Lithium Batteries – Cost Reduction Pathways – Introduction & Cathode Technology

This will be the century of energy storage

The secret of change is to focus all of your energy, not on fighting the old, but on building the new.

When you look at the amount of energy that we use that is stored in the chemical bonds of fossil fuels, by the middle of the century all of that energy will be stored in the chemical bonds of battery materials.

I think that scale is something like 20GWh in 2027. We’re going to have 2TWh of battery storage produced every year.

Sila Nano CEO, Gene Berdichevsky, Interviewed by Steve LeVine on The Information

The breakthrough with solar wasn’t an R and D breakthrough. It wasn’t a brilliant new material. It was a roughly a hundred billion dollar deployment of silicon capacity manufacturing, mostly in China. That massively, massively reduced the cost of silicon PV production.

Kobold Metals CEO, Kurt House, Interviewed by Jason Jacobs

200 giga factories must be built to lower lithium battery prices

Tesla CEO, Elon Musk, World Innovation Forum 2014

Founded in 2014 by Simon Moores, Benchmark Minerals has been tracking the cost of the main materials that go into batteries. Predominantly those used in mobile applications, Lithium, Nickel, Cobalt & graphite.

Chinese automaker Geely announced plans in March for a new 42 GWh cell base in Ganzhou, Jiangxi Province in China and is officially listed as Benchmark’s 200th entry into our Lithium Ion Battery Megafactory Assessment This also brings the total capacity in the pipeline for 2030 to 3.4TWh

Q: Right now Demand is outstripping supply 5 years down the road…

JB: I am pretty worried that this could become a bottleneck to electrifying everything that people are hoping to do….it’s going to be a bit painful for when all of these factories try & ramp at the same time. There’s only so many geologic sources of a lot of these key materials.

Redwood Materials CTO, JB Staubel interviewed by Jeneice Pettitt CNBC, April 10, 2021

China wants to be the world leader in EVs. It doesn’t want to be exporting rare Earth or rare Earth magnets and so many existing businesses will lose their business going forward as China requires more and more raw material for its own business and its own EV growth strategies.

Redwood Materials CTO, JB Staubel interviewed by Jeneice Pettitt CNBC, April 10, 2021

Essentially the story of the lithium-ion battery will be Europe in the next decade it has been about China, Japan and Korea it’s now about Europe

Altech Chemicals MD Iggy Tan, New World Metals Conference September 2021

Obviously Mincor and Panoramic where I used to work so they’re the only three assets in Australia that could be producing Nickel within the next sort of 15 months. In terms of new projects. I mean obviously Western Areas have got Odysseus which is which is as well but that’s pretty much it.

Poseidon Nickel MD Peter Harold New World Metals Conference September 2021

In the middle of September my knowledge of Lithium batteries was extremely limited. For instance I knew Elon Musk/Tesla held a well publicized battery day last year around this time (September) where one memorable rumour was a Million Mile battery which was not what was announced (Tesla’s focus was on reducing cost of materials & factory machinery). So until recently, I knew only that most Lithium batteries contained mostly Nickel but could also be made from Iron Phosphate. That the Nickel Batteries had Manganese/Cobalt or Manganese/Alumina & there was some chemical formula they were trying to work out to drop ratios down from 6:2:2 (6 parts Nickel, 2 parts Manganese/2 parts Cobalt) to 8:1:1 (8 parts Nickel, 1 part Manganese/Cobalt respectively). I had no idea how any of this worked apart from somehow this was all combined into flat rolls of foil/electrolyte separator & rolled into a battery shape. Oh & Tesla had somehow changed the way batteries were rolled, thus revolutionising their design, but I didn’t understand what this meant.

So the past few weeks has been spent trying to catch up on lithium battery technologies, how they work, what the main components are, where the raw materials/mineral deposits are, what has to happen to use the material in batteries, where the technology is headed & the challenges which seem to be in front of us. One thing I have learnt though is that the more content I consume, the more I realize just how limited my knowledge is, so what follows is my rough understanding of where I got to with some of the challenges which lie in front of the industry & more generally electrifying everything.

• 225+ Gigafactories committed for a rapid deployment in manufacturing capacity of batteries over the next 10 years.

• These are planned for China, USA, Europe, SE Asia.

• Resource/Raw material supply for such a rapid ramp in battery supply has been identified as a major potential constraint.

• China has led the way building out the supply chains & manufacturing capacity to date, but they will have their own manufacturing plants servicing their own markets which will make use of this supply meaning alternate supplies are required to supply the US, European, SE Asian manufacturing (mega/gigafactories) capacity planned.

What has been done to address this looming raw material supply crunch?

Multiple avenues of R&D to identify past, present, near future & long term battery chemistry
Advanced data analysis tools to map & identify deposits of materials required to supply above
Circular economy or large scale recycling of used materials with high recovery rates
Data Analysis to bring all streams together in order to track & provide bankable data

A good start to understanding how the battery works is this YouTube video.

The above are indicative only (all manufacturers will use different % quantities of materials)

Cathode

Common Cathode materials (Nickel, Cobalt, Alumina, Manganese, Iron phosphate)

And then for complicated reasons, which I won’t go into now, you’re actually stuck to just a few atoms actually in that first row. Nickel, cobalt, manganese, to some extent iron, if you pair it with phosphate. So it’s a small number of materials that really make the best cathodes and they make substantially better cathode materials. Nickel and cobalt in particular are way, way better than the next best cathode material.

Common industrial metals where supply chains are geographically diverse & could ramp quickly to meet demand

Aluminium/Aluminum – China, India, Russia, Canada, UAE, Australia https://bit.ly/3lWIxsm

Copper* – Chile, Peru, Australia, Russia, Mexico https://bit.ly/3zHcMIG

Iron** – Australia, Brazil, China, India, Russia https://bit.ly/3obem3h

* Copper by 2027 some forecast demand to outstrip supply https://bit.ly/3CZZJ7l

**Iron Ore is also notable for individuals who control a considerable amount of the world supply.

Metals where supply chains will require rapid scaling – most likely countries to meet short term supply deficit

Lithium – Spodumene (hard rock) Australia. Brine Chile, Argentina https://bit.ly/3kIcw85

Nickel – Indonesia , Phillipines, Russia, New Caledonia, Australia, Canada, China https://bit.ly/3zFoN1k

Cobalt – DRC 50% Australia 20% Cuba 7% Phillipines, Russia 4% Canada 3% https://bit.ly/3o6HgBN

Metals where the main deposit is geographically concentrated

Cobalt – DRC 50% Australia 20% Cuba 7% Phillipines, Russia 4% Canada 3% https://bit.ly/3o6HgBN

Phosphate – Morocco 70% China 5% Syria 3% Algeria 3% Russia, US, Egypt, Sth Africa 2% each https://bit.ly/2XQmCet

Manganese – South Africa 80%, Australia 10%, Ukraine, China, India, Brazil https://bit.ly/3u9scEt

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.