Battery value chain action needed to meet unprecedented demand: panel

Battery raw material demand is expected to be unprecedented in the coming years and participants in the battery value chain have a part to play to ensure sustainable supply to meet that demand, panelists on the FT Mining Summit Oct. 8 panel on strategic metals said.

"It is much easier to build a gigafactory and retool a car factory. The timeline to unlock a discovery and build mining projects is much longer -- we will reach a time when mining response won't be able to meet demand and run the risk of the mining industry dampening the whole electric vehicle dynamic. We all need to get our skates on and deliver units of the future to make the electric revolution happen," IGO Limited CEO Peter Bradford said.

However, Glencore head cobalt trader David Brocas said it was unfair to put the success or failure of the electrification of the transportation system on the mining industry.

"We've been trying to set up long-term partnerships [so] that we get the visibility we need to develop our assets on time, but it's a struggle. Three years ago most of the cobalt consumers wanted to secure cobalt on a one-year basis, today we are making progress and we are looking at companies that want to secure cobalt on five-to-10-year basis," he said.

"That's a key way to try to make sure that you don't see bottlenecks in the mining industry for cobalt, nickel and lithium that are going to prevent the electrification of transportation system and the transformation to a low carbon economy," Brocas added.

He said that all OEMs and battery makers were looking at all the battery metals, although the different metals had different risk profiles and in the case of cobalt, the concentration in the Democratic Republic of Congo was a risk that consumers were fully aware of and trying to address by entering into supply agreements.

"One thing, I think we're looking at metals that used to be non-strategic, but are becoming very strategic for societies -- and when a metal is strategic they tend to attribute a lot more value to long-term supply," Brocas said.

Stockpiling

He suggested that it would make sense for countries to stockpile nickel, cobalt and lithium in the same way oil was stockpiled.

"Why would countries not have the same level of protection for those critical metals that will fuel their countries later on?" Brocas said.

Vale Base Metals executive vice president Mark Travers said that there was a lot of action being taken by auto and battery makers now to secure nickel supply, which was an opportunity for miners.

"We can reposition nickel as the first wave ... but as demand increases in the second half of the decade, you're going to need that second wave of that new supply coming online. We're trying to offer something to these OEMs that gives them that visibility over the next decade in supply chains," Travers said.

Supply shortages were critical for lithium, Pilbara Minerals CEO Ken Brinsden said, adding that if EV penetration continued to grow, it would be challenging to source lithium units.

Brinsden said that there was a misnomer in the battery market, with people thinking that there was too much lithium around and there was no reason to worry about supply.

"That's a gross oversimplification about how the industry works -- there is abundant lithium in the ground, but can it be gotten out in time, is it the correct grade? We are disappointed in supply growth as compared to what people imagined would come out of the ground," he said.

The lithium supply view of some car and battery makers had been "grossly overestimated," he added.

Lithium industry not ready

"There is a major wave of demand coming and as it stands now, the industry is not ready," Brinsden said.

However, Pilbara was "working hard to expand supply ... The good news is that those tons are coming -- we are busy commissioning the next wave of capacity and hopefully that goes some way to helping our customers," he added.

Pala Investments head strategist Jessica Fung said that the Western world was slowly waking up to the shortage of critical metals and on paper, with many committees, alliance and discussions being set up.

"I think one of the things is that when we think of the supply chain and the coordination that needs to happen, one of the issues and one of the questions is, why doesn't the downstream invest in the upstream to ensure that they've got the supply? And the issue is that the business model is very different for everyone," Fung said.

OEMs focused on engineering cars and branding, midstream companies focused on margins, value adding activity and chemical engineering, while the upstream was leveraged to commodity prices, she said.

"The one thing we have in common across the whole supply chain is that everything needs to get engineered. So if we could just put our heads together and talk about all the engineering that happens across it, I think that ... could bring the supply chain together and ensure that we're talking the same language," Fung said.