The future of transport is electric…
After the non-starter EV revolution of the late nineties was crushed by its own architects, hybrids came along to give us a halfway house toward the end of vehicular pollution. But finally, as 2020 draws ever closer, auto manufacturers like Tesla (NASDAQ:TSLA), Nissan (TYO:7201) and, ironically, GM (NYSE:GM) have been followed by an explosion of startups to put us decidedly on the road to zero-emission utopia.
This supply of EVs comes at a critical point, as more and more countries are setting deadlines for the end to the sale of internal combustion engine (ICE) powered vehicles. Some of these deadlines are more ambitious than others, ranging from 2025 in Norway to 2040 in the UK. Even Norway’s target allows seven years until the ban is in place, which seems easily attainable when we factor in Volvo’s (STO:VOLV-B) commitment to production of exclusively electric and hybrid vehicles by 2019.
All in all then, this seems like a great prognosis — cleaner air for our cities and a dramatic reduction in greenhouse gases. But there is a catch: cobalt. The crucial ingredient in the lithium-ion batteries that power EVs, battery backup systems and consumer electronic devices has exploded in price over the past year— a reflection of its growing scarcity. The massive growth of EV production has caused a surge in projected demand, a demand which is set to outstrip supply by 2020.
The reason for this is simple. 60% of the world’s mineable cobalt are in the Democratic Republic of Congo, a country mired in corruption, violence and instability. This has led to a scramble from car manufacturers looking to secure supplies, both now and in the future.
Volkswagen recently failed to secure long-term mining rights in a move that demonstrates that it is the mining companies that have the upper hand. This failure was mainly due to VW’s attempt to secure cobalt at sub-market prices, but it still demonstrates the weakening of the auto industry’s hand in the face of such a strong position that cobalt suddenly finds itself in.
Another reason that car manufacturers are finding it so hard to secure deals is that China has been steadily buying up cobalt production; this means that most of the world’s cobalt ends up in China, putting Chinese companies at a significant advantage in terms of the production and sale of lithium-ion batteries.
Does this situation foretell impending doom for non-Chinese companies hoping to secure a stake in the booming EV industry? As companies get rich off of the blue-gold rush, others are seeking ways to avoid obtaining the precious mineral at source, while others seek to cut it out of the chain entirely.
In the suburbs of Vancouver, American Manganese Inc. (CVE:AMY) is developing techniques for battery recycling that outstrip cobalt mining in terms of cost effectiveness. This practice will come into its own when the batteries in the current fleet of EVs reach the end of their working life in around a decade. While this is too late to stave off the projected outstripping of cobalt supply, it does paint a more positive picture for EVs, and battery production in general.
Elsewhere, researchers at Argonne National Laboratory have teamed up with a group led by Christopher Wolverton at Northwestern University in Illinois to replace cobalt entirely with the far cheaper iron oxide. Through computational modelling, the team has managed to theoretically produce a battery that is significantly cheaper, but crucially, more effective and with increased longevity.
Of course, theoretical success is a long distance from practical application, so we are still left with the crisis of supply and demand before we can safely say that we have reached the goal of zero, but for now at least, it seems the hurdles toward that goal are far from insurmountable.
By Gary Norman for Oilprice.com
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