Near Term EV Deployment Might Happen Faster Than Lithium Can be Mined

Skrivet av Ella Rebalski – RISE Viktoria

EV Stock Will Increase Very Quickly, Very Soon

The demand for Electric Vehicles could grow to as much as 20 million worldwide by 2020, according to the International Energy Agency (IEA) [1]. The scenario is based primarily on estimates related to the cumulative announcements of new vehicle releases from OEMs, but it also lines up with the commitments that UNFCCC member countries made to support the deployment of EVs as part of the 2015 Paris Agreement. This is the highest possible scenario that the IEA accounts for based on cumulative OEM announcements, the lowest possible scenario of that type that they predict is 9 million EVs in stock by 2020.

In a graph on page 6 of their Global EV Outlook 2017, the IEA considers country targets, OEM announcements, as well as decreasing battery costs and increasing energy density to draw deployment scenarios for EVs, which in this case includes both Battery Electric Vehicles (BEVs) and Plug in Hybrid Electric Vehicles (PHEVs) [1]. Currently, the global EV stock has just passed 2 million in 2016 [1], so an increase to 20 million would represent a 10 fold increase.

More EVs Means More Lithium

While these numbers look good in terms of reducing emissions related to transportation, they also mean that there will be an increase in demand for the components necessary to manufacture those EVs, such as batteries, and the lithium needed for those batteries. The increase in battery production and the subsequent environmental and safety risks have been written about in this newsletter. One topic that has not been covered yet, however, is the potential for a near-term shortage in lithium. In September Bloomberg news wrote an article entitled “We’re Going to Need More Lithium” [2], describing how the predicted rise in EV sales could be threatened by the lack of existing lithium mines around the world today. There are more than enough lithium reserves in the world to supply the EV market, even as it grows exponentially, but many of those reserves remain undeveloped. According to the US Geological Survey, there was 35 000 tonnes of lithium mined globally in 2016, up more than 10% from 31 500 in 2015 [5], and exploration is continuing, so estimates on global reserves are also growing. In 2016 the majority of the world’s lithium came from Chile and Australia [5].

A Snapshot of Current and Planned Lithium Mining Operations

There are currently 16 lithium mines operating in the world, and 20 more that are scheduled to open, but none of those new 20 will be operational before 2019 [2]. The 20 million number of EV figure that was quoted at the beginning of this article is for 2020. That gives mining companies and OEMs a pretty short window to meet demand. Another sign that the race for lithium production is heating up is that some automotive industry incumbents have started to search for mining opportunities in inhospitable places. This summer German President Frank-Walter Steinmeier made headlines when he spoke to Afghan government officials about lithium exploration in the country’s Helmand province [3]. The area is currently controlled by the Afghan National Police, who are backed by NATO forces, but it is the largest province in Afghanistan and its border with Pakistan is one of the most dangerous in the world [6].

Personal Comments

This situation reminds me of when, as a child, I used to invite friends over for dinner without consulting my parents, who would then have to explain to me that we did not in fact have enough food prepared to feed the extra mouths I had brought home with me. There is almost always a way to stretch a meal a bit farther, but applying similar principles to battery manufacturing is much worse for everyone at the table.

Deutsche Bank published a detailed report on lithium in May of 2016 that suggested Australia and China will meet the near-term need in the next two years, and by which time the brine deposits in South America can be expanded significantly [7]. But China and Australia might not be convenient locations for some EV producers to source lithium from.

So far, lithium mining has not caused social and environmental strife of the same magnitude as other, more expensive minerals (although lithium mining has had its share of troubles – Chile is currently experiencing a water shortage). If governments or corporations try to get mines running quickly, in politically instable regions that do not have the resources to offer appropriate levels of safety for workers and appropriate environmental protection, this could begin to change, and quickly. Afghanistan is arguably one of the more extreme scenarios of this, but the fact that the area would be considered shows that the situation is becoming urgent for some OEMs.

Sources

[1] Global EV Outlook 2017. International Energy Agency. 2017. Link.

[2] We’re Going to Need More Lithium. Bloomberg Businessweek. 27 sep 2017. Link.

[3] At stake in US military efforts to stabilize Afghanistan: At least $3 trillion in natural resources. CNBC. 19 aug 2017. Link.

[4] The New OPEC: Who Will Supply the Lithium Needed to Run the Future’s Electric Cars? CNBC. 30 dec 2016. Link.

[5] LITHIUM. US Geological Survey. 2017 Link.

[6] Wikipedia. Helmland Province. Link.

[7] Deutsche Bank. Lithium Report. 9 maj 2016 Link.