Battery Metals

The German government earmarked about €1 billion ($1.1 billion) for raw materials investments as it seeks to reduce dependency on producers such as China for critical minerals, according to people familiar with the plan.

A selection process will be established to determine which projects — including in extraction, processing and recycling materials — are eligible, the people said, speaking on condition of anonymity. Financing, via Germany’s state-owned KfW development bank, will consist of equity capital to make acquisitions of minority stakes.

Projects in Germany and abroad will “contribute to the security of supply of critical raw materials,” an Economy Ministry spokeswoman said. The ministry didn’t give details on how the state fund would be structured.

Pandemic-triggered supply-chain disruptions across the globe and Russia’s invasion of Ukraine exposed the vulnerability of Europe’s reliance on energy and raw materials for high-tech and green projects. Chancellor Olaf Scholz’s government pledged to ratchet up efforts to access to critical materials over the longer term.

Raw materials including cobalt, copper, lithium, silicon and rare earth metals are needed to make microchips, wind turbines and batteries for electric vehicles.

As Germany’s parliament approves Scholz’s 2024 budget on Friday, the billion-euro fund is to be set up for four years. Investments will be coordinated with Italian and French initiatives in the raw materials sector, the people said. Policymakers will focus on mineral projects defined as critical in the European Union’s Critical Raw Materials Act.

Veronika Grimm, a member of Scholz’s panel of independent economic advisers, said the aim of diversifying raw-material supplies must be a “top priority” for the EU as a whole.

“The raw-material fund can be an element, but it won’t be a enough,” Grimm told Bloomberg.

KfW declined to comment on the plans. The lender is expected to make a statement about its role managing the project at its annual news conference next week on Feb 7. The EU agreed on measures in November under the Critical Raw Materials Act to boost domestic mining and reduce dependency on any one country.

While Germany still has to set up a structure to organize its investments into raw materials, Japan could provide a model. Since 2004, the state-owned Japan Organization for Metals and Energy Security has invested in the storage of raw materials, explored reserves, provided loans or guarantees for commodity companies and bought their shares directly.

The amount invested in energy storage soared globally during 2023, while battery manufacturing will require the biggest share of spending among clean energy technologies by 2030 to achieve net zero.

BloombergNEF has just published the latest edition of its annual ‘Energy transition investment trends’ report for 2024, including the above takeaways.

It found that total investment in energy transition technologies including renewables, hydrogen, electric vehicles (EVs) and carbon capture and storage hit record levels last year, with US$1.77 trillion total investment, a 17% increase from 2022.

China was the biggest among nations for investments, with US$676 billion representing 38% of the entire total, while electric transport accounted for the biggest share by technology, with US$634 billion invested – a 36% rise year-on-year.

EVs also overtook (no pun intended) renewable energy, which landed in a close second place with US$623 million invested during 2023.

Meanwhile, although as a share of the total energy storage’s US$36 billion of investment commitments during 2023 seems relatively small, it was a jump of 76%. Storage investments totalled more dollars than hydrogen (US$10.4 billion) and carbon capture and storage (US$11.1 billion) together.

BloombergNEF modelled a scenario aligned with net zero commitments made in the 2015 Paris Agreement to estimate from its calculations the levels of investments that will be required between 2024-2030 to meet them.

Investment in energy storage needs to accelerate rapidly nearly three times over to about US$93 billion annualised spending over the rest of this decade, while renewable energy investment needs to more than double to US$1,317 billion of investment on average each year, the research and analysis group said.

Power grids, a new addition to the scope of BloombergNEF’s analysis this year, attracted US£310 billion investment worldwide, but this sum again needs to more than double to US$700 billion annualised spending to meet the Paris Accord’s targets.

Supply chain investment exceeds net zero requirements but more needs to be focused on battery value chain
Similarly, electrified transport spending needs to nearly triple to US1.8 trillion. Of course, with EVs and battery energy storage system (BESS) both closely dependent on battery supply, and most commonly lithium-ion (Li-ion) batteries, Li-ion battery manufacturing plants would account for 70% of all clean energy supply chain spending, were they to be invested into to the full extent required for a net zero world.

The world is indeed already investing in battery production and investments are set to surge around 66% from 2023 to 2024 according to investment plans seen by BloombergNEF and battery gigafactories are a primary driver of this investment.

There was some other good news from BloombergNEF if we look at supply chain spending as a whole: it is currently actually at levels above what’s required to be on track for net zero by 2050. In fact, net zero can be achieved with yearly spending on supply chain at about 55% of the US$135 billion that was invested on things like equipment factories and battery metals during 2023.

