EV Battery Supply Chain: Tensions on the Ground

Guest

Henry Sanderson

Executive Editor, Benchmark Mineral Intelligence

Transcript

Bill Loveless [00:00:02] In 2021, 6.9 million electric vehicles were sold globally, and with 18 of the 20 largest auto manufacturers committed to embracing electrification. Sales are expected to reach 55 to 72 million by 2025. To produce these vehicles, manufacturers need critical minerals like cobalt, lithium and nickel for their batteries. China is a major player here because of its capacity for processing critical minerals and manufacturing batteries. Just as important is where these battery materials originate and how they are mines. What happens on the ground is often overlooked with the United States and Europe both aiming to bolster their domestic supply chains. The contest for critical minerals is heating up. What will it take to produce these minerals in sufficient quantities? And how can it be done in ways that protect the environment and the mining communities? This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I’m Bill Loveless. Today on the show, Henry Sanderson. Henry is the executive editor at Benchmark Mineral Intelligence, a leading provider of data and analysis for the lithium ion battery supply chain from 2014 to 2021. He served as the commodities correspondent for the Financial Times. He also spent seven years in China reporting for Bloomberg and the Associated Press in July. Henry published a new book, Volt Rush The Winners and Losers and the Race to Go Green. Volt Rush is about the geopolitics and the competition over the commodities needed to build a greener world. I talked with Henry about the competitive global market of EV battery components and the impact it has had on poor countries. We also discussed efforts by the United States and other countries to build domestic supply chains and join the conversation. Henry Sanderson, welcome to Columbia Energy Exchange.

Henry Sanderson [00:02:13] Thanks very much. I’m a big fan of the podcast.

Bill Loveless [00:02:15] Oh, thanks. I appreciate that. And we appreciate having good guests like you on the show. It’s what makes a difference. I’ve enjoyed your book. Let me get that up out front. Volt Rush The winners and losers in the race to Go Green. I would certainly recommend it to anyone who not only those who may know the subject pretty well, but those who simply want to learn more about it and get some authentic firsthand reporting and what goes on in this critical field. But first, tell us a little bit about yourself, your journey as a reporter and the impact your travels through so many countries has had on the work you do today.

Henry Sanderson [00:02:56] Yeah. Thanks so much. So just a bit about me. I I’ve been a journalist, you know, pretty much since I since I graduated. I actually did my master’s at Columbia in New York. I worked in New York for for two years. And I went to China in late 2007, just just before the Olympics. And I stayed in China for seven years until 2014, after which I came back to London to work for the Financial Times. And that’s when I started covering commodities and got interested in these in these minerals that we’re going to need to make the make the energy transition.

Bill Loveless [00:03:32] Yeah, And it is such an important topic and of course, one that you’re continuing to work on today as the executive editor of Benchmark Mineral Intelligence, which is, as I understand it, as a provider of data and information on the battery industry.

Henry Sanderson [00:03:47] Yeah, I was going to say that’s right. You know, we provide pricing and data analysis on the battery supply chain, which which is going to be one of the big, you know, big industries of this energy transition.

Bill Loveless [00:03:59] Well, you know, let’s talk a little bit about electric vehicles here. And right at the outset, it may seem like a recent phenomenon to some people, but they’re not. In fact, they go back some 120 years or so. As you remind us in your book, when they were relatively popular. Briefly, give us a flashback to the early days of the electric vehicles.

