Battery Metals

A forecast surplus of copper going into 2024 has suddenly all but disappeared.

The next couple of years were supposed to be a time of plenty for copper, thanks to a series of big new projects starting up around the world. The expectation across most of the industry was for a comfortable surplus before the market tightens again later this decade, when surging demand for electric vehicles and renewable energy infrastructure is expected to collide with a lack of new mines.

Instead the mining industry has highlighted how vulnerable supply can be — whether due to political and social opposition, the difficulty of developing new operations, or simply the day-to-day challenge of pulling rocks up from deep beneath the earth.

In the past two weeks, one of the world’s biggest copper mines was ordered to close in the face of fierce public protests, while a slew of operational setbacks has forced one of the leading miners to slash its production forecasts.

The sudden removal of around 600,000 tons of expected supply would move the market from a large expected surplus into balance, or even a deficit, analysts say. And it’s also a major warning for the future: copper is an essential metal needed to decarbonize the global economy, which means mining companies will play a key role in facilitating the shift to green energy.

While the price reaction to the supply disruptions has so far been muted — amidst ongoing worries about China’s property sector — any sign of demand recovery would hit a tight market.

Last week, Panama’s government formally ordered First Quantum Minerals Ltd. to end all operations at its $10 billion copper mine in the country. The order followed weeks of protests and political wrangling that came to a head when the country’s Supreme Court invalidated the law that underpinned its mining license. The giant Cobre Panama can produce about 400,000 tons of copper a year.

As the market was digesting the news that one of the biggest mines was closing (at least for now), Anglo American Plc delivered its own production bombshell on Friday with the announcement that it will slash production from its flagship copper business in South America.

While problems at its platinum and iron ore mines in South Africa were well publicized, the copper cuts caught investors off guard, sending the company’s shares plunging by 19%. Anglo has reduced its copper production target for next year by about 200,000 tons, essentially removing the equivalent of a large copper mine from global supply. Production will fall even further in 2025.

BMO Capital Markets, which was forecasting a large surplus of refined copper next year, now sees a small deficit instead. Goldman Sachs Group Inc. — which has been much more bullish on copper and already forecast a deficit of refined metal for 2024, now sees that shortfall ballooning to more than half a million tons. Jefferies also now expects a major deficit next year.

“The supply cuts reinforce our view that the copper market is entering a period of much clearer tightening,” Goldman analysts including Nicholas Snowdon said.

The expectation for a looser market in the near term has weighed on prices for much of this year, leaving copper drifting sideways. In early October, the International Copper Study Group said it expects a surplus of 467,000 tons next year — its largest forecast for a glut since 2014.

Live copper inventories on the London Metal Exchange had surged since mid-year to a two-year high, but have now retreated for three straight weeks.

“Disruptions have significantly increased, and a market deficit is now increasingly likely,” said Jefferies. “We could be at the foothills of the next copper cycle.”

A New Zealand-based startup is using woodchips to make synthetic graphite that can be used in EV batteries.

CarbonScape produces its alternative graphite by heating the waste from timber making, through a process known as pyrolysis, to create biochar, a carbon-rich material. The material is then milled and transformed into a raw form of graphite, which the company says is “a more sustainable option.”

“Our mission is to decarbonize the battery industry,” CarbonScape CEO Ivan Williams told The Wall Street Journal.

“That solves some other problems, too, including localizing supply chains,” he added.

Producing a viable alternative to graphite is increasingly important for Western nations as they seek to reduce their reliance on Chinese-made EV batteries.

Currently, China is one of the biggest producers of the LFP — lithium, iron, phosphate — batteries, which many EVs run on, and “up to 90% of the EV-battery supply chain relies on China,” Morgan Stanley analysts said in a July report.

This dominance of the supply chain allows China to make batteries cheaper than its rivals and subsequently offer lower prices.

But with tense Sino-US relations in recent years, Western nations are looking for alternatives to avoid any potential future disruptions to supply chains.

But some critics have cast doubt over CarbonScape’s idea, saying it requires too many woodchips and isn’t as cost-effective as graphite, per The Journal.

