15.1 Summary Figure 15.1: Manufacturer announcements compared to total number of electric vehicles in two IEA scenarios . Spot spodumene prices (delivered to China) rose by 58% to US$640 a tonne over the five months from December 2020 to May 2021. 250 Spodumene prices are forecast to rise from an average of US$435 a tonne in 2020 to US$740 a tonne in 2023, driven by higher 200 demand for batteries used in electric vehicles. Lithium hydroxide prices are forecast to rise from US$9,890 a tonne in 2020 to US$14,290 a tonne 150 in 2023. Australia’s lithium production is forecast to rise from 233,000 tonnes in Millions 100 2019–20 to 327,000 tonnes in 2022–23 (see Australia section). 50 . Australia’s lithium export earnings are forecast to increase from $1.1 billion in 2019–20 to $2.5 billion in 2022–23. 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 15.2 World consumption Manfacturers estimates Stated policy Sustainable development Decrease in March quarter 2021 electric vehicle sales but US sales up Source: IEA (2021) Car manufacturers’ announcements compared to electric light duty Electric vehicle (EV) sales decreased 15% quarter-on-quarter in the March vehicles stock projections, 2021-2025 quarter 2021, but increased 126% year-on-year. However, US sales Figure 15.2: Long term sales projection (IEA stated policy scenario) increased 14% quarter-on-quarter. Global EV sales exceeded 3 million units in 2020, and growth is unlikely to abate in 2021 — with 30 30 sales forecast at around 4.4 million units (Figures 15.1 and 15.2). Longer term, demand is projected to rise to 26 million EVs annually by 2030, but given manufacturers declarations of capacity increases, this is 20 20 likely to be exceeded (Figure 15.2). Millions Auto manufacturers have invested heavily in the transition from internal Per cent 10 10 combustion engines (ICE) to EVs, and will seek to recoup their investment as quickly as possible. Currently, automotive manufacturers planned capacity increases to 2025, exceed the requirements of government policies (Figure 15.1). This available capacity poses an opportunity for EV 0 0 2018 2020 2022 2024 2026 2028 2030 production and its associated minerals, with the percentage of automotive sales that are EVs by 2030 increasing from 28% to potentially 50%. Higher Electric vehicle sales Share of all vehicle sales (rhs) EV production may place pressure on the supply of materials such as Source: Department of Industry, Science, Energy and Resources (2021); International spodumene and lithium hydroxide. Energy Agency (2021); BloombergNEF (2021) Resources and Energy Quarterly June 2021 139 Lithium demand increasing strongly Box 15.1: Electric vehicle trends World demand for lithium is forecast to increase from 305,000 tonnes Volkswagen Power Day lithium carbonate equivalent (LCE) in 2020 to 452,000 tonnes in 2021 (Table 15.1). Demand is then forecast to reach 675,000 tonnes by 2023, Volkswagen’s Power Day highlighted a numbers of points that are key to as global EV uptake rises further (Figure 15.3). The very strong demand the Australian mining industry. The key to success for the electrification of increase in 2021 is based on increasing EV uptake — driven by prices, their product range will be large volume production of a ‘unified cell’ model choice and government measures. covering 80% of their range. The ‘unified cell’ will have a nickel manganese cathode and progressively minimise use of cobalt. Lithium trade draws breath before returning in April Meanwhile, LG will be ‘thrifting’ cobalt from July 2021 with their NCMA Over the four months to April 2021 China’s lithium hydroxide exports battery for Tesla. Transitions out of cobalt will take time to implement. decreased 8% compared to late 2020, but rose 20% in April, month-on- Volkswagen anodes will use synthetic graphite with silicon. The silicon month, reflecting normal trading. Lithium carbonate imports increased 20% aids in faster charging. Typically, lithium will be in the electrolyte as well compared to the prior period and 38% month-on-month. Over the four as impregnating the cathodes. Volkswagen assessed that the ‘unified cell’ months to April 2021, South Korea’s lithium hydroxide exports increased would lead to a 50% reduction in battery costs via cell construction, dry by 13% compared to the prior period, but lithium carbonate imports coating technology for electrodes, raw materials / manganese chemistry declined 11% compared to the four month prior period but rose 35% and removing the module stage with cell to pack technology. The batteries month-on-month. Japan’s lithium hydroxide imports increased 37% month- are also to be fully recycled via a hydrometallurgy process. on-month in April 2021, recovering to more normal trading. Volkswagen are constructing four giga-factories in Europe over 2023 to Figure 15.3: World lithium production and demand 2027 to manufacture these batteries. The result for Australia may be a significant increase in raw and refined material requirements, as this sort 800 of battery chemistry is based on lithium hydroxide. There may also be increasing requirements for nickel and manganese. 