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S&P podcast: Booming electric vehicle demand spurs mining, metals sector

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A boom in electric vehicles is expected to continue to drive increased demand for battery metals. With supplies limited, many are beginning to wonder if the industry will have adequate access to raw materials needed to transition away from vehicles running directly on fossil fuels.
Source: onurdongel/E+ via Getty Images


Electric vehicle demand is expected to skyrocket worldwide, and that could require a lot more minerals than are being supplied today, experts told S&P Global Market Intelligence's "Energy Evolution" podcast.

Sales of passenger plug-in electric vehicles are expected to increase from just over 3 million units in 2020 to over 11 million units by 2025, Market Intelligence analyst Alice Yu said. Meanwhile, the International Energy Agency recently suggested government action will be needed to ensure adequate supplies of nickel, cobalt and rare earth elements given the "looming mismatch" between expected demand and planned investments in supply.

"Right now, battery metals, lithium, cobalt and nickel, their demand are benefiting from a surge in plug-in electric vehicle sales," Yu said. "[This is] supported by government policies around the world encouraging the uptake of electric vehicles in attempts to decarbonize their transportation sectors and to improve air quality."

The IEA modeled a scenario in which the world meets greenhouse gas emissions reduction targets under the Paris Agreement on climate change and found that "clean energy technologies' share of total demand rises significantly over the next two decades to over 40% for copper and rare earth elements, 60% to 70% for nickel and cobalt, and almost 90% for lithium."

The scramble to meet electric vehicle demand is also impacting markets downstream. For example, existing project pipelines suggest market deficits for cobalt as soon as 2024 and for lithium in 2025, Yu said. However, the supply chain has proven in the past to be "innovative and responsive" to ramping up and meeting demand growth to even out any such market deficits, Yu added.

"The possibility of a supply shortage will inevitably spur a price surge, which will encourage more market entrants to bring additional supply into the market and meet demand," Yu said. "So there could be short-term demand or supply mismatches."

Research the University of California, Berkeley published in April concluded that all new U.S. car and truck sales could be electric by 2035. Continuing to rapidly deploy electric vehicles in the U.S. will require a combination of tax credits, grant programs, production incentives and programs to develop a supply chain for battery materials in the country, said David Wooley, executive director of the Center for Environmental Public Policy at the University of California, Berkeley.

Wooley emphasized that policies need to address the supply and demand equation for electric vehicles and the supply chains underlying the manufacturing process.

"The key thing to remember here is that this transition that we're talking about will not occur on its own. There's a whole series of policy changes that are needed to drive this deep and quick level of transition to electrified transport," Wooley said.

Innovations in manufacturing may decrease the need for certain metals needed to produce a battery. Manufacturers have already significantly reduced the quantity of some materials used in the process, and some have even removed things such as cobalt in battery chemistries being developed, said Nikit Abhyankar, a senior scientist at the University of California, Berkeley's Goldman School of Public Policy.

"The industry is going to keep innovating," Abhyankar said. "I am completely optimistic that we should be able to solve this problem."

The Institute for Sustainable Futures at the University of Technology Sydney prepared a recent report for Earthworks, a nonprofit organization focused on mineral and energy development, about ways to reduce the need for new mining projects while still meeting the demand for materials needed to make electric vehicles. The researchers said recycling could reduce primary demand compared to projected total demand by an estimated 25% for lithium, 35% for cobalt and nickel, and 55% for copper.

The report concluded that it is technologically possible to recover cobalt, lithium, nickel and copper from end-of-life lithium-ion batteries at rates above 90%. Earthworks also called for other policy approaches that would dampen demand for private car ownership and limit the need for new mining activities.

"I'd like us to think about this as an opportunity moment," Payal Sampat, mining program director at Earthworks, told "Energy Evolution." "We have an opportunity to make this low-carbon transition in a way that it also has benefits for the communities and ecosystems who are in harm's way from mining."

Episodes of "Energy Evolution" are available on Apple Podcasts, Spotify and other platforms.