Henry Sanderson [00:04:24] Yes. There was this fascinating period where you had electric vehicles, steam vehicles and the internal combustion engine all sort of competing for for the automotive automotive market. And it was there was a brief moment where it didn’t seem clear which way it was going to go. And actually electric vehicles were more popular briefly. And there was there was a time where we could have seen electric vehicles used for certain use cases such as intercity travel. There was a company in New York that had a New York taxi company that had electric vehicles, and we could have seen internal combustion engine for longer range vehicles. And it was is fascinating to me to learn about Thomas Edison, you know, one of the most famous American inventors. You know, we think of him we think of the light bulb was one of inventions, but he actually spent many years and millions of his own money trying to invent a better battery because he could really see that the power of a better battery if if if you could electrify automobiles, you know, that would be so much better than using using gasoline. And he even briefly worked with Henry Ford on on a prototype of an electric vehicle. But unfortunately, you know, it’s interesting because batteries sort of over promise they got ahead of themselves and they didn’t quite deliver on the promise of sort of breakthrough technology. And at the same time, the internal combustion engine just got better and better. And of course, with Henry Ford’s Model T, it’s interesting that they just swept everything, you know, everything before them. And, you know, we entered the oil age of the 20th century and internal combustion engines are used for so many things now. And this is the problem now. Is this embedded so deeply in our in our global economy, is in the fossil fuel infrastructure is massive. And now we face this this challenge of trying to try to get off of this, you know, addiction to fossil fuels.

Bill Loveless [00:06:16] You know, I find interesting your discussion on the the the efforts to build a better battery, you know, well beyond those early days when when electric vehicles were in fact popular. We saw fits and starts over over the years, including efforts by many, even some scientists at oil companies to do to build a better battery. Tell us about that.

Henry Sanderson [00:06:38] Yeah, so you’re right. The battery didn’t just didn’t just go away. You know, after Henry Ford’s Model T actually Edison’s batteries that did go on to be used for for for quite some time after they were installed. And battery scientists, of course, never lost the hope of a better battery. And we saw Ford Motor in the sixties sort of experiment with batteries. And then the first real sort of breakthrough battery in terms of lithium ion was was the ExxonMobil and the. 1970s. And it’s so interesting that decade because like today, you know, it was a very inflationary environment. You know, we obviously had the, you know, OPEC and the oil export situations that a West was confronted with high, high energy prices and was looking to renewables quite, quite seriously during that decade. And it was at that time that Exxon wanted to, you know, invest in solar, wanted to invest in electric vehicles. And it had this team, you know, this scientist, Stanley Whittingham, British scientist actually, who was working on some early batteries. And he and he created what is considered one of the first sort of lithium batteries. And lithium metal was actually used in the battery, which is a very volatile substance, is highly reactive. So they had this battery, you know, and so they wanted to get into the EV game. But unfortunately, you know, the early eighties, oil prices came down and we just we just completely forgot about renewables and, you know, EVs and Exxon sold off the division and focused on oil and then went into, you know, climate denial and focusing against against climate change.

Bill Loveless [00:08:20] Yeah, it’s certainly an interesting chapter in the in the world of batteries to develop the science of batteries, the technology of batteries. And it was an episode, I have to tell you, I wasn’t I wasn’t familiar with that particular those particular developments. Well, let’s take a broad look at what goes into it and the battery where the components come from and why their origins pose such a challenge to efforts by the United States, Europe and other parts of the world to promote the adoption of EVs.

Henry Sanderson [00:08:52] Yes. So the lithium ion battery just follow what I was saying was was first commercialized by by Japan in 1991 and by Sony. It was used in camcorders. It really enabled the rise of, you know, mobile digital equipment and smartphones. So we really owe a lot to the lithium ion battery. But when it got to the stage of electric vehicles, we need much bigger batteries. And what we’re seeing now is, is that that stress on raw material demand is getting greater and greater because inside a lithium ion battery and you obviously have have lithium in it, but but you also have minerals like cobalt, like nickel, like manganese. These are all in the cathode of the battery. And then in the onset of the battery, you have you have graphite, which is a carbon material. And the problem is that a lot of the supply of these minerals is quite heavily concentrated. So if you think about cobalt, you know, today, probably this year is going to be about 70% comes from the Democratic Republic of Congo. If you think about nickel this decade, most of the growth in nickel is going to come from Indonesia. And if you think about graphite, China, China completely dominates both the the mining of graphite, but the processing of graphite. So as we as we enter this, if we think about geopolitics and the current deterioration and relationship between West and China, a lot of these minerals are really right buying in the center of the geopolitics of the clean energy transition.

