Investors, analysts and company spruikers in the lithium space are not paying enough attention to the idea of recycling.
If steel, copper, lead, zinc and other metals can be recovered and recycled (as well as gold, platinum and palladium, not to mention silver) so can lithium.
There’s plenty of activity on the raw material side, but also considerable movement on the technical / battery / vehicle / technology side.
We have discussed elsewhere the way giant American car groups like Ford, GM and Toyota are pushing deeper into the EV space (see separate story).
Now there’s news of more detail about where VW and Mercedes-Benz and Stellantis (Jeep, Fiat etc) are heading – and it is clear that the viability of recycling (especially lithium) is going to be examined closely.
In times of rising prices and or demand, recycling as a source of new material is a viable business (and so care recycled iPhones for example).
One of the former senior tech employees of Elon Musk at Tesla believes it will be viable and so does Ford Motor Co, which has just done a deal with Redwood Materials.
Redwood was founded by former Tesla chief technology officer Jeffrey Brian Straubel and said last week that it had gained $US50 million of new investment from Ford to help it expand its manufacturing footprint in Nevada, where it is located.
Ford and Redwood have joined up to create a closed loop for recycling lithium-ion batteries from electric vehicles (EVs) and a domestic supply chain for critical battery materials.
According to Redwood, the two companies aim to integrate recycled battery materials – scrap from battery production and batteries at the end of their useful life – into Ford’s US battery supply chain to drive down costs and its environmental footprint, as well as to secure the critical battery materials supply that Ford will need to continue to ramp up its EV production.
Ford reckons Redwood can recover 95% of precious metals in EV batteries such as nickel, cobalt, lithium and copper, all of which will see rising demand as the world shifts from internal combustion to electric vehicles.
The automaker says US-produced anode and cathode materials can drive down battery costs, increase materials supply and cut reliance on imported materials,
“But recycling is just the first step in creating a circular supply chain. We’ll be collaborating to determine how, together, we can create pathways for consumer vehicles to come off the road at the end of their life and be recycled and manufactured into battery materials to make more Ford EVs,” Redwood said in the statement.
“Our relationship with Ford will look at how we can uniquely span the entire battery lifecycle,” Redwood said.
“As part of this relationship, we’re discussing how Redwood could supply Ford’s American battery facilities to ensure a steady, domestic source of sustainable battery materials to fuel the production of Ford electric vehicles,” Redwood added.
Ford has committed to invest more than $US30 billion in electrification of vehicles by 2025 (General Motors, Toyota, Stellantis, Daimler, Nissan and other car companies are doing likewise)
Ford is making a new Mustang Mach-E passenger car; the 2022-model E-Transit commercial van, to be available late in 2021; and the 2022-model F-150 Lightning light truck, to be available from spring next year.
The company expects around 40% of its global vehicle production to be electric by 2030.
Redwood said at the weekend that “It’s been incredible to see the tide change as so many automakers commit to a fully electric future. However, we need to plan far ahead for the increased demand of materials that this transition will create.”
“We also must manage supply chain risks carefully around lithium-ion batteries, or we risk a repeat of the semiconductor production shortages causing chaos in the world today. Additionally, we need to start planning now for the end-of-life of batteries as we ramp up to build millions of EVs that can’t be disposed of safely without a robust recycling solution,” the company added.
Redwood works with battery manufacturers to recycle production scrap and teams up with automakers to process end-of-life EVs.
It recently said it would also produce anode foils and cathode materials to supply domestically from a yet-to-be-built North American battery materials manufacturing facility, with the intention of ramping up to 100GWh of cathode material by 2025, enough for 1 million EVs.
On the other hand, Australia – the fastest-growing lithium supplier globally – lags in the adoption of EV-friendly policies and charging facilities, and in encouraging the birth of a recycling sector that will be needed as sales build here.
The importance of this latter point is only magnified by the fact that, in the short term, there is likely to be a shortage of battery grade material thanks to the impact of the pandemic and a shortage of skilled workers.
Australia’s prominence on the supply side makes the government and industry well-positioned to have a good idea on what the outlook could be for the metal.
In short, it is bullish due to the accelerating sales of electric vehicles (EVs) around the world.
The Federal Government’s latest resource quarterly sees a sharp rise in export revenues from lithium over the next three to four years.
The report said that an expected strong rise in the spodumene price will “see export revenue increase from $1.1 billion in 2020–21 to $3.4 billion in 2021–22, with production from lithium hydroxide refineries forecast to add to earnings for a total export revenue of $3.8 billion by 2022–23.
