Fortune Minerals : COBALT NEWS

Investing News Network Daily - June 22, 2021

A look at North America's EV battery megafactories plans, raw materials supply and what's next for the region.

As demand for EVs surges, the buildout of battery megafactories around the world is following suit as automakers and governments push for shorter supply chains and higher control…China leads the way in megafactories, with Europe also taking sound steps to build these facilities, but North America has a long way to go to lead in this space…When looking at the entire EV supply chain for any region, taking ownership of every step seems to be equally important, but it is becoming increasingly clear that governments and automakers are moving to have further control upstream. To reduce costs and improve security, among other reasons, the buildout of battery megafactories around the world is picking up pace…At present, Benchmark Mineral Intelligence is tracking 211 lithium-ion battery megafactories, but only 12 are in the US, while 156 are in China and 22 are in Europe. According to the firm, China is building a battery megafactory at the rate of one every week compared to the US at one every four months…Benchmark Mineral Intelligence's current forecast is for 410 GWh of capacity in North America by 2030…In the short time since the new US administration took office, it has proposed an investment of US$174 billion in EVs, pledged for a new national goal to reduce carbon emissions by 50 percent by 2030 and called for more battery megafactories in the US…When asked about why the US has lagged behind China in the battery megafactory space, Shang highlighted that the automotive industry in the US has only recently started to embrace EVs, and the national policy was not in place to support the transition…'By contrast, back in 2009, the Chinese government vowed to become a global leader in EVs,' Shang said… 'I think a key lesson would be to share the focus across the value chain and not just on downstream cell and EV production,' Rawles said. 'Raw material processing and cathode/anode production are fundamental to a healthy domestic lithium-ion economy, and this is something that needs to be ramped up in Europe.'…Another key factor that has helped Europe is its ability to attract public, private and industrial financing…Roskill believes that the American-made approach could become a challenge for the buildout and/or securing of raw materials and chemicals for battery megafactories in the near term…'Although capital keeps flowing into the supply chain, the time gap between the investment and the completion of the facility, especially in mining and refining segments, which normally takes longer time, must be taken into consideration,' Shang said. 'In addition, it takes several years, particularly for new entrants, to steadily produce high-quality materials to feed in EV battery manufacturing.'…Some parts of the North American supply chain have secured raw materials, but they are in the minority - those that haven't will need to act quickly if they want secure supply, Rawles explained…'We are starting to see longer contract terms in the battery supply chain, typically up to five years, but in some cases longer,' he said. 'This means it is becoming increasingly difficult to enter into such agreements with tier one suppliers as less and less material is available.'…However, this is not a North America-only challenge. 'It's the same for the global supply chain, with the whole world vying for these critical minerals,' Rawles added…High-nickel cathode chemistries, like nickel-cobalt-aluminum (NCA) and nickel-cobalt-manganese-aluminum, will be North American megafactories' first choice, as they will be transferred to EVs with a longer range, said Shang…That said, Roskill believes that the use of cathode chemistries will continue to be diversified… 'To date, the chemistry focus for cell plants in North America has been on medium- to high-nickel nickel-cobalt-manganese and NCA as the industry remains focused on extending range via more energy-dense cathodes,' Rawles said, adding that raw material demand will grow between seven and eight times over the next decade.