Bill Loveless [00:10:22] And of course, you look at the United States, for example, when when it comes to lithium, there’s simply one operational mine. There’s others in various stages of planning, but only one mine is actually in is it actually in operation? You know, so, so often and I think it’s important to understand where these minerals come from, because then I think this is where I found your book particularly interesting when you when you talk talked about what happens in these countries, what’s happened for years in these countries as these minerals were were mined. You know, so often the discussions about critical minerals addresses their strategic importance to the transition to cleaner energy and not so much to the impact of their development on poor countries. What the scholar Peter Doe Vern, in your book, you cite him called the quote unquote ecological shadows. Take us to one or two of those places where those shadows are being cast. Your first hand reporting on them in this book is revealing.

Henry Sanderson [00:11:27] Yeah. So I think that’s right. I like his phrase because because I think it’s a very apt way to describe these supply chains. And I think many of us in the West have have not only physically offshored a lot of these industries, but we’ve we’ve mentally offshore the consciousness off of these supply chains and the idea that everything begins with with mining, which is a completely unsexy industry, you know, especially the last decade when we’ve been so focused on technology companies and apps and things like that. Right. We’ve completely forgotten about mining and these supply chains. And if you if you go to these countries, you you see the sheer scale of of mines. You know, if you go to Chile, if you see the copper mines, they are just massive. You. And then you look down on these huge copper mines in Chile and these huge diesel vehicles at the bottom of them seem tiny because it’s just it is a huge deep holes in the earth. And if you go to mines in the Congo as well, you see you see the same thing. There’s a vast, vast infrastructure. And that’s why they take so long to build. And this is really the challenge that we have at the moment, is trying to build enough new mines to satisfy our demand. But when we talk about the ecological shadows, every mine has an impact, impact on the environment and some obviously are a lot worse than others. But this can be anything from, you know, the pollution caused by these vehicles to impacts on local water resources, on local communities. And if you look at nickel in Indonesia, for example, not only if you look at the nickel in Indonesia, you know, very small percent of nickel is in the rock. So, you know, 90, 98% is waste. So you’re disposing of huge amounts of waste when you mine. And then you’re processing the material in Indonesia using coal fired power, you have problems with coal dust, you know, with pollution on the local communities in terms of their their fishing. So it’s a very a very impactful part of the supply chain. And if you if you think about lithium, it’s quite different because the lithium in Chile is a sort of conventional mining with a big open pit. It’s they evaporate the lithium in these huge pools using the sunlight. But these areas are very water short, though some of the short, you know, water scarce areas in the world. So they’re big concerns about the loss of the brine that contains the lithium through evaporation. So pretty much every every way you look at it, if we’re if we’re mining, which is what we need to do, it’s going to have an impact on the earth. So I wrote this book to try and open people’s eyes to this supply chain, because I think once we open our eyes, we can try to solve some of these issues. And if we can bring the automotive companies into their supply chain, you know, then then we can tackle these issues, you know, much, much, much easily. I think for so long we’ve been ignorant of these supply chains, even though we use these minerals in our smartphones and in our digital devices. For some reason, it’s never registered in many people’s minds where these minerals come from. But when you have a green product, like electric vehicle is much more potent as a force for changing the supply chains for the better.

Bill Loveless [00:14:44] I’d like to talk about Congo again. You spent a lot of time there seeing how mineral the cobalt it was was mined there. It was referred to by some, including yourself, as blood cobalt. It’s one of the poorest and most corrupt countries in the world. But yet the leading producer of Cobalt, you write it produced over 70% of the world’s cobalt, giving it a monopoly much in excess of that enjoyed by Saudia Arabia, an oil a big producer of nickel to tell us how that mineral is mined there in some instances. And sometimes it’s a big company, sometimes it’s.