The need to invest in supply of battery metals cobalt, lithium and nickel is however acute and would make up 20% of total supply chain spending commitments in the Paris-aligned scenario. In 2023, it was just 11% and BloombergNEF anticipates it rising to 18% in 2026, based on the lead times of announced projects.

BloombergNEF also found that the solar PV industry’s current situation of oversupply means no new PV factories are required before 2030. The module supply glut is going to put pressure on the sector “for years to come,” the analysis group said, as covered by our colleagues at PV Tech today.

A few months back, BloombergNEF forecast that globally, cumulative installations of grid-connected storage will reach 650GW/1,877GWh by 2030, in the firm’s 2H 2023 Energy Storage Market Outlook. Since then, the company has also published its first-ever list of Tier-1 BESS providers.

One of the interesting things I’ve been doing is participating in a review group for a European study on heavy vehicle decarbonization comparisons and simulations. That means, among other things, that I’m poking at the assumptions being used.

As the paper is in review and assumptions are being tested and improved, I won’t identify the author or organization at this time. This isn’t about them being wrong or right, but about a bunch of assumptions being made about fuel cell heavy vehicle maintenance that don’t stand up to scrutiny, yet are in a lot of studies that are considered credible.

Let’s start with first principles. A heavy duty fuel cell vehicle like a freight truck or transit bus is a battery electric vehicle with added fuel cell drive train components. That means that the battery power train has batteries, an electricity charging system with no moving parts except the flap over the plug, a power management unit to move electricity across wires to the motor, and a motor. There are sensors, computerized controls and the like, but very few moving parts and very little that requires much maintenance. That’s born out by maintenance studies of pure battery electric vehicles.

A fuel cell vehicle is a battery hydrogen hybrid vehicle. It adds a sophisticated 700 atmosphere hydrogen tank or an even more sophisticated liquid hydrogen tank with pressure sensor and relief systems, a complex hydrogen fuel movement system which has to deal with very large pressure changes in the case of the pressurized tanks or very large volume and hence pressure changes as liquid hydrogen is warmed to gaseous form, very large thermal management challenges and hence thermal management sensors, actuators and components in both cases, an expensive and life-limited fuel cell which requires pure hydrogen and and clean air, an air intake and filtering system as a result and an exhaust system for moving the resultant water from the fuel cell out of the vehicle without freezing hence a heating solution.

This diagram of just the air management process, which isn’t required for battery electric vehicles remember, should make it clear that a fuel cell vehicle’s added components are non-trivial. There are many more points of potential failure and many more things that require scheduled maintenance.

The closest example is hybrid electric vehicles. The data from light vehicles shows that maintenance on the drive train costs a lot more on hybrid vehicles than on pure battery electric vehicles, about the same as internal combustion vehicles.

One of the things I criticized the International Council on Clean Transportation’s deeply flawed trucking study about last year was that they had significant maintenance cost improvements for hydrogen drive train trucks and none for battery electric trucks. In fact, they assumed that heavy duty, long-range trucks — the only segment where some organizations still hold out hope for fuel cells — would have very similar maintenance costs to battery electric after 2030, and equivalent maintenance costs to diesel trucks immediately.

The numbers are all in euros per 100 kilometers.

When I first reviewed it, I was scratching my head about giving the benefit of the doubt to maturation of hydrogen fuel cell trucks vs battery electric trucks. After all, fuel cell buses have been operating around the world in trials since 2000, and fuel cell fork lifts for longer. Battery electric trucks and buses are comparatively new.

But now I’m scratching my head about why everyone believes hydrogen fuel cell heavy vehicles will be low maintenance at all.

I’ve been collecting anecdotal data about maintenance costs. The Pau, France fleet operator made it clear when they ditched the hydrogen buses in 2023 after four years of operation that they had been very high maintenance, and that keeping them running was a constant challenge.

“The production station has more problems than expected and the buses have lots of very small breakdowns. As for me, I spend three quarters of my days there even though it is only one of 17 lines!”

Similarly, the Whistler, BC experience from a decade earlier found double the maintenance costs, per Ballard itself.

According to Burnaby’s Ballard Power Systems, which manufactures fuel cell engines, Whistler’s hydrogen buses cost $1.34 per kilometre to maintain, versus 65 cents per kilometre for diesel-powered buses.

Two bus operators, separated by a decade and an ocean, both had identical experiences with buses from different manufacturers. But still, anecdotal. If that was all the data, I would write it off to a couple of bad experiences.

But when a rail OEM sales executive for Stadler in Germany has this to say about his own products, I thought something was up.

“In addition, hydrogen fuel cells require significantly more maintenance than a batteries alone, requiring replacement within three years on average.

