OEMs search for sustainable supply

Taking the assault
out of the battery 

The electromobility revolution is widely regarded as a positive development in the history of the car but with concerns over raw material resources, as well as human rights issues, how realistic is sustainable battery supply? Victoria Johns finds out more

Driven by the boom in electric vehicle (EV) development, which the International Energy Agency (IEA) predicts will hit 125m EVs globally by 2030, the demand for high energy batteries is on the increase. Current estimates on demand could potentially double if governments step up the pace of legislative change. Analyst firm Wood Mackenzie expects double-digit growth for battery raw materials over the next decade.

However, according to Wolfgang Lehmacher, an independent supply chain and technology strategist, material supply shortages will hinder that growth. Lehmacher indicates that the sector could face a supply crunch by the mid-2020s.

“Simply put, there are limited amounts of lithium, cobalt, and nickel on earth, so there may just not be enough to meet carmakers future demand,” he says. “Getting the quantity of nickel that EVs will need by the mid-2020s will be a challenge.”

Tracking from source

A more immediate problem, however, is tracking accurately from where the existing raw materials are coming. In 2017, the top five countries mining lithium were Australia, Chile, Argentina, China and Zimbabwe. Almost three-quarters of the world’s raw lithium come from mines in Australia and Chile and two-thirds of the world’s cobalt is mined in the Democratic Republic of Congo (DRC). Congo also mines significant amounts of copper, as well as tin, tantalum, tungsten and gold ‑ the so-called 3TG or conflict minerals.

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Engine maker Cummins requires its suppliers to provide information on conflict minerals and to conform with the Responsible Sourcing Initiative (RSI).

“We comply with conflict minerals policy, Section 1502 of the Dodd-Frank Act,” says a spokesperson for Cummins.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires public companies to annually disclose information to the US Securities and Exchange Commission (SEC) about their use of certain minerals originating from a conflict region.

“All employees that are involved in the process of preparing, sending and handling lithium batteries are trained and certified to ship lithium-ion technology,” says Cummins. “To ensure compliance with sourcing requirements and adequate capacity to meet our demand, we have visibility into the sourcing of raw materials components beyond our direct supplier.”

Engine maker Cummins requires its suppliers to provide information on conflict minerals and to conform with the Responsible Sourcing Initiative (RSI)

Lehmacher believes traceability of the cobalt from the moment of extraction along the different stages in the supply chain is crucial, but says most schemes are failing to do this today. The exception, he says, is probably when using Certified Trading Chains (CTC), which require detailed proof of origin, as well as third party mining site audits and certifications. The CTC was developed by the German Federal Institute for Geosciences and Natural Resource (BGR).

Supply and demand

Lehmacher points out that lithium is not currently traded on any exchange, with prices being determined by long-term contracts or spot market prices in China.

“Securing the supply of raw materials for EV batteries is a key business requirement and ensuring long-term supply will strengthen companies’ ability to meet demand from EV manufacturers,” he says.

Carmaker Tesla is the number one battery manufacturer in North America. Its gigafactory in Nevada, a joint venture with Panasonic, is the world's largest lithium-ion manufacturing factory and it is now working with potential future producers in Canada and the US to create its own cobalt supply chains.

“Companies that buy batteries or battery components are several steps away from the source of the battery raw materials,” says Lehmacher. “Procuring directly from the mines increases visibility and ensures that they know their cobalt isn’t sourced from illegal mining operations and those using child labour.”

Human cost

Amnesty International says human rights abuse, including the use of child labour in the extraction of minerals used to make EV batteries, is undermining ethical claims regarding energy consumption and emissions.

Kumi Naidoo, Amnesty’s secretary general, told the Nordic EV Summit in Oslo in March this year that climate change should not be dealt with at the expense of human rights. “Without radical changes, the batteries which power green vehicles will continue to be tainted by human rights abuses,” he said. “We need to change course now, or those least responsible for climate change – indigenous communities and children – will pay the price for the shift away from fossil fuels.”

Moving batteries to the assembly lines, including their storage requires special handling because of their hazardous nature.

