The global pandemic shone a spotlight on the supply chain, and particularly its weak points. Dan Blondal, CEO of Nano One, discusses how the battery industry must transition from the old supply chain, unencumbered by the stale methodologies of earlier pioneers, to new processes and technologies.
As the world moves towards electrification, the demand for batteries, and the raw materials needed to produce them, is rapidly increasing. Unfortunately, this is bringing to light inefficiencies and vulnerabilities in the global battery supply chain that must be remedied before they become untenable.
Commercially pioneered in Japan in the early 1990s and largely developed in China through the 2010s, the global lithium-ion battery supply chain is centralised in a few locations and involves many steps.
The lithium-ion cathode (the positive electrode) comprises up to 50% of the cost of a battery cell, with every raw material component first having to be mined, concentrated, refined, shipped around the world, and then purified and converted into useful battery chemicals, before they can be assembled into cathode powders.
From powder form, the cathode is coated onto foils, then layered with the other battery components (anode coated foils, separator membranes and electrolyte) before being rolled or folded into lithium-ion cells, grouped into modules and assembled into battery packs.
Long distance costs
Automotive original equipment manufacturers (OEMs), miners and suppliers are feeling the repercussions of this long, complex and globally distributed battery materials supply chain, with its excessive costs, risks and environmental footprint.
In the past few years, however, new technologies and government efforts to localise battery supply chains began to be developed to make production simpler and less resource-intensive— reducing the cost and environmental footprint significantly.
The shipping industry, for example, is experiencing significant delays with the influx of companies restocking inventory to meet surging, post-pandemic, consumer demand. This congestion, coupled with surging prices, is making businesses think twice about shipping materials— especially heavy ones— around the world.
Supply chain dominance in countries like China are exacerbating the issues, creating supply bottlenecks with national agendas at cross-purposes with international interests.
The battery supply chain is experiencing a similar reckoning. Battery materials such as nickel, cobalt and manganese are worked up through mining and refining to form metallic powders and briquettes; or intermediate materials such as mixed hydroxide products (MHP), or metal sulfides, also known as mattes. From there, the conversion to battery grade metal sulfates and lithium hydroxide (often from lithium carbonate) adds cost, energy, shipping weight, logistics and environmental footprint; and it burdens the cathode producer with significant sulfate waste streams and water usage.
For example, nickel products (powders, briquettes, mixed hydroxide product) are converted to nickel sulfate by dissolving them in sulfuric acid and boiling repeatedly in energy intensive and costly crystallisers to produce a purified powder that can then be shipped to cathode manufacturers. It is important to note that nickel sulfate is another intermediate product and not the pure metal, and it weighs 4-5 times more in this form.
When intermediates such as nickel, cobalt and manganese sulfate arrive at the cathode producer, they are redissolved and mixed chemically in a solution with sulfuric acid (again) and caustic soda (sodium hydroxide) to form a mixed metal hydroxide precursor powder in a solution of sodium sulphate. The mixed metal precursor powder is filtered, washed and dried to separate it from the solution, before it can be milled, blended and thermally processed with lithium hydroxide powders to form a usable cathode material. The solution of sodium sulfate that is left behind is waste, destined for landfill or costly recycling, having been introduced upstream only to be discarded downstream.
EV adoption
As electric vehicle (EV) adoption takes off around the globe, the wastefulness of the battery material supply chain described above will be increasingly scrutinised.
The environmental cost of shipping battery materials long distances is tied to emissions, which grew nearly 10% between 2012-18, according to the International Maritime Organization’s (IMO) ‘Fourth IMO Greenhouse Gas Study’. In 2019 international shipping accounted for 2% of global CO2 emissions, according to another greenhouse gas report by IMO.
When battery materials are shipped around the globe for manufacturing and treatment processes, they are contributing to these increased emissions, causing the carbon footprint of batteries and EVs to increase as well. The IMO has called for the reduction of shipping’s carbon footprint and technologies are being developed to meet these goals; however, electrification and net-zero carbon fuels will take some time to make an impact on the sector. A straightforward way to reduce these emissions is by creating centralised supply chains while minimising weight, chemical conversion steps and international shipping as much as possible.
North America battery supply
Automotive OEMs have already begun the process of localising their supply chains in North America to reduce environmental and economic costs. Tesla and General Motors, for example, are partnering with North American headquartered mining companies to source their lithium in the United States.
In September 2020, Tesla secured a claim to 10,000 acres of lithium mining in Nevada, US. Incidentally, it has also been listed as a technical and industrial partner at a nickel mine in New Caledonia. Nearly a year later, General Motors partnered with Controlled Thermal Resources for a $500 million lithium extraction project at the Salton Sea Geothermal Field near Los Angeles, US. The project is expected to begin producing lithium in 2024.
These are great first steps to secure the raw materials needed to create batteries. The next step will be to find a way to process these materials and turn them into usable battery materials closer to where batteries are manufactured and supplied.
The push for localised supply chains can be seen in the public sector as well. In June 2021, US president Joe Biden announced a plan to strengthen critical supply chains, including the one for batteries. The Biden administration’s plan focuses on developing a battery supply chain in the United States and incentivising companies to shift away from overseas sourcing, manufacturing, and processing.
Approximately $17 billion in loan authority is being used to support the US domestic battery supply chain and make this goal a reality. Formalising this goal, and offering financial support to achieve it, has a significant impact on inspiring technological innovation in this area as well.
Leapfrogging China
While battery supply chains have not yet taken form in North America, there are companies and emerging technologies that are making it possible to differentiate and reduce reliance on China and other countries. The key to overcoming China’s longstanding foothold on the EV market is to redefine the battery supply chain and leapfrog it by innovation.
For batteries, the US must first overcome geological limitations and find a way to de-risk, source and secure raw materials that are not so far away. Livent, a lithium technology company, supplies key lithium materials on four continents, allowing buyers to source their materials from a manufacturer that is not an ocean away. Standard Lithium, a lithium developer based in Vancouver, Canada is building a lithium project in Arkansas, US to supply North American manufacturers. The mining partnerships mentioned earlier are additional examples of how automakers and miners can work together in this regard.
Sourcing key battery metals locally is an important step in the process but without new methods and technologies, unrefined metals will still need to be shipped around the globe for processing, conversion and manufacturing. There are multiple companies in North America changing the way batteries are manufactured and circumventing the need for overseas processing.
NanoGraf, a battery technology company, produces silicon-based anodes in Chicago, US to replace graphite-based anodes for lithium-ion batteries. My own battery materials technology company Nano One, based in Canada, is eliminating wasteful conversions to metal sulfates and lithium hydroxide— described above— by making cathode powders directly from pure metals and lithium carbonate. There’s also Unifrax, a US materials manufacturing company headquartered in New York, that creates lightweight materials used to prevent battery fires and extend battery life.
Cost-cutting the chain
Cost-cutting an entrenched supply chain is a myopic endeavour with nothing but fierce competition in the future. We must leapfrog this supply chain with new processes and technologies, unencumbered by the stale methodologies of earlier pioneers. Automotive OEMs, already grappling with chip shortages and EV production delays, must embrace technological change to secure a future with environmentally differentiated and economically competitive processing facilities in North America.
Companies and organisations must come together as a community to support innovation and set a course that reduces risk and promotes sustainable reductions in waste, cost and complexity in the lithium-ion battery supply chain.
