Mining Profile: Eduardo Bartolomeo, CEO, Vale | Supply chain and operations
In early 2021, Elon Musk became the richest person in the world, when his net worth reached $ 185 billion. Yet it was the entrepreneur’s electric car company, Tesla, that drove this increase in value. Tesla had surpassed a market value of $ 700 billion and overtook Toyota to become the world’s most valuable automaker. When it comes to Tesla, investors are really investing in “tomorrow”. They predict that the company will continue to tighten its iron grip on the future of the auto industry.
Tesla is therefore expected to have a huge influence on the future of mining as well. Each engine battery produced by the company contains a complex assortment of minerals and rare earth metals. Each of them comes with a diverse origination story, varying dynamics on the supply side, and their own unique set of challenges. Tesla relies heavily on Panasonic for all of its battery manufacturing. To produce its main lithium-ion EV battery technology, you need about 20 minerals, with the main components being cobalt, lithium and, most importantly, nickel. Almost all of these minerals are poorly located and difficult to find.
Our first stop is lithium. You won’t need a chemistry degree to know that a lithium-ion battery cannot be made without lithium. Fortunately, it’s not a rare metal, but that doesn’t mean it can be easily acquired either. It is located in the earth’s crust and requires large-scale mining operations for its extraction. Anything on this scale requires huge investment, and lithium producers will need to extract significant amounts of it to meet future demand. While prices are currently low, a reportpredicts that by 2025, demand for lithium will begin to exceed supply. Prices will inevitably rise, as will income growth for lithium producers.
While more than half of the world’s lithium resources are found under the salt marshes of the Andean regions of South America (US Geological Survey), Australia is by far the world’s largest producer, the Greenbushes lithium mine in Western Australia. being currently the largest existing project. However, the future of lithium mining will likely be determined in the famous lithium triangle – an area comprising the three countries of Chile, Bolivia and Argentina. The methods used here are extremely water intensive and can have a devastating impact on the environment and the local ecosystem. This has been described in a Bloomberg Reportwhich details the impact of the lithium mining boom on the Atacama Desert in northern Chile. The truth is, all the clean technologies needed to tackle climate change are extremely mineral-hungry.
The lithium and cobalt markets are primarily driven by demand for batteries, but from there it’s the story of two very different products. Cobalt is currently a key ingredient in Tesla’s batteries, and the company recently signed a new long-term deal with commodities giant Glencoreto to supply it. The deal, however, increased Tesla’s dependence on imports from the Democratic Republic of the Congo, where claims of child labor in the supply chainhad already swallowed up Tesla and Apple. China’s largest cobalt producer slumped DRC sales in 2020, raising new concerns about the country’s informal mining sector.
Since electric cars are generally better for the environment, neither Tesla nor Apple for that matter takes it for granted that their consumers are likely to be environmentally conscious and sensitive to these issues. Cobalt is essential for the transition to renewable energy, but the supply economy cannot be easily changed. Over 70% of the world’s cobalt is produced in the DRCand given the concerns and risks surrounding the supply chain, promises of safer mining practices have not convinced everyone.
Deep sea mining
Thus, the future of electric cars may depend on mining these critical raw materials at the bottom of the ocean via Deep-Sea Mining (DSM). Drones are already being used in seabed mining to discover rare earth metals. The value of seabed gold alone, for example, has been estimated at over $ 150 billion (The Economist). Others believe prioritizing ethical mining in other countries such as Morocco and Australia might be the answer, where blockchain technology, which helps track every step of the mining process, might reveal bad practices and lead them to their final eradication.
Tesla themselves are instead focusing on a future with cobalt-free cathodes. Cobalt is by far the most expensive material used in batteries, so removing it from the mix has other benefits that should help drive electric vehicles. It is important because we’re far from the bottom of the battery cost curve, and successful changes like this can help speed up that process.
Enter Nickel – the often forgotten battery element. Nickel is facing the most attractive supply-demand dynamics in the years to come. New generation NMC 811 cells (nickel-manganese-cobalt with 811 representing the ratios of each mineral) are being produced on a larger scale and are driving increasing demand. The production is secret. Although it is one of the most ubiquitous elements in the earth’s crust, the supply is slow and extremely expensive. Opening a new nickel mine easily exceeds a billion dollars in cost, and capital is hard to come by as these projects often result in massive cost overruns. For these reasons, future shortages around nickel supply will likely be the biggest concern of Tesla and the electric car industry.
For Tesla, the industry’s priority now is to break the million-kilometer record for EV batteries. This will help EVs to shake the fears of their short range and high battery replacement. The focus on lithium iron phosphate technology using thin nickel foil has yielded promising results. This month, scientists at Penn State University developed an EV battery capable of taking 400 miles of charge in just 10 minutes, and most importantly, they’re cobalt-free. This could be a critical step towards accessibility and sustainability of the mass market and bring batteries towards cost parity with combustion engines. It will also be a key factor for Tesla to realize its dream of a robot taxi industry – which Musk launched as the core of Tesla’s long-term vision, and analysts at Morgan Stanley have identified as being at the core of. the business case for Tesla’s actions. .
Tesla has played an important role in spreading the electric vehicle industry to consumers and investors. As transportation disruption becomes global and several countries continue to make bold EV commitments, the extraction of metals and minerals that allow these changes must be managed responsibly and sustainably. There is no such thing as a sustainable electric future.
Emiral Resources is a global mining group focused on the exploration, mining and production of mineral resources.
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