The world’s lithium battery-making capacity will more than triple from 175 gigawatt hours to 630GwH by 2022 says a top expert.
Gigawatts are a measure of energy output — one gigawatt hour is the equivalent of generating 1 billion watts for one hour.
“That’s not a forecast from us,” Bloomberg New Energy Finance analyst Logan Goldie-Scot told a conference in Perth on Monday.
“That’s purely based on announcements from different battery manufacturers on the size of their new plants, and when they expect to commission them,” he said.
The extra capacity was driven largely by an expected growth in electric vehicle (or EV) sales.
Technological advances also meant that batteries — the most expensive component of an EV — were getting cheaper to make, which provided a buffer against potential lithium and cobalt price rises.
Price falls would be driven by changes to battery chemistries, Mr Goldie-Scot said.
“We are seeing a move towards lower cobalt, higher nickel batteries in passenger EVs,” he said.
[Current technology] NMC 111 batteries use equals parts nickel, cobalt and manganese, which battery makers are moving away from in favour of NMC 811 [made up of 8 parts nickel, 1-part cobalt, and 1-part manganese].
Nickel-rich 811 batteries – still in the testing phase — can go further, and the reduction in expensive cobalt means lower costs.
“For example, if the cobalt price doubles [it equates to] a 12 per cent increase in the battery pack price for an NMC 111 battery,” Mr Goldie-Scot said.
“For the 811 battery — which is higher nickel and lower cobalt — instead of 12 per cent, battery manufactures are looking at a 4 per cent increase.”
Cobalt demand will increase — despite lower use in batteries
Despite a move towards lower cobalt chemistries, Bloomberg still sees demand for cobalt increasing quite significantly. Tightness between supply and demand could mean a lot of new production is required in the medium term.
“Once this supply tightness starts manifesting itself you’ll see new production come online,” Mr Goldie-Scot said.
This reinforces the view of other analysts, who are mostly bullish on where cobalt will go from here.
Wood Mackenzie sees demand at least doubling by 2025 and the market remaining tight due to the difficulty in sourcing cobalt.
There isn’t going to be a lithium glut
Bloomberg says the lithium market remains relatively tight – not as tight as cobalt, but they don’t foresee major supply shortages in the medium term.
“[Lithium producers] SQM and Albemarle are pretty candid about not wanting a lithium glut,” Mr Goldie-Scot said.
“They are building new production facilities in a modular fashion, which allows them not to flood the market.”
Both US-based chemical company Albermarle and Chile’s SQM are close to making investment decisions about downstream processing in Western Australia.
BNEF still see huge opportunities for lithium miners to increase supply, but also expects that the growth in passenger EVs will not be held back by a lack of lithium.
“People are now far more comfortable with the demand pull and ability of battery metals producers – lithium and cobalt especially – to keep up with that demand,” Mr Goldie-Scot said.
“One thing is really clear — if you look at where battery demand is expected to go over the next decade and beyond, there will be a significant ramp up in [manufacturing].
“And batteries are getting cheaper. And as battery prices come down, new markets open up.
“We strongly believe that we will see many more batteries across many more applications.”
By Reuben Adams
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