Battery Metals

Ministers from Japan and the Democratic Republic of Congo agreed on Friday to co-operate on efforts to ensure stable procurement of the rare metals in whose supply the African nation occupies a dominant role.

Japan’s industry minister, Yasutoshi Nishimura, met the mines minister of the DRC, Antoinette N’Samba Kalambayi, who was visiting Tokyo for a roundtable meeting on rare metals that involved roughly two dozen companies.

They agreed their nations would aim for a “sustainable, mutually beneficial” relationship involving the mining industry, the government said in a statement later.

Highly-sought rare metals, such as cobalt, find use in car batteries, and Congo is the world’s top producer of the metal, accounting for 74% of global output in 2021.

Mining companies and governments in Africa are calling for stronger trade ties with the United States after its new measures set out incentives for US carmakers sourcing battery materials from trade partners.

Battery materials and trade are set to be in focus at next week’s US-Africa summit in Washington, where President Joe Biden will meet leaders of African nations, including Congo.

The European Union (EU) and Chile inked on Friday a fresh partnership deal that will give the bloc greater, easier access to lithium, copper and other raw materials that are key to the transition to renewable energy sources.

Chile, the world’s top copper producer and the second largest lithium miner, will drop tariffs on all imports from the EU, except sugar, and make it easier for European companies to invest in the country, the European Commission said.

The agreement means EU companies will be less hindered by Chile’s dual pricing system for domestic use or exports and potential export monopolies, while still allowing the South American country to promote domestic processing.

Chile will, in return, secure more favourable access for its exports, particularly food and professional services.

Currently, more than 60% of EU imports of the lithium used in batteries that power electric vehicles are from Chile.

Brussels considers the Latin American country as a vital strategic partner as it seeks to diversify resources imports away from China and pivot away from Russian gas.

The two partners would treat EU and Chilean investors the same as domestic investors in each other’s markets, including in energy and raw material

“Closer economic ties with Chile will allow the EU to diversify and strengthen its economic resilience, while increasing opportunities for EU exports and investments,” the commission said in the statement.

“Better access and sustainable investment in critical raw materials such as lithium will contribute to advancing our shared ambition for a green transition,” it noted.

The new agreement extends an existing trade deal between the parties from 2003, which has already liberalized commercial transactions in about 96% of product lines.

The pact, which includes sections on human rights, environmental protection and gender equality, is expected to enter force in 2024, following the approval from the European Parliament and EU governments.

Chinese electric-car juggernaut BYD Co. is looking to get into the lithium business in Latin America and Africa after prices of the key battery component surged to “unreasonable” and “not healthy” levels.

BYD is scouring the world for lithium supplies, Executive Vice President Stella Li said in an interview Tuesday. In Chile, it’s in talks to enter into a mining project and is applying for permits to process the raw material into cathode for batteries. The automaker is also looking to invest in African lithium projects, although it’s detected infrastructure shortfalls there.

“We are now globally searching any opportunity,” Li said from Santiago, where she’ll cut the ribbon on Chile’s first EV dealership. “So Africa and Chile and also Argentina. Every country that has lithium reserves, we’d like to participate in to reserve for the future.”

While makers of EVs and rechargeable batteries are reaping the benefits of surging demand in the shift away from fossil fuels, they are also facing tight markets for raw materials like lithium and copper. In a bid to lock in future supplies, they’ve started to fund mining and processing projects.

Lithium has skyrocketed to record highs after demand outpaced supply, with prices in China more than doubling this year. But Li sees the market swinging back into surplus next year as new mines come on stream, with prices “stabilizing.”

There has been “hot money” going into the lithium space for the past two years and current prices are “not healthy, and will kill the industry” if they continue, said Li, who heads the company’s strategic planning from Los Angeles. She spoke from Bloomberg’s offices in Santiago.

In Chile, the biggest producer of copper and the second-largest supplier of lithium, BYD supplies electric buses and taxis and is opening a dealership targeting the high-end consumer market. But the Chinese giant is known for its vertical integration and wants to build a local supply chain there.

