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<p>Lithium rates have surged by over seven times since May last year, creating challenges for the global electric vehicle (EV) battery supply chain.</p>
<p>The International Energy Agency (<a href="https://www.iea.org/" target="_blank" rel="noopener">IEA</a>) said cobalt and nickel prices more than doubled from March 2021 to May 2022, stressing the supply chain as battery demand increased. Russia supplied 20% of high purity nickel to battery manufacturers globally, and its invasion of Ukraine fuelled metal prices. Russia is also the world’s largest battery-grade (Class-1) nickel producer.</p>
<p>In its Global EV Outlook, IEA has suggested that robust mining and drilling measures will help the EV sector fulfill its metal needs to boost the transport electrification drive.</p>
<p style="text-align: center;"><img decoding="async" loading="lazy" class="aligncenter size-full wp-image-36000" src="https://mercomindia.com/wp-content/uploads/2022/05/Battery-Demand-Surges-in-All-Regions.png" alt="Battery Demand Surges in All Regions" width="1504" height="859" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Battery-Demand-Surges-in-All-Regions.png 1504w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Battery-Demand-Surges-in-All-Regions-300x171.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Battery-Demand-Surges-in-All-Regions-768x439.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Battery-Demand-Surges-in-All-Regions-650x371.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Battery-Demand-Surges-in-All-Regions-624x356.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Battery-Demand-Surges-in-All-Regions-600x343.png 600w" sizes="(max-width: 1504px) 100vw, 1504px" /></p>
<h6 style="text-align: center;">Source: IEA</h6>
<p><strong>Battery pack rates soar</strong></p>
<p>The IEA report notes that drill counts (number of active drilling rigs) for nickel and lithium have surged by over 50% and three times more, respectively, between 2020 to 2021. Such high prices have ultimately led to increased battery metal commodity rates.</p>
<p>The average battery prices globally fell by 6% to $132 per kWh in 2021, a slower decline than the 13% drop in 2020. The report estimates that with such continued high prices, the battery pack rates are likely to shoot up by 15% from the weighted average price in 2021.</p>
<p>Lithium demand doubled to 80 kt in 2021 compared to 2017, of which the demand for EV batteries accounts for 47%, up by 36% in 2020. While EV batteries are the dominant driver of demand for lithium, its availability is a concern as it is irreplaceable for Li-ion batteries, and there are no commercial substitute battery chemistries at a scale currently that meet Li-ion’s performance.</p>
<p>Automotive Lithium-ion battery demand reached 340 GWh in 2021, more than twice the demand in 2020, primarily driven by the increase in electric passenger cars, which observed a 120% surge in registrations last year.</p>
<p>The demand for cobalt was 170 kt in 2021, of which the EV battery share was 24%, up from 18% in 2020. The demand for nickel reached 2,640 kt in 2021, dominated by the production of stainless steel, of which the share of EV-related demand was 7%, up by 4% in 2020.</p>
<p>The IEA report says that while the governments in the U.S. and Europe have taken bold public sector initiatives to develop domestic battery supply chains, China has been assigned 70% of battery production capacity until the end of the decade.</p>
<p>Over half of global lithium, cobalt, and graphite processing and refining capacity is in China, followed by Europe, which supports over one-quarter of global EV production with 20% cobalt processing. With 10% of global EV production, the U.S. has a battery production capacity of 7%.</p>
<p style="text-align: center;"><img decoding="async" loading="lazy" class="aligncenter size-full wp-image-36001" src="https://mercomindia.com/wp-content/uploads/2022/05/Global-Distribution-of-EV-Battery-Supply-Chain.png" alt="Global Distribution of EV Battery Supply Chain" width="1504" height="740" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Global-Distribution-of-EV-Battery-Supply-Chain.png 1504w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Global-Distribution-of-EV-Battery-Supply-Chain-300x148.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Global-Distribution-of-EV-Battery-Supply-Chain-768x378.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Global-Distribution-of-EV-Battery-Supply-Chain-650x320.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Global-Distribution-of-EV-Battery-Supply-Chain-624x307.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/05/Global-Distribution-of-EV-Battery-Supply-Chain-600x295.png 600w" sizes="(max-width: 1504px) 100vw, 1504px" /></p>
<h6 style="text-align: center;">Source: IEA</h6>
<p>Japan and Korea specialize in raw material processing, and while the former’s cathode production capacity is 14%, Korea produces 15% of the global cathode used in EV batteries.</p>
<p><strong>Lithium extraction</strong></p>
<p>The IEA report stresses on direct lithium extraction (DLE) process, which is currently in the pilot stage globally. DLE relies on high selectivity technologies to extract lithium from complex brines and reject impurities while offering cost and lead-time advantages.</p>
<p>The report suggests remining from mineral waste to extract valuable metals from mine tailings, wastewater, and rock. According to IEA, nickel and copper mining tailings totaled 4 billion tons in 2017. Many start-ups like the Rio Tinto-backed Regeneration have started remining to derive the best resources from what is dumped as waste.</p>
<p>According to another IEA report published by Mercom, the sale of electric cars more than <a href="https://mercomindia.com/sale-electric-cars-doubled-yoy-2021/" target="_blank" rel="noopener">doubled</a> to 6.6 million in 2021 compared to 3 million in 2020, amounting to 9% of the global car market.</p>
<p>The U.S. Department of Energy recently <a href="https://mercomindia.com/us-funding-boost-domestic-battery-manufacturing/" target="_blank" rel="noopener">announced</a> $3.16 billion in funding to expand domestic battery manufacturing, and bolster domestic supply chains. It will also set aside a separate $60 million to support second-life applications for batteries once used to power EVs and new processes for recycling materials back into the battery supply chain.</p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://cms.mercomindia.com/author/gourav-mishra/" class="vcard author" rel="author"><span class="fn">Gourav Mishra</span></a></div><div class="saboxplugin-desc"><div itemprop="description"><div class="designboxt">
<p><img class="alignleft" style="border-radius: 50%;height: 50px;margin-top: -4px;border: 1px solid #00b451" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/WhatsApp-Image-2022-04-06-at-6.37.25-PM-1-1.jpeg" width="50" /></p>
<p><strong style="text-decoration: underline">Gourav,</strong> Staff reporter at Mercom India<br />
<a href="https://mercomindia.com/author/gourav-mishra/" target="_blank" rel="noopener">More articles from Gourav.</a></p>
</div>
<div class="authorboxn"><img class="alignleft" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/04/WhatsApp-Image-2022-04-06-at-6.37.25-PM-1-1.jpeg" width="89" height="102" /><a href="https://mercomindia.com/author/gourav-mishra/" target="_blank" rel="noopener">Gourav</a> is a staff reporter with Mercom India with over six years of experience in various roles with NewsX, The New Indian Express, IBTimes India, and U.S., Republic, and Analytics India Magazine. Gourav has a Master&#8217;s in journalism from Jain University, Bengaluru. <a href="https://mercomindia.com/author/gourav-mishra/" target="_blank" rel="noopener">More articles from Gourav Mishra</a></div>
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EV Battery Supply Chains Stressed as Lithium, Cobalt and Nickel Prices Soar: IEA

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