Necessary lesson from our many provide chain snarls is that upstream shortages can trigger significant downstream jams.
Rapid on hotfoot? That’ll crimp wooden pallet gives and disrupt goods transport. Rapid on aluminum? You’ll must wait longer for that can of soda. Rapid on chips? That’ll shut down entire automobile vegetation.
The electric automobile provide chain is equally exposed to uncooked cloth shortages. And there’s an added notify: investments in downstream EV factories and battery vegetation are outstripping investments in upstream lithium mining.
“There’s a truly necessary imbalance,” says Keith Phillips, CEO of mining firm Piedmont Lithium, referring to your entire EV provide chain. “There’s an mountainous amount of capital going into the enchancment of automobile vegetation and battery vegetation, and there’s now not virtually ample capital going into lithium manufacturing…which technique tons of [the EV and battery plants] will likely be empty.”
Indeed, the battery gives consultancy Benchmark Minerals calculates that the downstream of EV provide chain is rising at twice the lumber of upstream mining and processing. ”One thing drastic wants to happen to shut this hole if one of many significant pillars of the [energy transition]is to exist at scale,” the consultancy’s CEO Simon Moores notorious on Twitter this month.
Why are lithium mine investments lagging?
A assortment of factors can reward the EV provide chain’s lopsidedness.
First, lithium projects snatch a lot longer to manufacture, salvage accredited, and ramp up, notes Phillips. He would know. Piedmont’s flagship mission is slated to be one of many US’s first fresh and significant lithium mines when it opens. But the permitting task, which Phillips says is a long way more complicated and lengthy than in Australia or China, has taken years and is restful now not performed.
2nd, Phillips thinks EV companies had been unhurried to completely treasure the enormity of lithium demand. “In the previous, these automobile companies haven’t needed to address difficulties in procuring steering wheels and windshields or seats. They never truly had a lack of this sooner than,” he said.
That’s now starting to interchange. Remove Tesla: its CEO Elon Musk wants the firm to salvage into lithium mining as one way to catch gives and regulate charges.
On resolution: a lithium-ion battery and EV change bloc
Although the US has one of many world’s richest lithium resources (pdf), it fully has one lithium mine in operation accounting for below 2% of global manufacturing.
But what if the US may perchance presumably work intently with allies who’re significant lithium producers—articulate Australia, which makes up 55% of world manufacturing?
To that stay, the US Department of Defense (DoD) has proposed to Congress (pdf) that the definition of “home source” be modified within the Defense Production Act, a regulation passed in the starting up of the Korean Battle to abet the US manufacture wished battle cloth.
The keep “home source” is currently outlined as a enterprise that operates in or procures from the US or Canada, the DoD wants to widen that to moreover consist of the UK and Australia.
Phillips, whose firm has a lithium mission in Quebec, welcomes this proposal. With Canada’s and Australia’s lithium resources, he says, “then surely [the US] may perchance merely moreover be self-ample.”
Maintain in mind it a more or much less “friend-shoring” for lithium and EVs. Or as Benchmark’s Moores attach it: “We contemplate it’s the initiate of a brand fresh vitality storage change bloc.”
