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Europe could dominate lithium ion battery supply chain rankings by 2030: BNEF

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Europe could dominate lithium ion battery supply chain rankings by 2030: BNEF

Highlights

Sustainable raw material extraction required

Investment in cell manufacturing capacity expansion important

Regulations must be implemented to promote EV adoption

European countries could fill the top three positions of Bloomberg New Energy Finance's, or BNEF, lithium ion battery supply chain rankings by 2030, if the continent is able to extract raw material sustainably, expand cell manufacturing capacity and implement regulations to increase the adoption of electric vehicles, or EVs, according to the BNEF Summit Munich held May 17.

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BNEF metals and mining associate Kwasi Ampofo told the virtual summit that to compete in the lithium-ion battery space, Europe required the battery raw materials, mines and refineries, as well as the right battery cell manufacturers to create the right batteries to give EVs range and safety.

He added that the region also required local demand that would give feedback on how to improve batteries, as well as give critical mass to ensure that batteries and hence EVs become cheaper to promote advanced adoption.

Ampofo pointed out that Europe's current refining capacity was low, with its nickel sulfate refinery capacity at just about 30%, cobalt sulfate lower and manganese sulfate refining capacity at 5% of the current market capacity.

"The story will not change significantly by 2030. In lithium hydroxide, which is one of most important metal products to go into the high nickel chemistry batteries favored by European manufacturers, Europe has no [refining] capacity and will still have no significant capacity by 2030," Ampofo said.

However, he said that there were two ways for Europe to improve this, namely through investment in capacity to reduce costs and the sustainable extraction of raw materials.

He said investment in technological advancements and capacity could improve cost curve competitiveness.

On this front, Vulcan Energy Resources is planning to develop the Vulcan lithium hydroxide project in Germany, which is expected to produce a low cost lithium product, due to low or no energy costs, as the project will extract geothermal energy from the geothermal deposit.

The project is also planned to implement direct lithium extraction (DLE) technology, which will significantly reduce the cost of using reagents in the extraction process.

"If these two, the energy and DLE technology, succeed, we could have a European producer producing at one of the lowest costs globally. These are the kind of initiatives we expect Europe to take in order to compete on raw material globally," Ampofo said.

He added that producing EVs was about reducing global emissions, meaning that it was imperative that the raw materials going into EVs had zero emissions right from the point of start.

"Europe can step up to this by producing their metals sustainably in order to be globally competitive," Ampofo said.

Competitive battery production costs

In addition to raw materials, Ampofo said that more cells needed to be manufactured at competitive costs, with Europe currently second compared to China in terms of cell manufacturing capacity, and set to remain at this position by 2030, despite planned significant growth.

He pointed out that currently Eastern European companies were as cost-competitive as some Asian countries, while western European countries were producing cells at one of the highest costs.

"To be able to expand Europe's cell manufacturing capacity, Western European countries would have to bring the cost of manufacturing cells in their region equal or lower to eastern Europe, which would ensure new investment comes into the market and Europe could potentially become a bigger cell provider than Asian countries," Ampofo said.

On the demand side, he said that Europe was currently still expected to be second to China for EV adoption in 2040, but this could be improved through regulations and lower battery production costs.

However, for this to be successful, Eastern European countries would have to catch up with western European regulations to boost demand.

"Reducing cathode cell costs and implementing these regulations will ensure that Europe sees a significant adoption in its EVs," Ampofo said.