Insight 06: Lithium, Cobalt and Nickel: The Gold Rush of the 21st Century
Summary
Ending UK sales of new vehicles running on diesel and petrol by 2030 will massively increase the demand for lithium, cobalt and nickel used to manufacture electric vehicle batteries. Many countries around the world are embarking on a similar path to electrification. Even so, global markets for raw materials should be able to deliver the demand in the UK and elsewhere. But action is needed now to iron out likely bottlenecks in supply chains.
Focus of the Insight
This Faraday Insight quantifies the demand for key raw minerals from EVs over the 2020 to 2050 period and particularly whether global resources and reserves of lithium and cobalt are adequate.
Conclusion
The shift from the internal combustion engine to EVs will substantially increase the demand for the raw materials required to manufacture their batteries in the UK and globally. The key issue with delivering this change appears to be about scaling up annual global production levels and supply change issues rather than whether the world has enough resources. The current production of raw minerals is far from adequate to meet future demand and the global industry will need to scale-up significantly over the coming years. However, there are more than enough resources to supply the manufacture of EV batteries to 2050, giving time for an EV battery recycling industry to become widely established and able to deliver significant volumes of key battery raw materials for future production requirements.
The exact supply challenge for the UK will be determined by the nature of the EV transition (i.e., whether we import or manufacture EV batteries). Increased demand for raw materials combined with the long investment cycle and lead-times required to exploit existing mineral reserves could put the global raw minerals supply chain under pressure in the coming decade. Supply bottlenecks, mineral price spikes and a slower transition could happen unless action is taken to mitigate and manage supply chain risks. Steps to help manage UK supply chain risks have recently been set out in the UK Government’s critical minerals strategy. The strategy aims to improve the UK security of supply by accelerating domestic production, increasing collaboration with international partners and improving international markets.
Tackling resource pressure and social issues with cobalt will require innovations in battery cell technology and the successful development of alternatives such as solid-state batteries. As well as scale-up and supply chain issues, large quantities of the raw materials contained in batteries will also need to be recycled.