600 Volkswagen — The Power Company 400 What may be a game changer for Volkswagen is morphing from an automotive manufacturer into a power company. They are planning on 200 doing this by using the ‘unified cells’ as home storage and grid storage devices. The ID.3 vehicle, similar to the Golf, has a 77kWHr battery. This Thousand tonnes tonnes Thousand (LCE) has the capacity to power a home for five days, in addition to commuter 0 2013 2015 2017 2019 2021 2023 driving. The bidirectional charging to and from the car will facilitate power usage in the house; all ‘app / cloud ‘controlled to optimise performance. In Production kt Demand kt Europe in 2020, 6500 GW of renewable power was lost due to curtailment Source: Roskill (2021); BloombergNEF (2021); Department of Industry, Science, Energy and Resources (2021) Resources and Energy Quarterly June 2021 140 which could have been reduced with more energy storage. The 15.3 World production implementation of a cheap ‘unified cell’ via the ID.3 and other vehicles Security of supply being sought, as world demand lifts could be a significant development for Europe in terms of energy storage, utilisation and emissions reduction. It could also be a game changer for Output in 2021 is forecast at 441,000 tonnes LCE, while production is Australia in terms of raw and refined battery-materials demand. forecast at 538,000 tonnes LCE in 2022, and 679,000 tonnes by 2023. At this stage, supply may fall short of demand unless mine and brine US Green deal operations are expanded beyond initial projections. Unprecedented expenditure by the US Administration to offset the impact ‘Green’ stimulus packages are adding tightness to the market, apparent in of the COVID-19 pandemic is underway, with fiscal measures potentially the appreciation of the spodumene price. Additionally, offtake and equity equalling 25% of GDP. The current package before Congress is aimed at investments continue, suggesting security of supply may be a significant ‘green’ infrastructure (see overview and macroeconomic chapters). This issue going forward. expenditure, along with the EU’s plans, are underpinning the growth story for battery minerals. Project development is accelerating Fast charging and solid state batteries Galaxy Resources and Orocobre are joining forces with key operations in Argentina to produce lithium carbonate. This will make the merged Silicon used for fast charging is one step towards an 80% charge of a company the 5th largest lithium producer in the world, after Gangfeng, standard car battery in 30 minutes. However, the move to solid state Albemarle, Tianqi and Sociedad Quimica y Minera de Chile (SQM). The batteries, along with lithium anodes, may reduce charge times for 80% of company will be based in Buena Aries, along with a corporate presence on standard car batteries to around 12 minutes. The move to solid state Australia’s east coast and an office in Perth. Spodumene production from would likely increase the demand for lithium again, although it is not due Mt Cattlin will continue, with James Bay in Canada being considered for to be rolled out extensively until around 2030. Solid state technology has a development for spodumene. longer driving range and is safer. Volkswagen are working with Quantum Scape in California; one of the main solid state battery developers. Other Galaxy’s Sal de Vida project is planned to commence at 10,700 tonnes per producers from Japan and China are set to launch solid state batteries year lithium carbonate equivalent (LCE), increasing in stages to beyond the outlook period (2026) but Toyota may do this sooner. 32,000 tonnes. Early works are underway and first output of lithium carbonate is possible in 2022. Meanwhile production from Orocobre’s Recycling Olaroz operation was 12,000 tonnes per year LCE in 2021, with The Volkswagen recycling plant for lithium batteries in Salzgitter, construction underway for 22,000 tonnes in 2022 and feasibility studies for Germany, will be essential to delivering on its ESG credentials and further expansions. supplying recycled materials vital to its supply chain. The plant is small Chile’s SQM is positioning itself to more than double production over the scale, but will be used to develop and scale up technology in this area, as next few years. It plans to raise annual Chilean production from large lithium batteries become available for end-of-life recycling. Statutory 70,000 tonnes of lithium carbonate to 120,000 by the end of 2021 and requirements covering battery life cycle and supply chain in Europe may 180,000 tonnes by 2023.