Henry Sanderson [00:15:26] Not. Yeah. So when you go to the DRC and the mining area, which is centered around Kosi in the south is sort of near the border with Zambia, you can see right away the two different aspects of mining in the DRC very visibly. You see the big industrial miners who fly in on private jets to to the airport and get transported by jeeps to really what are like little villages behind high barbed wires. And inside these big camps, you have, you know, big industrial mining operations that look like something out of factories in China. And they’re very self-contained. They’re very protected in most cases from from sort of local communities, although there is a lot of intrusions from local communities. But then all around, you have what’s called artisanal mining. Probably not not a great way to describe it, but individual miners going out and mining for cobalt and copper by hand using very simple implements, and they take these bags of cobalt and copper to local Chinese buying houses. And you can see these along the road. And there’s also a sort of market where they can take the minerals and these minerals get weighed and they get paid for for these minerals. And then these minerals basically enter the Chinese supply chain and they goes to China and it gets mixed with often with all the minerals coming from the industrial mining sites and everything gets processed in China and then gets turned into battery materials and into batteries. So you have these two different sectors in the DRC and they have a very uneasy existence between them because often the local miners, as I said, will will go on to the. The sites of the industrial miners and mine by hand, you know, invade these sites, I guess you could say. And and there’s been unfortunately been been accidents as there’s been deaths. So there’s a very uneasy existence between these two camps. And you can see it when when you go there. And the DRC government now is trying to create a bit more order on on these individual miners, trying to have some sort of system where they can buy the cobalt and give them a fair price, because it’s I mean, you know, it’s very damaging to their health. Lives have been lost, but also from from the DRC. His point of view, when you have a surge of cobalt from these individual miners, it obviously can crush the price. It can cause them to lose tax revenues. So they’re trying to to to put control on on this industry. So that’s really the problem that the DRC faces has it’s got such rich resources. But but it but it needs to and we need to help them do better to to to provide safety equipment to improve the lot of these people who are mining or provide other jobs, you know, that would be the best for them to do.

Bill Loveless [00:18:21] Was it was a difficult for you to gain access to these regions where this sort of artisanal mining was taking place? Was access there for you? Was it or was it difficult?

Henry Sanderson [00:18:34] Yes, it is quite difficult to visit a lot of these artisanal sites because, you know, some of them are, you know, protected. Sometimes they have deals with soldiers or, you know, other other officials are involved. But you know, what’s going on, on the ground. And what I saw is attempt to sort of control these artisanal mining sites and, you know, fence fence in some areas where where people can mine and give them safety equipment and give them some some sort of proper monitoring to try to help them so you can reduce the accidents, reduce the the number of deaths. But you’re right, it is actually quite hard to see to see some of the sites because obviously there’s been a lot of negative press about it. Obviously, they’re aware of that so that they’re not that keen to show these sites to to to foreigners.

Bill Loveless [00:19:22] You quote a report by the NGO Amnesty, a global human rights group on cobalt mined by hand and the DNC. You say that the report from this group also made clear that many of the big electronics companies had no idea where the cobalt they bought came from.

Henry Sanderson [00:19:46] Yeah, that’s right. I think that report was a real landmark report because it highlighted what I was saying earlier, which is that for so long, the electronics supply chain, the smartphone supply chain, have relied on cobalt from the from the DRC with very little scrutiny or oversight. And a lot of these companies, because their supply chain is quite long, you know, they might just know which smelter in China they got the metal from or which, you know, which company further down the line in China. But they wouldn’t or they wouldn’t know the exact mine or where the cobalt in the DRC was was coming from. And this is one of the big efforts now, which is tracing cobalt all the way from from the mine to to to to the final product. You know, if you think about diamonds, for instance, we’ve we’ve had, you know, efforts the Kimberley Process and diamonds trying to better trace diamonds after a lot of scandals and a lot of, you know, problems with diamonds and war in Africa. So, you know, there are efforts to do the same for for battery minerals now. But I think, you know, you’re right. The report you know, it was quite interesting reading to to to think that these massive multinational companies have very little idea really where this where this cobalt was coming. And I think for the electric vehicle makers, that’s not that’s not a they can’t do the same thing. Right. Because there’s greater scrutiny on where this mineral comes from, because it is used in a green product. But also they want to lower the carbon emissions of their supply chain. They’ve all you know, they made promises to be net zero, so they need better information about their supply chain and the processes that the minerals are going through.

Bill Loveless [00:21:22] Yeah. And have you seen a response from the big automakers, Tesla, the others, as to the origins of these these minerals and some of the questions they’re mining do raise in terms of the impacts on the populations there?