“Because of this and the hydrogen tank on board, the maintenance effort is of course more complex compared to battery trains,” Obst explained, adding that hydrogen trains also require a battery for back-up power.”

As a result, when I saw very low maintenance costs assumptions in the study I’m reviewing, I provided this material and suggested that assumptions of almost identical maintenance costs was inappropriate. The lead researcher pointed at the source, so I went to that. It was a German working group study, in the same effort as the study I assessed a couple of months ago.

The study, translated thanks to a very handy online webpage which is going to be sending me pleading emails to give them money forever now, was the 2020 Workshop Report Changing the Drive of Commercial Vehicles: Ways to Decarbonize More Difficult Trucks with a Focus on Electrification from the German National Platform: The future of Mobility effort.

I dove into that expecting to find a reference to studies and empirical data. What I found was that three researchers from two institutions — Wolfgang Schade of M-Five and Patrick Fieltsch and Heike Flamig of the Technical University of Hamburg had provided maintenance assertions without reference or citations. There was nothing in the bibliography that might explain them either. I couldn’t find any other studies in German that might have been the source, but Googling in German isn’t my top skill, so I may have missed something.

So we have ICCT, M-Five and TUHH all asserting what appear to be low numbers for maintenance and so far no data or studies backing them up.

I went back to the ICCT TCO study to look at their maintenance numbers, and it cites another 2023 publication by the lead author, so I went to look at that study. It points to a University of California, Davis paper from 2022 by Wang et al, Estimating Maintenance and Repair Costs for Battery Electric and Fuel Cell Heavy Duty Trucks.

Does it have data? No, no it doesn’t. It lists the reports it drew on, stated clearly that there was no data to draw on and that everyone was assuming that fuel cell trucks would be about the same as battery electric trucks or maybe a bit more expensive.

So far I’m half a dozen reports in on two continents in two languages and haven’t found anything except guess work. But I have two quotes from bus fleet operators, a vehicle type that is strongly adjacent and similar to heavy duty trucks with a high duty cycle, a decade apart making it clear that they very high maintenance costs and a quote from a train OEM executive who makes it clear that his fuel cell product’s maintenance costs are much higher as well. In fact, he says no one would buy it unless the request for proposal explicitly called for hydrogen trains and nothing else.

This led me to go and look at fuel cell bus maintenance data, with the hope that despite all of the failures that have been swept under the carpet in the 25 years that hydrogen buses have been trialed and abandoned in dozens of places around the world, someone would have actually captured some data.

And lo, California came through. As always with the USA, they publish everything about themselves, making data available for analysts like me to try to extrapolate to places with vastly lower budgets or any sense that everyone will care about them.

I found three studies of bus fleets in three different transit organizations in California,

This US OSTI study of a fleet of ten fuel cell buses in Oakland, California for the full year of 2020 found that the average maintenance for distance traveled was much higher than the maintenance costs for diesel buses, about 59 cents per mile vs 35 cents per mile. Incidentally, that was very close to the hybrid battery diesel fleet, which was at 62 cents.

This study from Southern California by NREL of of 10 fuel cell buses for 16 months found costs per distance traveled lower than the OSTI study at 42 cents per mile, but still higher than the 35 cents per mile diesel baseline. Notably, propulsion related maintenance was 37.3% of the total.

This NREL study covering six years of maintenance for fuel cell buses in Riverside County, the long-running Sunline County, Coachella adjacent city, found maintenance costs were 2.5 times higher for the fuel cell fleet than the older CNG fleet for the period, 56 cents per mile or very close to the first study.

A bit more searching found no other empirical data available in English on maintenance costs. I looked at a couple of hydrogen forklist papers but they didn’t break out maintenance or other costs in a useful way. As a note, almost all of the roughly 50,000 hydrogen forklifts are in the USA in distribution centers that received a lot of US DOE money for hydrogen refueling stations and initial forklift purchase. And as another note, 1.2 million battery electric forklifts were purchased globally in 2022 alone.

So now the data set is the following:

• Bus fleet studies from California totaling over eight years between three fleets found much higher maintenance costs than for a diesel baseline.
• Published articles with quotes from Whistler, BC and Pau, France fleet operators make it clear that maintenance costs for their bus fleets, both the 14 year old Whistler experience and the one-year old Pau experience were very high. A decade with zero movement is not indicative of a maturing industry.
• The Stadler executive on record as saying that maintenance costs are much higher for their brand new trains.

To me what appears to be clear is that there are a bunch of transportation researchers who are all guessing based on literally no evidence that clearly more complex and failure prone hydrogen trucks will have about the same maintenance costs as much simpler battery electric trucks, or maybe a little more expensive. Further, they are all assuming that they will be much cheaper to maintain than diesel trucks, where at least they have the transmission system to point to.