Nevertheless, the Kiwi startup is gaining international attention as global EV production expands. CarbonScape secured $18 million in funding from European forestry products company Stora Enso earlier this year, opening up new supply lines to Europe, The Journal reported.

“This investment represents a strong statement of support for sustainable sourcing of battery materials for global decarbonisation,” Williams said, per Reuters.

Hong Kong-based battery maker Amperex Technology has also invested in the company.

Graphite is a critical mineral in the US and the European Union, and officials hope to encourage more local mining production.

CarbonScape did not immediately reply to Business Insider’s request for comment, which was made outside of normal working hours.

Gene Berdichevsky was the seventh person hired by Tesla in 2004 and was the leader of the battery team for the  Roadster battery system. In 2011, he left Tesla to co-found Sila with Tesla colleague Alex Jacobs and Gleb Yushin, a materials science professor at Georgia Tech.

Sila is planning to supply its Titan silicon powder to battery makers like Panasonic that will replace all or part of the graphite used for the anodes in traditional lithium ion batteries. The silicon powder has several advantages. With it, EVs could soon be able to travel up to 500 miles without stopping to charge. When the need does arise to recharge, the Sila batteries could do so in about 10 minutes. Best of all, using silicon powder from Sila does not require new manufacturing techniques and bypasses China, which currently supplies 96% of the purified graphite used by the world’s battery makers.

Panasonic produces  about 10 percent of all EV batteries and its primary customer in the US is Tesla. This week Panasonic said it will use US made silicon powder from Sila in some of the lithium ion batteries it manufactures. Last year, Sila signed a supply agreement with Mercedes-Benz for its new long range G Class electric SUV which is expected to debut in 2025. Mercedes led the  Series E funding round for Sila in 2019.

The Sila Silicon Powder Anode

According to Wired, Sila’s Titan Silicon anode powder consists of tiny particles of nano-structured silicon that replaces graphite in traditional lithium ion batteries. “It took us 12 years and 80,000 iterations to get to this point. It’s sophisticated science,” Berdichevsky says. Compared to graphite, silicon stores up to 10 times more energy, so using it instead of graphite for anodes — which release electrons when a battery discharges — can significantly improve a battery’s energy density.

However, the material swells during repeated charging, with the resulting cracks radically reducing battery life. The Sila technology allows for this expansion by using nano-scale carbon “scaffolding” to keep the silicon in check. “Titan Silicon is a nano-composite material,” says Berdichevsky. “It’s like raisin bread, where the raisins are the silicon, and there’s the squishy matrix around the raisins with a big outer rind on the particle itself. The rind holds the space, and the bread moves aside when the raisins expand. The scaffold is not holding the silicon, it’s accommodating the expansion.”

The patented scaffolding process involves silicon-derived silane gas infiltrating custom carbon lattices. The resulting micron scale powder is then shipped to battery makers. “We can replace anywhere from 50 to 100 percent of the graphite in lithium-ion batteries,” Berdichevsky claims. A full replacement could deliver a 40 percent increase in mileage for a typical EV and reduce the time it takes to get to an 80 percent charge to about ten minutes.

Sila says that Titan Silicon is about five times lighter than graphite and takes up about half the space when fully charged. In a press release announcing the agreement with Sila, Panasonic said it has a goal of increasing the volumetric energy density of its batteries to 1,000 watt-hours per liter by 2030.

“That’s a very high metric,” says Berdichevsky. “The best batteries in the world today are right around 740 watt-hours per liter, and those are the same numbers that solid-state battery developers claim that they can reach. We’re saying we can soon reach those levels with technology [that] is here now.”

Graphite is the world’s default anode material, present in almost every lithium-ion battery and consisting of up to 60 percent of a battery’s volume. According to the International Energy Agency, about three-quarters of all EV batteries are currently made in China. Mining consultancy Benchmark Mineral Intelligence estimates that China produces 61 percent of the world’s naturally occurring graphite and refines 98 percent of finished graphite material.

Sila Scaling Up Silicon Powder Production

Since 2017, Sila’s anode powder destined for consumer electronics has been made in a pilot facility at the company headquarters in Alameda, California. In order to produce silicon powder in the quantities needed to make EV batteries at scale, the company is now configuring a 600,000-square foot former fiberglass factory in Moses Lake, Washington.