According to Lehmacher, considerations upstream and downstream the supply chain are reflected in frameworks from the CTC and the Organisation for Economic Co-operation and Development (OECD), whose due diligence guide provides recommendations to help companies respect human rights and avoid contributing to conflict through their mineral purchasing decisions and practices.

Lehmacher also points out that there is the need to look at the entire use cycle of batteries. “Battery waste was expected to reach as much as 170,000 tonnes in 2018,” he says. “Lots of energy is needed to extract the minerals from the ground. In the interest of the planet we should re-use and recycle.”

Recycling of batteries is expected to become big business, much as metal recycling is a huge industry today.

“I am convinced that EV batteries can come close to achieving a circular production cycle that requires a minimum of new material to be injected to make new batteries,” says Lehmacher.

Cummins has announced an extended partnership with the University of California San Diego to analyse the most effective ways of reusing and repurposing EV batteries. In certain countries, including the UK, the company is obliged to take back, free of charge, waste industrial batteries supplied to an end user for treatment and recycling.

Current investment
Despite the charge against EV batteries, Naga Karthik Voruganti, mobility analyst at Frost and Sullivan is optimistic raw materials can meet the demand of the 2040 emissions target: “We expect EVs to account for most of the demand for raw materials among all the other industries. Lithium, cobalt and nickel companies are increasing their mining activity, and have extreme production targets to meet the demand from battery manufacturers globally,” he says.

Voruganti went on to say that those battery manufacturers had, in turn, to keep the supply going to the automakers, who have announced huge EV sales targets to comply with the emission regulations and other related standards across the world.

“With billions of dollars, maybe trillions by the middle of next decade, pouring into this industry, we can definitely expect raw materials to meet the demand of EV production to 2040, he says.”

Batteries and blockchain

Technologies such as blockchain are expected to replace traditional paper-based labelling methods to indicate materials origin. Blockchain is the record-keeping technology or ‘distributed ledger’ of information originally developed for Bitcoin.

Volvo Cars says it will become the first carmaker to implement global traceability of cobalt used in its batteries by applying blockchain technology. The announcement follows the revelation last month of the company’s first fully electric car, the XC40 Recharge.

It has now reached an agreement with its two global battery suppliers, CATL of China and LG Chem of South Korea, along with leading global blockchain technology firms, to implement traceability of cobalt, starting this year.

Martina Buchhauser, head of procurement at Volvo Cars adds: “With blockchain technology, we can take the next step towards ensuring full traceability of our supply chain and minimising any related risks, in close collaboration with our suppliers.”

IBM, in collaboration with Ford, LG Chem, Huayou Cobalt and RCS Global, launched a blockchain pilot at the beginning of this year to trace and validate sourced cobalt, from mine to end-user. It traced the material from a mine in the DRC, refining and upgrading in Asia, and to an end user in the US and Europe.

“Cobalt produced at the Huayou Cobalt’s industrial mine in the DRC will be monitored as it travels from mine and smelter to LG Chem’s cathode plant and battery plant in South Korea, and into a Ford factory,” explains Lehmacher.

Blockchain technology boosts transparency of the raw material supply chain because the information about the material’s origin cannot be changed undetected, says Lehmacher. However, he does point out that it does not replace human-led auditing or due diligence.

Seven mining and metals companies teamed up with the world economic forum (WEF) in October, to improve responsible sourcing of raw materials. Geneva-based WEF stated that the new Mining and Metals Blockchain Initiative will explore the building of a blockchain platform to address transparency, the track and tracing of materials and the reporting of carbon emissions.

The seven founding members were: Antofagasta Minerals, Eurasian Resources Group Sàrl, Glencore, Klöckner & Co, Minsur SA, Tata Steel, Anglo American/De Beers.

Lehmacher concludes: “Over time, this could help the industry to collectively increase the level of transparency, efficiency or improve reporting of carbon emissions.”

Volvo said it wanted to ensure its customers that they could drive its vehicles knowing the material for the batteries has been sourced responsibly

“Without radical changes, the batteries which power green vehicles will continue to be tainted by human rights abuses”

Kumi Naidoo, Amnesty International