Saturday, September 23, 2023

Three critical challenges for the metals supply chain and how companies can address them

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Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

CEO and co-founder of Impossible Metals Inc.

At the UN Climate Change Conference (COP21) in December 2015, the Paris Agreement was established by 196 countries who pledged to work together to help fight climate change. As a legally binding international treaty on climate change, the goal is to limit global warming to well below 2 degrees Celsius, and preferably to 1.5 degrees Celsius.

Since road transport accounts for billions of metric tons carbon dioxide emissions, replacing conventional vehicles with electric vehicles (EVs) has become a critical goal. In the United States, President Biden signed an executive order with the aim of making it half of all new vehicles sold by 2030 zero-emission vehicles. European Union standards for automakers include a target to economize 55% of CO2 emissions from cars in 2030.

As IEEE Spectrum noted, “The mineral requirements for the batteries and electric motors of an electric car are six times higher than those of an internal combustion engine (ICE) vehicle.” So it’s not surprising: “EVs require automakers to design new manufacturing processes and build factories to make both EVs and their batteries. Ramping up the battery supply chain is the automakers’ current “most challenging topic,” according to Arno Antlitz, VW’s chief financial officer.

The challenges

So why is accelerating the battery supply chain such a challenge? The challenge revolves around the essential minerals needed to make EV batteries: nickel, cobalt, copper and manganese.

First, we don’t have enough battery metals to support the world’s climate goals. The demand for electric vehicles is growing rapidly. Benchmark Mineral Intelligence recently reported that we need more than 300 new mines by 2035 to meet demand. Unfortunately, new terrestrial mines are likely to produce low-grade metals and require significant infrastructure investment. The end result is that for the first time the cost of EV batteries went up instead of down in 2022, driven by the cost of raw battery metals.

Second, the environmental, social and governance (ESG) impacts of terrestrial extraction and refining are becoming increasingly unacceptable to many people. Most of the country’s nickel is found in Indonesia. To extract the nickel, the nickel ore is usually excavated using diesel excavators destructive to the country. This process can remove a carbon sink and destroy a large amount of biomass and biodiversity. Once the ore is extracted, it is processed with high pressure acid leaching (HPAL) with coal power and sulfuric acid. The sulfuric acid is stored in a large tail dam. Sometimes tailings dams fail, resulting in loss of life and the environment. And the social consequences could include the displacement of people to make way for a mine and its associated infrastructure.

Third, China has invested trillions of dollars in Africa and Indonesia over the past few decades to own it now about 80% of the future offtake and processing of critical battery metals. While there are some critical battery ores in the United States and in countries like Australia and Canada, these are relatively small reserves compared to China’s. The low grade ore, remoteness and licensing risk make it difficult and costly to develop domestic and friendly mines.

Tackle the challenges

Fortunately, companies are already starting to address these issues. Some, such as Global Sea Mineral Resources, Ocean Minerals LLC and my company, are turning to polymetallic nodules to help meet demand for EV batteries as polymetallic nodules are abundant on the sea floor in many locations. For example, our approach includes using an autonomous underwater vehicle to selectively pick up nodules and prevent serious damage.

Other solutions that companies are working on include household investments recycling solutions. In addition, some politicians are working to speed up the permit procedure for domestic mines. Unfortunately, the unit economy can be challenging.

Here are three things business leaders and the mining companies that serve them can do to overcome these challenges.

1. Update your supply chain strategy to prioritize sourcing critical battery metals from domestic or free trade countries to reap the benefits of the US Inflation Reduction Act (IRA). If you do your final vehicle assembly in North America, you can also benefit from incentives from the IRA.

2. To satisfy the growing number of customers seeking the highest ESG performance, you must commit to sourcing battery metals that are mined and processed with consideration for people and the environment, for example by protecting biodiversity. protect and eliminate toxic waste. I suggest that mining company leaders also prioritize approaches that protect people and the environment.

3. Collaborate with climate technology companies to create innovative solutions. The number of tech companies focused on fighting the climate crisis has quadrupled since 2010 44,595 companies last year.

I suggest that business leaders actively think about how to deal with these challenges. Business Council is the premier growth and networking organization for entrepreneurs and leaders. Am I eligible?


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