That area has an abundance of hydroelectric power available. Berdichevsky says European customers want battery materials that are manufactured using renewable energy. The EU now requires every EV battery destined for use in Europe to have a “battery passport” — a label that declares its carbon footprint. Such “battery passports” digitally track batteries and their materials through the supply chain.

There are also supply chain requirements in the Inflation Reduction Act of 2022. To qualify for EV subsidies, battery minerals must be sourced domestically or from allies. The IRA mandates that 40 percent of battery materials be sourced from the US or approved countries starting this year, rising to 80 percent from 2027 onward.

The IRA also prohibits using critical minerals, battery materials, and other components from “foreign entities of concern.” “If you use any material that comes from China in your batteries, then your customers will miss out on a $7,500 tax credit,” says Berdichevsky.

The access to hydro power has attracted other battery companies to Moses Lake. Just a mile from the Sila factory, Group14 Technologies has broken ground on a new factory that will make a similar silicone powder for Porsche, which led a $614 million funding round in Group14 last year. That factory is expected to begin operations in 2024 and produce enough of its SCC55 anode powder to make batteries for 200,000 EVs annually.

“There are companies that have partnerships and collaborations, but they’re all still in development,” claims Berdichevsky, “while we’re ready for scale production manufacturing.”

Jay Turner, an environmental studies professor at Wellesley College, tells Wired large scale domestic manufacturing of new EV battery technologies is an important development. “It marks an important break with history. In the past, the US has been a leader in advanced battery research but much of the actual manufacturing has taken place abroad. It is exciting to see US-developed research being scaled at US factories. Sila and Group14 both look well positioned to scale.”

The Takeaway

It’s hard to be King Of The Mountain. China may have a stranglehold on graphite production today but how long will it be able to hold onto that position? The simple answer is to stop using graphene and start using something else — like silicon powder. That’s not easy, as the research by Sila shows, but it is possible.

We reported recently on a company that plans to make battery grade graphite from wood chips. There are thousands of researchers in hundreds of labs working on making better, more powerful, less expensive batteries. As we say around the fusion powered fire pit at CleanTechnica, the batteries that will power our electric cars and trucks in 2030 haven’t been invented yet.

China may dominate the industry today, but that is changing rapidly thanks to policy initiatives in Europe and the US. Relax, people. Everything will be fine.

Investments in lithium-ion battery recycling, especially in the electric vehicle (EV) battery sector, have been considerable in the early years of this decade.

How much capacity is required and where it is best located was among the topics of discussion at the Asia INTL Li-ion Battery Recycling Summit 2023, held in Singapore in early December.

Dr. Michelle Lynch, CEO of United Kingdom-based research and consulting firm Enabled Future Ltd., predicted a medium- to long-term future with a consolidated lithium-ion battery recycling sector.

She said her background in the chemical industry—a highly consolidated one—may be one factor why she tends to predict such an outcome.

Having access to and being able to afford the best technology provides one reason, Lynch said. Extracting 98 percent of the recyclable materials from a stream of batteries rather than 95 percent can be the type of competitive advantage for one company to outlast another.

“It will be that company that can [extract] that extra half-percent” that will survive in the long term,” she said. As well, she said the winners will produce “the most output for the least cost.”

Lynch said repair, reuse and repurposing applications might provide greater opportunities for smaller players, preventing the EV battery market from having 95 percent of its capacity in the hands of a relatively small group of companies, which is how she characterized the chemical sector.

Two other speakers at the summit said relatively small or modular systems provide opportunities for companies of all sizes to remain in the EV battery recycling sector.

Myriam El Kara, founder and director of Singapore-based Sterling Acumen Pte Ltd., said lithium-ion battery recycling offers substantial risk to any parties involved, in part because of metals price volatility.

The metals and minerals sector consultant predicted access to end-of-life EV batteries—whether to repurpose them or recycle the metals content—“is going to be key to survival in the industry.”

Reverse logistics provide another challenge, El Kara said, as does the risk of investing in the wrong technology. For the latter, she urged attendees to build a resilient and adjustable recycling model and to explore modular systems.