Henry Sanderson [00:21:39] Yeah. So what we’ve seen so far is big automakers like Tesla have decided to buy that cobalt from the big mining companies in the DRC like Glencore. But at the same time they try to get more involved in helping the the artisanal miners, the local miners, through groups like the Cobalt Alliance and other automakers are involved in that. But what we haven’t seen from big automakers is someone saying, I’m willing to buy the cobalt from these individual miners. I’m willing to take the risk that these projects that I’m supporting are not perfect. There might still be some some problems, but I want to buy the material. And we haven’t seen that yet. So I think this material is still going into supply chains, but no one’s really standing up and owning the responsibility for for buying that material. So pretty much just as before, this material is going to China and who knows where it ends up. And the big automakers have have gone with the big miners in most cases to sign deals with with the big mining companies, because they can have better traceability that this cobalt comes from this this mine. And then they will go to this company in China to be processed and on to this company in China to be made into batteries and battery materials. So, yeah, that’s that’s what we’ve seen.

Bill Loveless [00:22:55] Yeah, we’re talking a lot about Congo here, but previously you mentioned Chile. The conditions in there. You were talking, I think mainly about the environmental impact of development of the mining in a country like Chile. But Chile is very different than Congo in terms of human rights issues. And some of these factors that you write about and that have happened on the African continent. What what is the significance of your chapter on Chile in this book in terms of the relationship with China?

Henry Sanderson [00:23:29] Yes, the Chile is is a really interesting country because copper is is Chile. You know, Chile has been the world’s biggest copper miner for a long time. And it really drives, you know, a lot of Chile. But at the same time, you know, Chile has this, you know, uneasy history and an uneasy relationship with with, you know, the years, the Pinochet years. And what we’ve seen in Chile now is, you know, we saw lots of we saw lots of protests going on there. We saw the election of, you know, a left wing young, young president, you know, recently. So they have had these these rich resources of copper and lithium, but the people are not that happy with them with the benefits that they receive. There’s also concerns about impacts on indigenous communities. So there’s a real push now in Chile to to make mining more sustainable and to get more value out for the country from from from mining. But at the same time, I think the government recognizes the, you know, the need for mining to to boost this economy so that they can spend, get the money to spend on all the social things that they want to spend on. So they have a slightly uneasy relationship with with with the industry in that provides a lot of that the tax income. But you know, what’s happened in lithium in Chile is because of because of a lot of the politics. There hasn’t been growth in the industry. There haven’t been new companies coming in, you know, hasn’t been a lot of growth. So Argentina, neighboring Argentina, has seen a huge wave of investments, a lot from China. So Argentina is probably this decade at the end of this decade is going to overtake Chile as the biggest lithium producer in South America because they have a much more, I’d say, open attitude to new investments and new companies. Whereas in Chile, because lithium is defined as a strategic mineral, this is something that came in 1979 that that has created a lot of roadblocks to new investments and new projects. And we pretty much haven’t seen any new lithium projects come on in Chile outside of the two big lithium producers that have been producing for quite a number of years.

Bill Loveless [00:25:46] And China has invested in lithium in Chile, Right. I mean, it’s an example of China’s reach to invest in resources outside of its own borders.

Henry Sanderson [00:25:58] That’s right. It’s an extraordinary story where there are two lithium producers in Chile. One is ACM, which is a Chilean company, you know, crown jewel of Chile, and the other is Albemarle, which is the US company. And a few years ago, this Chinese company, Tianjin Lithium, bought up, bought a stake in SKM for over $4 billion. You know, it plunged the company into a lot of debt and a lot of problems. But they got a stake in, you know, one of the world’s best lithium assets, lowest cost lithium assets. So if you think about it, over the long term, if you think about it where we are now with with lithium shortages on, you know, now and on the horizon, it looks like a pretty good investment, to be honest. And then next door in Argentina, as I say, Chinese companies have been the biggest investors in lithium in Argentina. So Asturias interesting. I write about it because it is a sort of it signifies a lot of the the issues going on in Chile. It for many years was controlled by the son in law of Pinochet who Leo Conseiller who said this, You know, this is not particularly liked by a lot of people in Chile. And then. Now you have this Chinese ownership as well. But but what I think is that, you know, China spent a lot of time courting these these countries in South America through things like the Belt and Road Initiative. And it has, you know, has actually paid off. You know, Chinese investments have been pretty pretty much welcomed in Chile and Argentina. And I think strategically, it probably has paid off for China, because we’re seeing we saw this week that Canada said kind of ordered Chinese companies to divest from its lithium from three lithium companies in Canada. So it’s the China’s going to encounter more resistance probably in Canada, probably in Australia against lithium investments, whereas in Chile and Argentina, we don’t see that and I don’t think we are going to see that actually. So it’s it’s it’s quite interesting geopolitically.

