Positive Charge for Mining

Exploration is booming for the metals used in electric-vehicle batteries as the mining industry stands ready to benefit from the technological revolution in transportation.

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The global economy stands on the brink of a technological revolution. Four years ago, Professor Klaus Schwab (founder of the World Economic Forum) described it as the "fourth industrial revolution", and characterised the change as "a fusion of technologies" (as discussed in the 'Top Five Trends for Mining' blog of February 28).

An important part of the technological change is the sudden popularity of electric vehicles. EV sales were 1.2 million in 2017 and the internet site InsideEVs estimates that monthly global sales of EVs reached 240,000 in November 2018 (an annualised rate of 2.9 million). Car maker Ford estimates that sales of EVs and hybrid vehicles reached 3.4 million last year, which represented 4% of the 86 million vehicles sold globally, with over half of the EV sales being in China.

Global sales of EVs and plug-in hybrids are widely expected to account for half of the total vehicle market by as soon as 2030. Led by China, battery cell manufacturing capacity has more than doubled over the past three years, and is projected to double again to 250 GWh by 2020. Boston Consulting Group estimates that total cell-production capacity will be 900 GWh in 2030. 

It is estimated that recycling will take ten years before it becomes a viable supply source, so the burgeoning demand for EVs and their batteries will necessitate new mined sources of the required metals. The additional wiring required in EVs will boost demand for copper, and the most important battery metals will be cobalt, nickel and lithium, plus increased consumption of graphite, manganese and vanadium.

The current market for cobalt is small and already dominated by usage for batteries. The supply is problematic, however, as over 60% of production last year was from the Democratic Republic of the Congo (DRC). There is a high potential for cobalt discoveries in Australia but the resources (tonnages and grades) are significantly smaller there than those in the DRC.

Battery usage is currently only a small portion of the consumption of nickel, but demand is expected to increase dramatically. Like cobalt there is a supply issue as S&P Global Market Intelligence (SPGMI) calculates that only 50% of current supply of the metal is in a form suitable for battery manufacture.

The mined supply of lithium is soaring, and SPGMI estimates that production of lithium carbonate equivalent could increase from last year's 505,000 t to between 0.8 Mt and 1.2 Mt of LCE by 2023. Panasonic has warned, however, that it is important for battery manufacturers to build a strong relationship with secure, long-term suppliers of a consistent product.

Battery Research

The evolution of battery design has led to an increase in capacity and consequently to an increase in the range of EVs, although challenges still remain around reduced voltage and decreased stability. Car makers are currently investing heavily in research to minimise the quantities of metals required in these new technologies, and to improve the security of supply.

In a research article published by SPGMI in December, Michael Giblin looked at the various battery types. He wrote that lithium-iron-phosphate, or LFP, batteries were an early leader for use in EVs but nickel-manganese-cobalt, or NMC, batteries have become the preferred option. Development of these NMC batteries has seen a reduction in the cobalt content, from the equal proportions of the earlier NMC111 battery to the current NMC532 (five parts nickel, three parts manganese and two parts cobalt), which reduces the cobalt and manganese content in favour of nickel.

SPGMI notes that other battery technologies under development include lithium titanate, or LTO, batteries. These differ from other lithium-ion batteries in that lithium titanate is used to coat the anode in place of graphite. LTO batteries have displayed significantly higher cycle lives, and very rapid charging, in addition to being more suitable for low-temperature environments. LTO batteries, however, compare unfavourably to NMC batteries in their energy density and voltage output.

LMO batteries, which comprise lithium manganese oxide, have been a mainstay of the EV industry for a number of years. These batteries are rarely now used in isolation but can be used efficiently in combination with NMC batteries. The resulting EV still does not have the driving range exhibited by the nickel-cobalt-aluminium (NCA) batteries used in Tesla's vehicles, which also feature a reduced cobalt content.

Mr Giblin writes that research continues on other battery technologies, such as solid-state, lithium-air and lithium-sulphur batteries, all of which place less reliance on the scarcer metals. He warns, however, that these battery technologies are as yet commercially unproven and are unlikely to reach commercialisation in the next 10 years.

Exploration Boom

The exploration sector has already responded to the imminent surge in demand for these battery metals. SPGMI estimates that 292 companies budgeted an aggregate US$430 million in 2018 to the exploration for cobalt, lithium, graphite, manganese and vanadium — up 59% from the US$270 million budgeted by 230 companies in 2017. In addition, nickel allocations also benefited in 2018, rising 22% year over year to US$298 million.

In 2018, lithium exploration budgets reached a new high of US$247 million, up 58% year over year. SPGMI notes that despite attracting more investment, the number of active explorers remained flat, with 137 companies active in 2018 compared with 136 in 2017.

For a second consecutive year, cobalt registered the largest year-over-year percentage increase in planned exploration spending among the nonferrous metals covered by SPGMI. An estimated 95 companies allocated a total of US$111 million for cobalt exploration in 2018, more than triple the US$36 million budgeted by 52 companies in 2017.

Among the other emerging battery materials, SPGMI notes that graphite attracted the most interest in 2018, with 47 companies allocating over US$43 million. Junior companies were the only participants in this graphite exploration, with allocations targeted to Mozambique, Tanzania, Australia and Canada accounting for 79% of the 2018 total.

Manganese exploration allocations by 13 companies totalled US$15 million, falling 31% from the US$22 million budgeted by 19 companies in 2017. These exploration efforts are primarily focused on Australia and South Africa, where eight of the top ten producing mines in 2017 are located. 

Vanadium allocations increased 111% year over year to US$13 million in 2018, with the number of active explorers jumping to 22 from eight in 2017. Australia, the US and South Africa collectively received almost 84% of the 2018 exploration total.

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Chris Hinde

Chief Commentator, Mining Beacon

Previously editorial director of Mining Journal, and more recently head of S&P Global Market Intelligence's metals and mining team, Chris is now Mining Beacon's editor-in-chief and lead commentator. He posts two blogs every week, one on Monday reviewing market conditions over the prior week, and a second on Thursday looking at issues on the global mining scene. There is also a quarterly blog on business opportunities in the sector.