That will top export revenues for zinc.
Australian production is now expected to rise over the next three years from 217,000 tonnes LCE in 2020–21 to 306,000 tonnes LCE in 2021–22 and 374,000 tonnes LCE in 2022–23.
“Correspondingly, spodumene concentrate exports are forecast to increase from 1.5 million tonnes in 2020–21 to 2.5 million tonnes in 2022–23,” the quarterly report forecast.
This increased confidence in the outlook saw the report again revise upwards previous forecasts for the value of exports.
“Forecast exports in 2021–22 have been revised up again from $2.0 billion to $3.4 billion, reflecting the very strong gains in the spodumene price, as well as increases in export volumes.
“Spodumene prices closed at US$405 a tonne at the end of 2020, but have since surged to US$1,300 a tonne in spot terms; well above the June 2021 Resources and Energy Quarterly forecast of US$670 a tonne for 2021.
“Exports in 2022–23 have been revised up from $2.5 billion to $3.8 billion, again reflecting the very strong gains in the spodumene price. Australia’s production of spodumene concentrate in the June quarter 2021 rose by 8.4% quarter-on-quarter (and 15% year-on-year) to 58,000 tonnes LCE (circa 390,000 tonnes of concentrate).
“Output is rising in response to surging spot prices, and contract prices can be expected to rise, which should boost production at operations using long term contracts,” the report forecast.
Spot spodumene prices (delivered to China) rose to $US2,240 a tonne in September.
“Spodumene prices are forecast to rise from an average of US$435 a tonne in 2020 up to an average US$900 a tonne in 2021, US$1,190 a tonne in 2022 and US$930 a tonne in 2023, with contract pricing under negotiation. Lithium hydroxide prices are forecast to rise from US$9,890 a tonne in 2020 to US$15,160 a tonne in 2023,” the Quarterly report predicted.
Looking globally, the Quarterly notes the surging output of EVs and forecast that would see demand for lithium rise from 305,000 tonnes lithium carbonate equivalent (LCE) in 2020 to 486,000 tonnes in 2021. Demand is then forecast to reach 724,000 tonnes by 2023, as global electric vehicle uptake rises.
“The very strong increase in demand from 2021 to 2023 is based on increasing electric vehicle uptake — driven by government measures, lower vehicle prices and increasing model choice. Consequently, there is a short-term supply pinch in spodumene, with auctions now available for the small amount of uncontracted tonnes that are available.
“Asia is still dominating lithium product demand, despite battery factories diversifying into Europe and the US. In further developments, battery manufacturer, LG, is set to increase cathode production in Korea and potentially reduce reliance on China for supplies of precursor materials. There is also potential for a joint venture in mining to secure supply chains,” the Quarterly reported.
EV sales rose almost 21% quarter-on-quarter in the June quarter 2021, with sales dominated by China and Europe. Global electric vehicle sales exceeded 3 million units in 2020, and growth is likely to continue over the rest of 2021 — with sales forecast at about 5 million units, up from the last forecast of 4.4 million units.
“There is more than usual uncertainty in the forecast, due to a semi-conductor shortage in the auto industry, but auto-makers are expected to prioritise electric vehicles over combustion engines. Longer term, demand is projected to rise to about 30% of vehicle sales annually by 2030, given manufacturers’ declarations of capacity hikes and recent strong sales trends,” the quarterly forecast.
And the report had some interesting short term good news for the Australian sector from some bad news from some players.
“Tighter conditions have appeared in the spodumene market, with some producers potentially holding only around six weeks of concentrate supply.
“Meanwhile, lithium carbonate stocks have built up in the supply chain on the back of some patchy electric vehicle demand, after large imports of carbonate by China in early 2020.
“Chemical grade lithium carbonate is in greater supply than battery grade lithium carbonate.
“Stockpiles in battery grade product are likely to be drawn down before chemical grade products. However, chemical grade products can sometimes be upgraded to battery grade via additional refining.
“Shortages are looming in the global battery lithium hydroxide market in 2021, after delays in project ramp ups.
“Weak lithium product prices and COVID-19 have contributed to delays at the Kwinana lithium hydroxide refinery owned by Tianqi. Stage 1 is now estimated to be completed by early 2022.
“Ramp up of the Kwinana lithium refinery’s production is at risk due to expertise required for that operation. The Kemerton lithium hydroxide refinery is due for commissioning in late 2021.
“The value-adding of spodumene in Australia with the production of lithium hydroxide may come at an opportune time with respect to possible global supply shortages,” the report noted.