Bill Loveless [00:27:55] You know, North America and Europe want to develop their own battery supply chains and governments there are taking steps to do just that. Let’s take the U.S. where the Biden administration and Congress have new tools through the recently enacted Inflation Reduction Act. Are these new initiatives in the United States likely to succeed?

Henry Sanderson [00:28:18] Yes, I think the Inflation Reduction Act is Israeli landmark legislation. And, you know, I’m quite excited by it. It really restores US credibility in this space. The incentives available are huge and they’re very attractive, so attractive that we’re seeing companies from Europe now head to the U.S.. Right. Because who doesn’t like free money? Right. And the incentives for for battery manufacturing are really strong for for making battery materials and for mining critical minerals. The issue the U.S. has is, you know, with permitting these mines, with with, you know, any legal challenge can delay these mines coming into production. So I think probably the U.S. will see a lot more battery cell factories, a lot more cathode, you know, graphite materials processing, recycling. But on the mining level, I think it’s going to take time. It’s not going to be as as quick as as people expect. But then, you know, the Inflation Reduction Act gives you incentives to source minerals from free trade agreement countries. So, you know, Canada, Australia, these these are all countries and Chile actually free trade agreements. So these are all countries where the U.S. could, you know, get the minerals from and then perhaps process them in the U.S. and then create battery materials and the U.S.. So this this inflation auction act is is is really key because you could see the creation of these new supply chains, you know, North American supply chain. And that’s what we’re seeing with remarkable speed that’s happening already. You know, Canada’s ordering Chinese companies to divest. We’re seeing investments by South Koreans companies in the U.S. and Canada. So it’s really happening very quickly. So the problem is that the standards are quite strict in terms of the percent, the value of a mineral that needs to come from from FTA countries. So the concern is you could actually, you know, push up the cost or push up the price by by forcing automakers to pay more, to get to get supply from from these countries or from the U.S.. You know, that’s that’s a concern because we need to see battery costs fall. And if you try to, I guess, globalize or decouple in this way, the big risk is that costs are going to go up for these clean energy technologies.

Bill Loveless [00:30:35] What about efforts to build those supply chains in Europe?

Henry Sanderson [00:30:39] Yes. Europe is is interesting because they haven’t so far launched the same sort of, you know, carrots that the IRA has. Right. The same sort of incentives. They have more sort of restrictive policies that they’re thinking about, sort of rules of origin, battery, passport, things like that in terms of, you know, where the materials come from, the sustainability of the materials, etc.. But Europe is is seems to be taking a different path in terms of Chinese investment, because just as Canada and the U.S. are blocking out Chinese investment in Europe, we’ve seen a lot of Chinese investment in battery factories. Actually just this week, one announced in Portugal in recycling plants and material plant. So. So I think Europe, we’re going to see more Chinese investment. I think that’s that’s what’s happening. But but Europe is the same in the U.S. and those struggling to to launch new mining projects. Right. For for some of the same reasons that communities don’t want them. You know, they’re very difficult to get to get permitted and into production. So I think Europe likewise is going to struggle with with the mining side of side of the the program. But I think what we’re going to see in both Europe and North America is a lot more of the processing, recycling, battery manufacturing. So, yeah, let’s see. I do think that the key in this whole thing geopolitically is what’s going to happen with Indonesia and what’s going to happen with with the DRC because. You know, at the moment, the IRA, as it’s written at the moment, doesn’t incentivize companies to to get cobalt from the DRC or nickel from Indonesia yet without these two pivotal countries. How you know, how is the US going to transition to EVs and why leave these countries out? Essentially, are we just giving them to China? Right, by saying we’re not going to incentivize you to buy from these countries? So these are really key decisions, right? What’s going to happen to these two countries? Can the US or the West get more involved with the minerals that these these countries have? And if we don’t, I think, you know, we risk we risk leaving them to China.

