Lithium-ion battery production is more likely to be constrained by cobalt or nickel supplies than by lithium availability, experts believe.
Li-ion battery makers use both metals in greater quantities than lithium, which has been the subject of significant supply concerns as battery production ramps up. In fact, none of these minerals are worryingly scarce in nature.
What troubles some observers, however, is that cobalt and nickel are susceptible to greater supply-chain risks because of the countries that control the resources.
“It's not a physical scarcity risk, but there are supply risks that could affect the price not just of lithium but also cobalt, manganese and nickel. They are very important materials, depending on the chemistry," said Logan Goldie-Scot, head of energy storage analysis at Bloomberg New Energy Finance.
Cobalt in particular has a precarious supply chain since half the current reserve comes from the Democratic Republic of Congo, where there is “an uncertain legal framework, corruption and a lack of transparency,” according to the CIA World Factbook.
Although the country is becoming more stable and improving in terms of economic development, it has a long history of conflict, and national elections next year could prove a flashpoint if the current president, Joseph Kabila, refuses to step down as required by law.
Meanwhile, according to Goldie-Scot, “Nickel is spread across a wide group of countries but the market remains vulnerable to the actions of just a few of these. In January 2014, Indonesia banned exports of nickel, which caused the price to rise from $13,000 a ton to $21,000.”
Manganese is similarly subject to price variations based on supply.
This month, MetalBulletin reported European ferro-manganese prices “shot up” from between €740 and €750 to €750 and €790 per ton following supply shortages announced by two South African mining concerns, South32 and Assmang.
Lithium also could face supply chain crunches. Although it is widespread in nature, about 70 percent of economically accessible supplies are found in just three countries: Argentina, Bolivia and Chile.
This concentration has sparked fears that lithium supply constraints could stunt Li-ion battery growth. But experts consider this unlikely because the three countries have differing political agendas and so far do not seem keen on hampering exports.
If anything, Bolivia appears to be encouraging further exploitation of its reserves, in concert with foreign investors.
At the same time, companies such as Simbol Materials in the U.S. and Cobre Montana in Australia are moving to develop new ways of exploiting currently uneconomical reserves outside of Latin America.
Consequently, said Goldie-Scot, “our view is that there really isn't a near- to medium-term lithium scarcity.”
In any case, said Alexis Georgeson, senior public relations representative at Tesla, lithium only plays a minor role in that company's batteries. “The cells in Tesla batteries are primarily metal oxides composed of nickel and aluminum, and to a lesser extent cobalt,” she said.
“Carbon and steel are also featured. The lithium content is actually a small amount by weight, and contributes a correspondingly minor part of the cost of Li-ion batteries. Our batteries really should be called nickel batteries," said Georgeson.
For now, Tesla is definitely not worried about lithium availability, Georgeson confirmed. “There are more than enough reserves of lithium world-wide to serve the growth of the battery markets, including Tesla's projected needs,” she said. “Even if we wanted to build 10 or 20 Gigafactories, we would not have to search beyond the known reserves that can be economically mined.”
Tesla also expects to source an increasing amount of the material through recycling as battery production ramps up. “The Tesla Gigafactory will incorporate onsite recycling,” Georgeson said.
“All the materials and components in our Li-ion cells can be recycled or otherwise safely disposed of. We are working with our suppliers to implement even further efficiencies for Gigafactory production.”
Minerals experts highlighted the growth prospects for cobalt, rather than lithium, in the wake of Tesla’s Powerwall announcement.
“When it comes to investing in the future of commodities, forget about resources such as iron ore and coal, which dominated the industrial economies of the old world order,” wrote Andrew Critchlow, commodities editor for the Daily Telegraph in the U.K.
“The new currency for smart commodity investors will be cobalt, which is poised to play a growing role in everyone’s life if the vision of American billionaire Elon Musk to have a Tesla Motors battery powering homes comes to fruition," he said.