BYD intends to provide technology for Chilean mines to directly extract lithium, and will secure supplies through offtake agreements with producers, Li said. From there, BYD will use the mineral to produce cathodes that will go into EV batteries, including BYD’s Blade, although it doesn’t plan to make battery cells in Chile.

It’s also in talks with prospective partners — other than incumbent producers SQM and Albemarle Corp. — for a Chilean mining project, and has submitted applications to state development agency Corfo to do customized materials to produce cathode in Chile, according to Li.

BYD is more than willing to deal with the state lithium company that Chile’s government is creating to partner with private companies. In January, the Chinese firm was awarded a lithium contract by the previous government, but that process was rescinded amid community opposition.

The company is expanding its global presence at a time when governments around the world are attempting to develop local and regional EV supply chains — partly in a bid to reduce their reliance on China. President Joe Biden’s green stimulus program, for example, aims to create a preference for lithium produced in the US or in free-trade partners like Chile.

Warren Buffett’s Berkshire Hathaway Inc. holds 16% of BYD’s Hong Kong-traded H shares, which are down 25% this year.

China’s Tianqi Lithium Corp is exploring investment opportunities in Australia’s burgeoning battery minerals sector through its local tie up with Western Australia-based (WA) miner IGO Ltd, its chief executive said.

Australia is seeking overseas investment into its critical materials industry as it seeks to become a green energy superpower, although Treasurer Jim Chalmers said last month it would be “more assertive” on who it lets make those investments.

“WA already export(s) all the minerals needed to make batteries. There is enormous environmental and economic benefit in successfully developing downstream processing capabilities near the source of those resources,” Tianqi CEO Frank Ha said in a statement late on Tuesday. “We have a very clear desire not only to grow our operations but to be part of the Western Australian community.”

Tianqi Lithium Energy Australia (TLEA), its tie-up with IGO, owns the Kwinana Lithium Hydroxide plant in Western Australia and is majority shareholder in the Talison Lithium mine Greenbushes.

It already operates three lithium processing plants and the Cuola mine in Sichuan.

Direct investment or joint venture options would be considered to achieve the next phase of the companies’ strategic growth ambitions, he said. He did not mention how much money the company was looking to invest.

PWC estimates Australia’s critical minerals sector with a value-adding supply chain could be worth more than $40 billion to the Australian economy by 2035 and create up to 4,500 jobs a year.

State premier Mark McGowan said Tianqi Lithium had his government’s support.

“It is a priority for the McGowan Government to support Western Australia’s participation and growth in global battery and critical mineral supply chains – with the primary goal of increasing domestic value-add manufacturing.”

The state government also said it would slash approval timeframes for green energy projects, investing A$22.5 million ($15 million) to overhaul its environmental approval process.

($1 = 1.4941 Australian dollars)

Prices for the batteries that power everything from smartphones to cars rose in 2022 for the first time since research firm BloombergNEF started tracking them — and they won’t likely drop next year.

The global average price for lithium-ion battery packs climbed 7% to $151 per kilowatt-hour, according to BNEF’s annual battery price survey. Never before in the 12 years BNEF has surveyed battery prices have they recorded an annual increase, instead dropping sharply as production grew.

But this year’s rising costs for lithium, nickel and the other metals batteries contain have halted that decline and will keep prices around $152/kWh in 2023, BNEF predicts. Not until 2024, when more lithium production is expected to come online, are prices forecast to drop again.

The $151 figure represents an average price across several industries that use lithium-ion battery packs, including large-scale units being plugged into the electricity grid to prevent blackouts. For electric vehicles, the average pack price was $138/kWh.

The higher prices strike at a delicate moment. Automakers worldwide are rolling out new electric car and truck models aimed at the mass market, not just early adopters, and high battery prices are one of main reasons EVs cost more up-front than comparable gas-burning cars.

That EV premium is expected to disappear once battery prices drop below $100/kWh, a milestone BNEF previously forecast would arrive in 2024. Now the research firm forecasts reaching that tipping point in 2026.