Bill Loveless [00:32:48] Interesting what’s going on with the prices of critical minerals these days. Henry, I noticed in your reporting and reporting by others that at your company now that lithium prices in China had touched an all time high, you know, continuing a record breaking streak that is putting pressure on automakers and battery producers.

Henry Sanderson [00:33:13] Yeah, so it’s really interesting. So what we’ve seen is lithium prices have gone crazy. They’ve increased some 400% this year in China. And that’s really the pain point in the industry at the moment, because it’s not just so much price. It’s also just getting hold of the lithium, you know, securing the supply and also securing the future supply. You know, you don’t want to be caught short in a few years. Right. And I think this is the real problem at the moment is this is looking like a zero sum game that some automakers are going to have the raw materials and be able to meet that targets and some are going to be caught short. And I think the race is really on at the moment to secure supplies of lithium, not just today, but but further down the road. And if you then layer on top of that the geopolitics. You know, if you layer on the fact that the IRA says Chinese companies shouldn’t be involved, you know, if you layer on the need to create more localized supply chains, then it adds additional complexity to this whole issue. So lithium is really, really a problem at the moment because prices just keep going up in China. And while there is new supply coming on demand, as demand is very strong and it takes time for a lot of new lithium projects to come into production, you know, projects are often delayed or they’re often over budget. So this is the this is the issue in the lithium market. I mean, I would say lithium is abundant. It’s not so much that there’s a natural scarcity of it. It’s just it takes time to to invest in these projects, to to build them out, you know, and to develop the processing. It’s a chemical industry in many ways. You need to produce a fine, high quality battery quality lithium. You can’t just produce any old lithium. It has to be a very high quality. It has to be tested by an automaker, which also takes months and months. So the time to to get a lithium mine from, you know, expiration to being accepted by an automaker is many years. So this is this is the issue that we have at the moment. And also, you know, most processing is in China. And the West needs to build build out the processing as well. And we don’t necessarily have the skills and the expertise to do that. So it’s a huge it’s a huge challenge that we face at the moment.

Bill Loveless [00:35:31] You’re right, that deep sea mining of critical minerals and recycling are also options that deserve more scrutiny. But can they contribute significantly to the demands for these minerals?

Henry Sanderson [00:35:42] Yeah. So recycling is is really a key industry for the energy transition. And we’re seeing now the build out in recycling facilities and recycling probably not going to make a huge impact until 2035 until later because if you think of EVs going out now, they’re going to last 15 years before you get the batteries back. There won’t be a while before we see the batteries back. But what you do have, which is interesting, is we have all these gigafactories being built, you know, hundreds of gigafactories for batteries being built and they don’t produce perfectly. They don’t produce. If you think of raw materials being trucked in and batteries coming out the other end, it’s not 100% right. They lose a lot of materials in the process. So a lot of that scrap now is going to be recycled and then they can get back the recycled materials to use in new batteries. So that’s an interesting source of, you know, recycling materials. And that’s probably what we’re going to see as the dominant sort of feedstock this decade until we get a lot of these batteries back.

Bill Loveless [00:36:44] You know, you write that, quote, We are at the beginning of the electric car revolution, which means we have a unique opportunity as consumers to push companies to do the right thing and manage the downsides involved. You touched on this a little bit in our conversation. Are you at all hopeful regarding our transition to. Lena forms of energy, as well as our reliance on these critical materials.

