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General Market Commentary
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General Energy
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General Market Commentary
Demand for EV raw materials to spike: report
The demand for raw materials used to manufacture rechargeable batteries for electric vehicles (EVs) will grow rapidly as the importance of oil as a source of energy recedes, according to a new report from the United Nations Conference on Trade and Development (UNCTAD).
According to UNCTAD, ongoing efforts to lower greenhouse gas emissions are expected to spur further investment in green energy production, which has been steady in recent years at US$600 billion per year, on average.
“Alternative sources of energy such as electric batteries will become even more important as investors grow more wary of the future of the oil industry,” said Pamela Coke-Hamilton, UNCTAD’s director of international trade.
Electric car sales have boomed in recent years, rising 65% in 2018 from the previous year to 5.1 million vehicles, and are expected to reach 23 million in 2030, according to the International Energy Agency.
The report highlights the significant role of rechargeable batteries in the global transition to a low-carbon energy system.
The worldwide market for cathode for lithium ion batteries, the most common rechargeable car battery, was estimated at US$7 billion in 2018 and is expected to reach US$58.8 billion by 2024, according to the report.
“The rise in demand for the strategic raw materials used to manufacture electric car batteries will open more trade opportunities for the countries that supply these materials. It’s important for these countries to develop their capacity to move up the value chain,” Coke-Hamilton said.
Reserves of the raw materials for car batteries are concentrated among a few countries. Nearly 50% of world cobalt reserves are in the Democratic Republic of the Congo (DRC), 58% of lithium reserves are in Chile, 80% of natural graphite reserves are in China, Brazil and Turkey, while 75% of manganese reserves are in Australia, Brazil, South Africa and Ukraine.
The highly concentrated production, susceptible to disruption by political instability and adverse environmental impacts, raises concerns about the security and supply of raw materials to battery manufacturers.
The report warns that supply disruptions may lead to tighter markets, higher prices and increased costs of car batteries, affecting the global transition to low-carbon electric transportation.
According to UNCTAD, investing more in green technologies that depend less on critical battery raw materials could help reduce consumers’ vulnerability to supply shortfalls in the current mix of materials such as lithium and cobalt, but this would cut the revenues of the countries producing them.
The report indicates that the bulk of value added to raw materials used in making rechargeable batteries is generated outside the countries that produce the materials.
For instance, value added to cobalt ores by the DRC is limited to intermediate products or concentrates. Further processing and refining are mostly done in refineries in Belgium, China, Finland, Norway and Zambia to obtain the end products used in rechargeable batteries as well as for other applications.
The DRC, which accounts for over two-thirds of global cobalt production, has not maximized the economic benefits of the mineral due to limited infrastructure, technology, logistical capacity, financing and lack of appropriate policies to encourage local value addition.