Mining Journal asked Benchmark's senior analyst Any Miller...

Mining Journal asked Benchmark's senior analyst Any Miller whether this could be construed as the jurisdiction getting serious about its role in the global battery arms race in which it was currently a bystander.

MJ: How serious do you think the US is about building its future competitiveness in a global, future lithium-ion battery industry?

Andy Miller: The arrival of electric vehicles (EVs) and the emergence of battery energy storage has sparked a wave of lithium-ion battery megafactories being built, but at this stage the US has very ltitle participation in the supply chain.

BMI is now tracking 70 lithium-ion battery megafactories under construction across four continents, 46 of which are based in China with only five currently planned for the US.

Only one of these battery megafactories is American owned (Gigafactory 1, Tesla). This, however, was the world's biggest battery plant by capacity in 2018.

Since October 2017, planned lithium-ion battery capacity in the pipeline for the period 2019-2028 has risen from 289GWh to 1,549GWh (1.54TWh) in BMI's February 2019 assessment. This expanded capacity is the equivalent of 23-24 million sedan-sized electric vehicles.

MJ: In terms of policy direction, what is the US doing to improve its competitiveness as a global energy player, and can it catch up with the leader/s?

AM: The increasing scale of planned lithium-ion capacity will be a contributing factor to pushing lithium-ion battery production costs below $100/kWh in 2019, BMI's data shows.

This figure is long seen as a tipping point for the adoption of mass market EVs.

Almost exclusively, these megafactories are being built to make lithium-ion battery cells using two chemistries: nickel-cobalt-manganese and nickel-cobalt-aluminium.

This means the supply of lithium, cobalt, nickel and manganese to produce the cathode for these cells, alongside graphite to produce battery anodes, needs to rapidly evolve for the 21st century. However, the scaling up of these chemically engineered materials, which are not commodities, is a major challenge for the industry.

In his recent testimony before the US Senate Committee on Energy and Natural Resources, BMI's MD Simon Moores said those who controlled these critical raw materials and those who possessed the manufacturing and processing know how, would hold the balance of industrial power in the 21st century auto and energy storage industries.

He said at the beginning of 2019, the US had a "minor to non-existent" role in most of the key lithium-ion battery raw materials and only had a presence in lithium-ion battery manufacturing via Tesla. Tesla and its Gigafactory 1 was emerging to be the most strategic US asset in the EV supply chain.

MJ: What do all the downstream demand drivers mean for the upstream producers?

AM: The growth trajectory expected for lithium-ion battery raw material demand is unprecedented.

Lithium-ion batteries are becoming a major global industry and the impact on the four key raw materials of lithium, cobalt, nickel and graphite will be profound.

Between 2023-2028, lithium demand will increase by over eight times, graphite anode by over seven times, nickel by a massive 19 times and cobalt demand will rise four-fold, which considers the industry trend of reducing cobalt usage in a battery.

The real-world expectation is that 70% of this capacity will be realised by 2028, yet even at full capacity this will not yield enough lithium-ion batteries for EVs, energy storage and mobile technology.

As a result, this global battery megafactory trend will continue.

This would still cause major disruption in the mineral industries supply of lithium-ion batteries and the US is heavily import reliant on all four.

MJ: Are other jurisdictions waking up to the fast-paced evolution of battery manufacturing capacity?

AM: With the wave of new announcements of battery manufacturing capacity growth centred around Asia, particularly China, there has been rising interest politically in the sector.

Several governments have expressed fears in becoming too reliant of Asian lithium-ion cell manufacturing capacity and a growing number have stated plans to back their national battery industries in order to increase competitiveness.

Most recently the Australian government's Trade and Investment Commission released a report highlighting Australia's target of developing a few sites for lithium-ion battery production as well as outlining a number of plans and strategies to incentivise investment in the sector.

The report from the Australian commission follows an announcement in November by the German government committing US$1.1 billion to support lithium-ion cell production in the country, setting the target of 30% of global cell production coming from Germany and Europe by 2030.

The funds were put in place following the collapse of German battery consortium TerraE in October. The group felt they could not raise enough funds to make the investment to build a German megafactory.