expanding in Europe, primarily in Norway. BYD’s launch will consist of the Tang SUV and a number of commercial vehicles.

Other industry leaders are South Korean conglomerates LG Chem (KS:051915) and Samsung SDI (KS:006400). They supply batteries for Nissan (T:7201), General Motors (NYSE:GM), BMW and other electric car manufacturers. These five Asian companies and a number of other manufacturers intend to build 24 plants by 2021 with a total battery production capacity of 332 GWh.

Notably, shares of Contemporary Amperex Technology on the Chinese stock exchange rose nearly 15% in the last week and continue their 9-month rise.

Next-generation batteries are being built in Europe

Batteries are used everywhere – in our phones, laptops and cars – but they have not yet become the inexpensive, high-performance energy source of the future. A number of European and Swiss R&D initiatives are now trying to find ways to make innovative breakthroughs in this promising field.

“The use of batteries can reduce carbon emissions in the transport and energy sectors by 30%, provide 600 million additional people with electricity, and create 10 million long-term, environmentally sustainable jobs around the world,” says a recent annual report of the World Economic Forum in Davos, headquartered in the town of Colonie in the Geneva suburbs. So far, Asia dominates the market for batteries and accumulators, with more than 90 percent of production coming from China, South Korea and Japan.

But Europe intends to close the gap as soon as possible. The European Union, yielding to the demands of local automotive giants, intends to soon launch mass production of batteries and cells (modular rechargeable battery cells) in order to end the technological dependence on foreign manufacturers. “At the moment we are just trying to catch up, but the main idea of the EU is to create our own production and innovation base for development in the field of battery production.”

We talk to Corsin Battaglia, an expert from the Swiss Federal Laboratories for Materials Science and Technology (Eidgenössische Materialprüfungs- und Forschungsanstalt EmpaExternal link), about this. Switzerland is not part of the European Union, but it is active in European research projects to develop the next generation of batteries. The European Battery Alliance was founded four years ago at the initiative of the European Commission to increase production capacity and develop research potential in this area.

According to the NGO Transport & Environment, as part of this initiative, almost 40 battery manufacturing plants, the so-called “gigafactories,” are planned to be built across Europe. If all of them actually work, by 2025 the old world could secure a 20% share of the global battery market, representing an annual turnover of 250 billion euros or 270 billion Swiss francs. One of the first all-European clean battery plants will be the Northvolt EttByrdExternal Link gigafactory in the northern Swedish city of Skellefteå.

The huge lithium-ion battery factory will cover 500,000 square meters, or 70 soccer fields. The Northvolt factory claims to be able to produce the number of batteries needed to produce one million electric cars a year. There are currently no plans for a gigafactory in Switzerland, but the country and its huge scientific potential are closely tied to European efforts to develop the battery model of the future.
Northvolt Ett giga factory in northern Sweden.
Northvolt Ett’s huge lithium-ion battery factory in northern Sweden will cover more than 500,000 square meters, or 70 soccer fields. William Steel (Northvolt)

“Whether it’s raw materials and materials, the assembly of battery cells into a single battery, management systems, recycling, disposal or energy storage systems, there are a large number of companies active in the battery industry in Switzerland, and some are even world leaders in the industry,” says Corsin Battaglia.
Self-repairing batteries

Lithium-ion batteries have been the dominant electricity storage technology for the past dozen years, and demand for them is expected to grow tenfold over the next decade. Over the past 30 years, the cost of lithium batteries has fallen by nearly 100%, but the science for improving such batteries has made little or no progress. To meet the future demand for such batteries, we will need alternative technologies that provide longer cell life and increase the overall capacity of these batteries.

This is exactly what European Battery 2030+, a European battery research and development initiative with a total budget of €40 million, is doing. The initiative was launched last year, 2020, and includes seven major research projects supported by nine European countries, including Switzerland. One of the projects is called HIDDEN, and it aims to increase the average lifetime of lithium-ion batteries and their specific energy capacity by at least 50 percent.