Sunday 31st January 2021
For the electric boom
Europe is digging for battery raw materials
Should the demand for e-cars increase sharply in the next few years, the question arises: Where should the batteries come from that power the vehicles? The answer is then very likely: from Asia. For more independence, factories and raw material mines are being built in Europe.
It would be a terrible scenario for the self-proclaimed “e-offensive” of the European carmakers, which is just about to take off: More and more consumers are interested in electric driving, but battery production can barely keep up. Surprised by the rise in demand, many providers could experience supply problems – similar to the current situation with microchips.
Despite growth among European manufacturers, according to a study, the market power of Asian battery cell manufacturers will remain unbroken in the coming years. “Asia will remain the epicenter of cell production,” said the study by the management consultancy Roland Berger and RWTH Aachen, which was published on Wednesday.
The industry is concerned with the risk of not having the required number of cell modules available later. European manufacturers are expanding their capacities. But where do all the raw materials for batteries and electronics come from? One idea: promote more materials on the continent, especially in times of fragile global supply chains and high dependency on Asian suppliers.
Australia as a role model in mining?
Eurobattery Minerals (EBM) is pursuing this approach. The Swedish mining and exploration company wants to increase the level of self-sufficiency with nickel, cobalt and copper for batteries in e-cars. The aim is also to increase the extraction of rare earths within Europe, such as those found in electric motors. According to the company, it is also about the standards for mining. “The main suppliers of these materials are currently China, Congo and Chile, where the raw materials are extracted under devastating conditions,” says EBM.
Non-governmental and UN organizations have often condemned the exploitation under sometimes hair-raising ecological and humanitarian circumstances, and some political actors use violence to make enormous profits from “conflict raw materials”. EBM boss Roberto García Martínez promises a “focus on ethical production and traceability”. But even if the controls in Europe may be better: Is it even realistic to purchase raw materials exclusively from your own sources in view of the expected battery volumes? Martínez thinks so. EBM has launched mining projects with researchers in Sweden, Finland and northern Spain – the company has recently also been listed in Germany. In Finland in particular, industry expert Ferdinand Dudenhöffer also sees even more potential in “battery mining” and in processing. BASF also participates in projects there.
The Federal Institute for Geosciences and Natural Resources (BGR) considers supplementary funding in Europe to be important. Whether a single supply succeeds with the spread of e-mobility, however, is another question. “You are still dependent on other suppliers here,” says the head of the German Raw Materials Agency at BGR, Peter Buchholz. “It is good if in Europe additional capacities are built up. Only the projects have to be cost-competitive.” Nickel is mined in Canada or Australia “according to the best available environmental and social standards”. And: “Finland is already an interesting location for nickel and cobalt compounds.” So tapping domestic stocks is not entirely new.
The EU is also putting pressure on battery cells
Felix Kuhnert from the consulting firm PwC emphasizes: “Economically, it makes sense to build a European supply chain.” Even more than the extraction of raw materials, however, “their processing to the purity required in batteries is centralized in China – and would benefit greatly from the development of European capacities”. This could indirectly play into the hands of competitors in the Far East. “On the other hand, factories for battery cells are already being set up so quickly that there is a risk of overcapacities in the middle of the decade.”
The German automotive industry association VDA advocates a two-pronged raw materials strategy. “In the short and medium term, self-sufficiency in the EU is unrealistic. Although there are initial projects, most of them are still at the planning stage,” it says. A reduction in global networking is not an option: “Germany and Europe as export-oriented locations are dependent on open borders. A principle of isolation or pure regionalization contradicts the model of success of the European economy.”
The demands on regional added value and short transport routes are growing. And the EU is also putting pressure on the battery cell issue: discussions are underway in the ERMA raw materials alliance about a safer supply of valuable minerals. The Deputy Head of the EU Commission, Maroš Šefčovič, and Internal Market Commissioner Thierry Breton announced the start of the alliance at the end of September. Associations, trade unions and non-governmental organizations can join the alliance.
Germany is investing five billion
In the long term, how well worn batteries are recycled also plays a role. “With the annual demand for new batteries growing from 40 gigawatt hours today to 500 gigawatt hours by 2030 and a holding period of more than seven years, the raw material issue cannot initially be resolved through recycling,” says Kuhnert. It makes sense to build up closed chains of recyclable materials in pilot projects. “But the industrialization of these recycling cycles poses major challenges for the car manufacturers.”
VW, for example, is already investing in the topic. In Salzgitter, where the central engine factory will soon have its own cell production facility, the recycling of battery raw materials is now starting on a trial basis. It’s about aluminum, steel and copper, but also about nickel, manganese and cobalt. Instead of energy-intensive replenishment through further mining and global transport, the materials are to be extracted from old parts and reused with “second life concepts”. According to previous plans, they want to recycle 1200 tons of batteries per year here.
CEO Herbert Diess has proclaimed overall responsibility in the group, from procurement through construction to secondary use. On Friday, Chief Technology Officer Thomas Schmall wants to present further details and goals for the start of the system. Volkswagen is investing more than a billion euros in battery cell production in Salzgitter. The German state is investing a total of five billion euros in battery projects.