Tag: nickel

OM in the News: The EV Battery’s Supply Chain Problems

The Swiss mining giant. Glencore, is suspending production at an unprofitable nickel operation in New Caledonia

The global EV revolution has been losing momentum as buyers are more aware of the vehicles’ higher prices, range limitations, and charging station shortages. So automakers such as Ford, GM and Volvo are delaying investments and striking a more cautious tone about the outlook for EV consumer demand.

But a big part of that revolution has been in the development of the core of EVs, namely the batteries. “Producers of lithium and nickel, which are used in lithium-ion batteries for EVs, have been stalling projects and closing mines to save cash,” writes The Wall Street Journal (Feb. 20, 2024). Prices of lithium are down as much as 90% since the start of last year, while the price of nickel has halved.

When Albemarle, the world’s most valuable lithium company, last year announced plans for a $1.3 billion plant in South Carolina, it was hailed as transformative for the state. The high-tech project was designed to process different sources of lithium and serve as a supplier of the critical mineral for South Carolina’s burgeoning EV industry, producing enough lithium for 2.4 million vehicles annually. Less than a year later, those plans have been hobbled by the crash in battery metal prices, undercut by a slowdown in EV sales in the U.S. and China. Albemarle has deferred spending on the project, amid companywide cost-cutting that includes layoffs.

Now the world is suddenly awash with the metals after producers ramped up new projects to feed the global EV industry and compete with China. (We note that boom-and-bust cycles are commonplace in metals markets, given demand can be unpredictable and new mines typically take many years to develop).

In the more-established nickel industry, some miners say they have been left with no choice but to close unprofitable mines. The downturn has wiped out more than a fifth of Australia’s mine supply. Mothballing any mine is a difficult choice, as companies pay ongoing maintenance costs that can run into millions of dollars a month when they aren’t producing anything to sell.

Classroom discussion questions:

  1. What is the US doing to create supply chains for EV  battery components? Is it working?

      2. How do mining firms forecast the demand for minerals that are so dependent on auto demand?

OM in the News: The “Nickel Pickle” and Other Electric Vehicle Tales

The Wall Street Journal (June 5, 2023) led with a front page article called the “Nickel Pickle” and then went on with two more stories about EV headwinds. Let’s summarize: To make batteries for EVs, companies need to mine and refine large amounts of nickel. The process of getting the mineral out of the ground and turning it into battery-ready substances is particularly environmentally unfriendly. Reaching the nickel means cutting down swaths of rainforest. Refining it is a carbon-intensive process that produces waste slurry that’s hard to dispose of.

Mining and refining nickel is a dirty business

The nickel issue reflects a larger contradiction within the EV industry: Though EVs are designed to be less damaging to the environment in the long term than conventional cars, the process of building them carries substantial environmental harm. One Indonesian miner, for example, said that rainforest clearing caused greenhouse gas emissions equivalent to 56,000 tons of carbon-dioxide. That’s equal to driving 12,000 conventional cars for a year.

Tesla adds that EVs cause more emissions during the manufacturing phase than conventional vehicles, due in part to the process of extracting and refining minerals.  Nickel is responsible for 1/3 of the carbon emissions generated from making a battery cell.

The second piece states that battery-powered EVs “are not the only way to achieve the world’s carbon neutrality goals.” Toyota is promoting its hybrids and plug-in hybrids as alternatives to battery-powered EVs. Plug-in hybrids contain an engine that can kick in when the battery runs low and are cheaper than EVs. That firm has pledged  to make all its vehicles carbon neutral by 2050.

Toyota’s CEO made news when he claimed that a “silent majority” in the auto industry “is wondering whether EVs are really OK to have as a single option.” He added that “the amount of raw materials in one long-range battery EV could instead be used to make 6 plug-in hybrid electric vehicles or 90 hybrid electric vehicles.” For that anti-EV comment, progressive investors and government pension funds have moved to oust him.

The 3rd article reports that VW “is searching the world, from Canada to Indonesia, for supplies to make the batteries in EVs it sells less dependent on Chinese components,” especially nickel. China dominates global production of refined battery materials used in EV batteries. “Today we are 100% dependent on China,” says a VW exec.

Classroom discussion questions:

  1. Why is nickel a supply chain problem?
  2. Why is the Toyota position controversial?

OM in the News: A Green Mining Mirage

The history of the mining industry is littered with environmental destruction, pollution and detrimental impacts on local populations. But the raw materials it provides—including nickel, cobalt and lithium—are crucial to the transition for electric vehicles. The global race to secure a supply of these critical materials is on, but can it be done sustainably?

A nickel mining site in Sorowako, Indonesia

The big global miners’ stark message: Recycling is the only green source because most deposits contain such low concentrations of metals and minerals that, while methods can be improved to minimize damage, recovering the materials will always be messy and destructive. Most miners have been making efforts to clean up their practices. Some are even investing in recycling, but these aren’t likely to produce a meaningful supply any time soon.

Eventually, the collection infrastructure, recovery processes and recycling facilities may be developed and scaled up to the task, reports Wall Street Journal Pro ( May 11, 2023). There are plenty of old electronic devices cluttering up our drawers that could yield some metals, but it will take at least a decade or two for electric-vehicle batteries to be exhausted and become a sizable feedstock for recycling. Until then, we have mining.

Indonesia supplies about half the world’s nickel, a crucial input for EV batteries. Ford and VW are investing billions of dollars into the local supply chain as a low-cost source that they can directly control. But there are serious questions about destruction of the country’s rainforests in pursuit of the metal. Russia also mines nickel, but westerners are wary of buying from the country after its forces invaded Ukraine. New Caledonia—a French island group in the Pacific—is another possible source, but there are concerns about environmental impact there too.

Another option is to mine nickel from the seabed. It is less destructive than Indonesian sources, but environmental groups worry about damage to the relatively untouched deep sea ecosystem. A major problem is—ironically—that heightened scrutiny of new projects on environmental and social grounds is significantly raising the costs of the new mines necessary to fuel a low-carbon global economy.

Until there are significant developments in recycling, battery technologies, or both, there are tough trade-offs to be made in the transition to EVs.

Classroom discussion questions:

  1. Why is there a shortage of mines to produce the minerals needed in EV batteries?
  2. What are the ethical issues involved in the transition to EVs?