El Kara portrayed a global imbalance in battery metals and materials, with China having a preponderance but the European Union having just 20 percent of what it needs in terms of lithium-ion precursor active cathode materials (pCAM). That circumstance means recycling capacity in the EU and North America will at some point become critical.

Another pro-modular voice at the conference was a provider of such systems: Leon Farrant, co-founder and CEO of Singapore-based Green Li-ion.

The modular systems made by Green Li-ion can recycle 730 metric tons to 3,000 metric tons of lithium-ion and lithium-iron phosphate (LFP) batteries, Farrant said. The hydrometallurgical systems produce battery-grade anode materials.

“It’s important to be modular,” Farrant said, noting Green Li-ion systems offer a low capital expenditure (capex) but high-technology system to smaller and medium-sized players in the market.

He also said it offers a way to cut down on reverse and forward logistics costs and arrangements and any potential regulatory hurdles along the way. “Let’s stop shipping [end-of-life] stuff around the world; it’s just not required,” he said.

The Asia INTL Li-ion Battery Recycling Summit 2023 was organized by Shanghai-based Global Decision Maker Management Consulting Ltd.

Iron ore fell after a widely-watched government policy meeting in China finished without any major new stimulus pledges.

The steel-making staple lost as much as 2.9% in Singapore. The Communist Party’s annual economic work conference said industrial policy would be the top priority next year, disappointing investors who had been looking for more measures to support the country’s ailing economy.

The policy plans will be a letdown to anyone who had hoped to see China shift gears to revive growth and confidence with massive stimulus in 2024, according to Eric Zhu, an economist at Bloomberg Economics. The tone of the comments on macro policy remained accommodative, but with few hints of a more aggressive stance, he said.

Iron ore is still near the highest since February after rebounding over the past few months on a series of moves by Beijing to boost infrastructure spending. However, signs that authorities won’t be doubling down on that approach are dimming the outlook for next year, particularly as the Chinese economy struggles with deflation.

Optimism over stimulus has been running too high, and it’s likely that iron ore prices will retrace in the first half of next year, said Liu Jialiang, vice president of research at Cofco Futures Ltd.

Iron ore traded 2.8% lower at $132.30 a ton as of 12:42 p.m. in Singapore. Futures in Dalian lost 2.7%, while steel contracts in Shanghai declined at least 2.1%. Among base metals, copper dipped 0.4% to $8,322.50 a ton on the London Metal Exchange. Zinc declined 0.6%, while aluminum slipped 0.1%.

Panasonic Energy Corporation announced a partnership with Sila, gaining access to its Titan Silicon, a nanocomposite silicon negative electrode.

Panasonic is a leading battery supplier worldwide with partners like Tesla, Mazda, and Stellantis. Sila is a next-generation battery materials manufacturer that debuted Titan Silicon during WHOOP 4.0 in 2021.

Panasonic plans to produce Sila’s anode material in its Moses Lake, Washington facility, qualifying it for tax credits under the Inflation Reduction Act. Titan Silicon is expected to optimize the Japanese supplier’s lithium-ion batteries. Another upside to Titan Silicon is that it produces significantly less CO2 per kWh than graphite.

Sila is the first company to launch a next-generation anode material to the market, providing an alternative to graphite anodes. Titan Silicon is designed for high-volume production and high performance. Panasonic aims to increase the volumetric energy density of its batteries to 1000 Wh/L by 2030-2031 to meet the expanding demand for electric vehicles.

“We believe that by combining Sila’s innovative battery materials with our advanced cell production capabilities, we can help accelerate the adoption of EVs by addressing concerns such as range anxiety and charging times,” says Shoichiro Watanabe, Vice President of Panasonic Energy.

The battery materials manufacturer estimates that Titan Silicon can increase the range of EVs by 20% and is currently in the development stage to double that range estimate. Sila also states that Titan Silicon’s nanocomposite silicon material can reduce battery charging times. The aim is to reduce charging time to 10 minutes.

“Panasonic is a technology-leading battery manufacturer in the world, and we are actively working to push the boundaries of performance. We are optimizing Titan Silicon to help achieve this vital goal. We look forward to working together,” said Gene Bell, Co-Founder and CEO of Sila.