None of them appear to have gone to look at maintenance data for closely adjacent hydrogen buses where there is a 25 year history, or looked at rail operator statements, although that quote was fairly recent. None of them appear to have gone to OEMs that have run trials of hydrogen trucks and asked about maintenance experiences. None of them appear to have noticed the $100,000+ fuel cell replacement charge a Hyundai car owner had and started asking questions.

As a reminder, virtually all of these buses have Ballard fuel cells in them, technology that Ballard has been selling globally for over 25 years, with losses of $1.3 billion since 2000. This is not an immature technology, it just fails to commercialize at scale after every single trial.

Like the assumption of cheap green hydrogen, the assumption of low-maintenance fuel cell trucks does not stand up to the slightest of scrutiny. Road freight researchers in the 2010s made some baseless and low-ball assumptions and in the 2020s those assumptions are considered valid because they’ve been cited so often.

Wyloo Metals Pty Ltd., the private nickel producer owned by billionaire Andrew Forrest, is shutting down its Western Australian mines due to a sharp slump in prices for the key transition metal.

The mines near Kambalda will go into care and maintenance from May 31, the company said in a statement on Monday. Wyloo, which bought the mines only six months ago, informed BHP Group Ltd. that it won’t be able to fulfill a nickel off-take agreement that’s due to expire at the end of 2025, a spokesperson added.

Prices for nickel — used to make stainless steel and EV batteries — have slumped in the past year, mainly driven by a flood of cheap supply from Indonesia that’s threatening to disrupt the industry. Earlier this month, First Quantum Minerals Ltd. said it will halt mining at its nickel and cobalt operation in Australia and cut a third of the workforce in response to weaker metal prices and higher costs.

The closure of Wyloo’s Kambalda mines comes after BHP, the world’s biggest miner, last week warned it could be forced to write down the value of its nickel to mitigate the crash in prices.

Wyloo, which owns assets in Canada and Australia, last year also entered into a joint venture agreement with with IGO Ltd. to produce battery-ready materials at a plant near Perth. Despite the shutdown of the mines, it’s studying developing its own nickel concentrator in the Kambalda region, Wyloo said in the statement.

SEACOR Marine announced it will convert four of its platform supply vessels (PSV) to battery hybrid power in a move to enhance efficiency and slash emissions.

The Houston-headquartered marine transportation firm said on Thursday it has ordered containerized energy storage systems (ESS) from Norway’s Kongsberg Maritime for install aboard SEACOR Ohio, SEACOR Alps, SEACOR Andes and SEACOR Atlas.

The four 278.4-foot-long PSVs are all of Kongsberg Maritime’s UT771 CDL design and were built in China from 2018 to 2020. Each will be equipped for battery hybrid operation with the installation of a containerized Deckhouse ESS and associated switchboards and thruster control systems. The upgrade will also include a new Kongsberg Maritime K-Pos dynamic positioning (DP) system installed to replace the current DP system on all four vessels.

Retrofit work is expected to commence in December 2024 and wrap up by the second quarter of 2025. Once the installs are completed, more than 50% of SEACOR Marine’s PSV fleet will be hybrid powered.

John Gellert, SEACOR Marine’s Chief Executive Officer, said, “Our decision to expand our hybrid fleet aligns with SEACOR Marine’s core values of innovation and environmental stewardship and builds upon our record of leadership in adopting green technologies in the maritime sector. SEACOR Marine was one of the first offshore operators to install battery hybrid systems, and this announcement marks a significant step in our ongoing efforts to enhance operational efficiency and reduce the environmental impact of our fleet.

“These energy storage systems are an investment in the sustainable future of our fleet and our ability to meet the offshore transportation requirements of our clients worldwide. We are excited to offer our clients additional hybrid PSVs that operate efficiently through reduced fuel consumption and related operating costs, while also reducing greenhouse gas emissions.”

James Poulton, Kongsberg Maritime, Senior Vice President, Aftermarket Sales, said, “We see that by installing battery power, fuel consumption in DP operation mode on these vessels can be reduced by as much as 20%. In addition to batteries, the conversion will also feature a shore connection, enabling connection to power grids when in port, which greatly reduces the amount of engine running hours and emissions from diesel fuels. The key benefit of having battery power instantly available is to maintain the redundancy of the vessels’ power system, with less engines running. This is particularly useful when operating in DP mode, but also has its value in other operational modes.”

Beginning in February 2024 in Ulsteinvik, Norway, Kongsberg Maritime will also upgrade the SEACOR Yangtze—another UT771 CDL PSV built in China in 2018—with the Deckhouse ESS.