One evening, an elderly Cherokee Brave told his grandson about a battle that goes on inside people.
“Within us,” he said, “are two wolves locked in a constant state of battle – a good wolf and a bad wolf.
The good wolf represents all of the good things we seek to be: brave, honest, true, happy, and generous of spirit.
The bad wolf represents greed, anger, selfishness, arrogance, hatred, and fear.
Throughout our lives,” the man finished, “these two wolves will battle.”
The young boy looked up at his grandfather and asked, “Which one will win?”
The grandfather replied simply, “Whichever one you feed.”
Accelerating the Energy Storage Century
The challenges for large scale adoption of Energy Storage in order to electrify everything are many. But none of it happens if raw material supply chains are unable to ramp fast enough & at lowest cost in order to keep the trajectory of Lithium Ion battery costs reducing. Tesla has taken on many of these challenges, the Gigafactory concept which arose out of that, Tesla becoming the factory that builds the factory. Of the three core components of a Lithium battery (electrolyte, cathode, anode) examined below is how it appears we are about to ramp/increase supply.
Remember that Tweet from Benchmark Minerals?
4100 Gwh over 225 factories equates to 18Gwh per factory.
Or at Tesla’s existing 150GWh to get to 4,100 GWh annual manufacturing capacity would require 27 Gigafactories. The changes Tesla announced during battery day put this at 4.1 Gigafactories.
It is then the resources, raw materials where the biggest constraint potential exists. The world simply does not produce enough of these raw materials & in order to obtain them will need to build mines & refineries to supply the large number of battery factories & manufacturing capacity planned.
Which brings us to how we get those materials, where from, how do we find them, develop the resource deposit, who is going to ramp production in order to supply them to these battery factories?
Tesla Giga Nevada, Gigafactory 1 was built around 2015. Noting Elon Musk’s statement that the world would need 200 Gigafactories to reduce battery prices, the smartest people you’d hope would start thinking about what materials the world would need in order to supply these factories.
In 2018, one of the largest mining companies in the world, in fact the third by revenue in 2020 at $43.2B, included the following bar chart produced by MIT identifying Metals most impacted by new Technology.
https://www.nsenergybusiness.com/features/largest-mining-companies/
Looking into these raw material supply chains however, goes back further than that, to when those who have proven time & again to have great foresight, began to work out which way the world could go & what would be required to make it happen.
In order for me to understand how modern day success has been achieved at an unprecedented scale at any other time in history I’ve looked at a couple of extremely successful organizations run by very smart individuals.
The first one which I looked at was Soft Bank who CNBC reported on May 12 2021 :
Softbank just shocked its critics by landing the biggest profit in the history of a Japanese company
Group net profit was $45.88 billion in the year ended March, topping the $42.5 billion made by Warren Buffett’s Berkshire Hathaway in its last business year.
The Second one which I looked at of course, was Amazon.
What is common in both these cases is investments are not simply made on one thing in a sector. That usually a broad approach taken to investment selection & although they may initially be niche or stand alone, there are times when these solutions combine & are integrated to make a greater whole.
A relatable example may be Microsoft Office Suite with Excel, Word, Outlook, Powerpoint etc.
Another may be what Facebook have done with (biggest names only) Instagram, Messenger, WhatsApp etc.
Which brings me to why there is good reason to wonder would a similar approach be undertaken for the much more opaque mining sector. Particularly those minerals identified by MIT & included in a Rio Tinto mining presentation as far back as 2018.
Tin (Sn), Lithium (Li), Cobalt (Co), Silver (Ag), Nickel (Ni), Gold (Au), Tungsten (W), Vanadium (V), Graphite (C – Carbon), Niobium (Nb), Zinc (Zn), Platinum Group Elements or Metals (PGE/PGM) Platinum (Pt) & Palladium (Pd) & Salt.
In November 2015 Bill Gates launched the Breakthrough Energy Coalition, a group of likeminded investors, running some of the biggest companies in the world.
Bill Gates (Microsoft), Jeff Bezos (Amazon), Richard Branson (Virgin), Mukesh Ambani (Reliance Industries India), Ben & Lucy Walton (Walmart), Masayoshi Son (Softbank) to name but a few.
At the time, Bill published a white paper which talked about Promising Research into Energy Innovations which covered 3 main technologies – Photocatalysts (to produce Hydrogen), Flow Batteries & Dye Sensitized Solar PV Paint.
The breakthrough energy Coalition investors are not simply looking at one or two technologies, but ways in which entire economies can de-carbonize. It logically follows that Lithium batteries will play an extremely important role in large mobile applications, so they would be remiss in not examining the supply chains from the mine to refinery to end product. And they did IMO, bringing in other successful mining entrepreneurs.
2014 – Elon Musk – 200 Gigafactories
2015 – Tesla Gigafactory 1
2015 – Breakthrough Energy Ventures launched by Bill Gates, Jeff Bezos, Mukesh Ambani
2015 – Andrew Forrest Pursues new Opportunities in minerals and energy commodities
This is what the Breakthrough Energy Coalition has invested in below - look familiar?
At the time, Bill published a white paper which talked about Promising Research into Energy Innovations which covered 3 main technologies – Photocatalysts (to produce Hydrogen), Flow Batteries & Dye Sensitized Solar PV Paint.
These writings about the technical aspects of batteries, components, supply chain and the like are intended to stimulate awareness and discussion of these issues. Investors should view my work in this light and seek other competent technical advice on the subject issues before making investment decisions