Henry Sanderson [00:37:12] I’m really hopeful. I think one of the great things about the IRA, what’s happening in Europe, one of the great things actually about competition with China is it’s spurring the West on to to localize to reshore these industries. And once we do that, they’re much more visible and we can innovate and we can make them cleaner because the whole problem with offshoring everything was they just we didn’t care. And we and they became dirty in many ways because because we were we were blind to it. Right. So localizing will also make the supply chains hopefully more environmentally friendly, more sustainable. You know, we can unleash the the innovation that has gone on in America to create apps and and you know, tech companies on clean energy. You know we can on and on the hard problems of clean energy then we can clean up the supply chains. So I do think that side of competition with China is healthy. But I am worried that, you know, this whole deterioration in relations with China, the fear of decoupling it can have some some negative consequences as well. And that’s my biggest concern at the moment, which is if we just try to completely cut China out overnight, we’re going to lose some of the benefits of of globalization that has helped reduce the cost of these clean energy technologies. And we could risk increasing the costs, delaying the transition. So I think we need to be careful with how we how we handle this process of wanting to decouple from China, which which I think strategically is wise. Right? It’s not wise to have one country supplying, you know, all your batteries and all your solar panels. Of course, we need to diversify. That’s absolutely a strategic good decision, as we’ve seen with Russia and Europe. Right. But how do we diversify? Let’s not that’s not damage that the progress that we’ve seen so far, because after all, we need to reduce carbon emissions, we need to decarbonize. And I think that’s the sort of balancing act competition with China could be good as far as on. But we don’t want to totally derail all the benefits of globalization. I don’t think and I think China too, you know, they probably want to selectively decouple as well. Right. In some sectors they want to, but other sectors, they are probably willing to have some sort of foreign investment. So, yeah, it’s going to be interesting to see how it all pans out.

Bill Loveless [00:39:30] Well, the book is Volt Rush The Winners and Losers in the Race to Go Green. Henry Sanderson, thank you for spending time with us today for joining us on the Columbia Energy Exchange. I’ve enjoyed the conversation.

Henry Sanderson [00:39:42] Thanks so much. Good to talk.

Bill Loveless [00:39:49] Thank you again, Henry Sanderson, and thank you for joining us on Columbia Energy Exchange. The show is brought to you by the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs. The show is hosted by Jason Bordoff and me Bill Loveless. The show is produced by Erin Hartig, Steven Lacy and Cecily Mazur Martinez from Postscript Media. Additional support from Daniel Prop, Natalie Volk and Kyu Lee Gregory. Bill Frank is our sound engineer. For more information about the podcast or the Center on Global Energy Policy, visit us online at Energy Policy dot Colombia, dot edu or follow us on social media at Columbia U. Energy. And if you like what you heard, consider giving us a rating on Apple Podcasts. It helps the show reach more listeners like yourself. We’ll see you next week.

In 2021, 6.9 million electric vehicles were sold globally. And with 18 of the 20 largest auto manufacturers committed to embracing electrification, sales are expected to reach 55-72 million by 2025.

To produce these vehicles, manufacturers need critical minerals like cobalt, lithium, and nickel for their batteries. China is a major player in battery manufacturing because of its capacity for processing these minerals.

The European Union is close to striking a deal to ban new combustion-engine cars starting in 2035. Earlier this summer, the California Air Resources Board passed a new mandate for EVs, effectively phasing out the sale of gasoline-powered cars by 2035.

With the United States and Europe both aiming to bolster their domestic supply chains, the contest for critical minerals is also heating up. What will it take to produce these minerals in sufficient quantities? And how can it be done in ways that protect the environment and the mining communities?

This week host Bill Loveless talks with Henry Sanderson, the executive editor at Benchmark Mineral Intelligence. From 2014 to 2021, he served as the commodities correspondent for the Financial Times. He also spent seven years in China reporting for Bloomberg and the Associated Press.

In July, Henry published a new book, “Volt Rush: The Winners and Losers in the Race to Go Green”. Volt Rush is about the geopolitics and competition over the commodities needed to build a greener world.

Bill talks with Henry about the competitive global market of EV battery components and the often overlooked working and environmental conditions in developing countries. They also discuss efforts by the United States and other countries to build domestic supply chains.

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