Supply of minerals lags EV policy demands

Vehicle electrification is a key lever in efforts to reduce pollution and global warming, but the pace set by government policies in the U.S. and Europe may be proving too fast for supplies of the minerals needed for all those EV and plug-in hybrid batteries to keep up.

Those minerals — lithium, cobalt, nickel, manganese and graphite chief among them — also are critical for wind turbines and solar panels necessary for clean power. Copper, another vital material, is used to conduct electricity in a battery and is also in high demand for the wire to expand power grids globally.

At the present pace of critical minerals production, only 70 percent of the global demand for copper and 50 percent for lithium will be met by 2035, according to a May report by the International Energy Agency.

Beyond that, copper simply can't be mined quickly enough to support the transition to electric vehicles demanded in the U.S. under present government policies, according to a May joint study by the University of Michigan in Ann Arbor, Mich., and Cornell University in Ithaca, N.Y.

A slowdown in EV sales growth along with a post-pandemic easing of supply line constrictions saw steep declines in critical battery mineral prices in 2023. Lithium fell 75 percent and the costs of cobalt, nickel and graphite slid 30 percent to 45 percent, according to the IEA.

That gave the impression critical battery minerals shortages have eased.

But federal EV and clean air policies and calls by at least eight U.S. states, Canada and a dozen European nations to phase out new internal combustion vehicle sales between 2030 and 2040 will change things significantly.

That anticipated increase in electric vehicle production, along with other global demands for the same minerals used for EV batteries, "means we cannot sit tight; the day after tomorrow will be very different," said Arumugam Manthiram, a battery minerals researcher at the University of Texas at Austin.

There are decent reserves of most of the critical minerals, with expectations of even more to be found in unexplored or unexploited areas of the globe, said Margaret Mann, a researcher at the National Renewable Energy Laboratory in Golden, Colo.

Lithium Americas, for example, discovered in 2017 that a lithium mine site at Thacker Pass in Nevada contained an even larger deposit than previously identified.

Likewise, California's long-neglected Salton Sea has become a hot spot for lithium extraction, with the Department of Energy determining in 2023 that the highly saline lake in the southern Mojave Desert could produce as much as 3,400 kilotons of lithium — enough for 345 million EV batteries.

Controlled Geothermal Resources, an Australian company that counts General Motors and Stellantis as investors, began construction this year on the first unit of a seven-phase, $1.9 billion geothermal energy and lithium production facility at the Salton Sea aimed at extracting 300,000 tons of lithium annually from its waters. CalEnergy, part of Warren Buffett's Berkshire Hathaway Renewable Energies, is also developing a process to extract lithium at the 10 geothermal power plants it already operates around the Salton Sea. Now, though, most mining operations — and known reserves — are concentrated in very few places. Several are no longer approved for trade with the U.S. under terms of the Inflation Reduction Act legislation, which restricts where battery minerals can come from if automakers wish to qualify their EVs for federal incentives.

China controls most known supplies of battery-grade graphite, which is also in demand by the U.S. military. Russia produces 38 percent of the world's nickel. China is also an important source of lithium. Both countries are on the Inflation Reduction Act's list of proscribed trade partners and neither is a welcome source of supply in military circles.

Cobalt, a critical mineral in batteries designed for high energy density, comes largely from the Democratic Republic of Congo, where child labor and unsafe working conditions in cobalt mines is an ongoing concern.

"It's less about shortfalls today and more about secure supplies," said Abigail Hunter, executive director of the Center for Critical Mineral Strategy in Washington, D.C. In terms of secure supply lines, there's a "really big mismatch" between what's needed and where it comes from, she said.

Meeting the 2050 global copper demand from all industries will require more than twice the amount that's been mined worldwide from the beginning of recordkeeping through 2018, according to the University of Michigan-Cornell study.

More than $800 billion in new mining investment is needed globally by 2040 to meet critical materials demand, according to the IEA.

One source of critical battery materials is the nascent battery recycling industry. The minerals in a typical EV battery are about 95 percent recyclable.

Once there's a steady stream of batteries coming from retired EVs, a mature recycling industry could supply battery makers with as much as 28 percent of the required minerals, said Dale Hall, senior EV policy researcher at the International Council on Clean Transportation in San Francisco.

But that materials stream is a decade or more away, he said.

Slowing down the push for full-electric vehicles is another way to help manage impending critical minerals shortages.

One author of the University of Michigan-Cornell study suggested advanced hybrids could be as useful as EVs in fighting climate warming with much less demand for critical minerals. A Toyota Prius' 0.9-kilowatt-hour high-voltage battery, for example, is about 98 percent smaller than the average EV battery of 80 kWh.

The Prius "actually has a slightly better impact on climate than a Tesla," said co-author Adam Simon, an earth and environmental studies professor at the University of Michigan. "Instead of producing 20 million electric vehicles in the United States, would it be more feasible to focus on building 20 million hybrid vehicles?"

Whether the best course is to shift from an all-EV strategy, boost mineral extraction and exploration at home and in friendly countries, or as the renewable energy laboratory's Mann suggested, move away from EV batteries that depend on the critical minerals in favor of chemistries, such as lithium iron phosphate, that use more plentiful minerals, one thing seems certain: A solution to mineral shortages isn't just over the horizon.

"The battery technologies we use now were developed in the 1980s and we are still learning about them. It can take a decade to go from lab to commercialization, so a solution won't come in a day, or a month, or a year. We need a long-term plan," said University of Texas researcher Manthiram.