​Electric Cars And Their Inevitable Impact On Mining

They're seen as the clean, green alternative to the carbon monoxide emitting, fossil fuel guzzling cars of today. Certainly, governments around the world have taken this concept on board and are working towards ensuring electric cars become the norm rather than the exception. The UK and France plan to ban their sale from 2040. The Netherlands wants to do it even earlier – they're talking from 2025. The European Commission has a 30% by 2030 plan for reduction of vehicle emitted CO. China was also talking big and saying they wanted 5 million electric cars on their roads by 2020, a figure they've since modified down to a more realistic 2 million. 

Car manufacturers likewise are jumping on the bandwagon. From 2019, which is this year, Vovlo announced that all their new cars will be battery powered either completely, or partially. Other majors have likewise made ambitious announcements. VW and BMW intend to have at least 30 / 25 electric models respectively available in their showrooms by 2025. And so on.

Let's take a good look at the metals that go into an electric vehicle. Obviously, electric vehicles are battery powered. Those batteries use lithium and cobalt, amongst other metals. This has driven the price of those commodities up and increased interest in digging them out of the ground. Global lithium production rose from ~37,500 MT to 43,000 MT between 2016 and 2017. Not surprisingly, at least half the world's lithium output is owned by China courtesy of their 51% share of the Greenbushes lithium mine in Western Australia. They were also prepared to invest 4 billion US in Chilean lithium miner Sociedad Química y Minera (SQM) to give it a controlling interest in that company as well. Those 2 million new electric cars the Chinese government intends to have on their roads by 2020 require lots of lithium! China is also the world's largest producer of the lithium ion batteries needed to run electric cars.

Currently Australia and Chile between them account for 3/4s of the world's lithium supplies. Argentina is the 3rd largest producer but a long way behind the top 2 producers. Surprisingly, considering some of the world's largest lithium deposits are in China, the country only ranks 4th in terms of production. Zimbabwe rounds out the top 5. Batteries are not the only products that use lithium, although they do account for ~46% of it. The next biggest user is glass and ceramics (27%) whilst lubricating greases use 7%.

Another crucial mineral that goes into making the batteries required for electric cars is nickel. However, nickel is also used extensively in other processes, notably for making stainless steel. There are already a number of global producers. Currently the Philippines produces nearly a third of global supply, followed by New Caledonia, the US, Australia, and Finland.

Then there's cobalt, a common by-product of copper and nickel mining. It's used in the cathodes in lithium-ion batteries. It's also used in other industries and has military application as well. The world's largest producer by far is the Democratic Republic of Congo – the country produced 66,000 MT in 2017, a long way ahead of China's 7,700 MT. Canada, Russia, and Australia are the other top 5 producers.

Other important minerals used in other parts of the cars include rare earths, copper, and manganese amongst others; we covered some of them and their uses in a previous article.

What does the rise of the electric vehicle mean for the mining industry in general and, importantly, are they really as green as we've been led to believe?

For a start, electric cars require charging stations. If car manufacturers produce as many of them as they plan to, the world will need at least 40 million charging stations by 2027. However, before all these charging stations can be built, electricity grids need to be upgraded to cope with the additional demand. And so on. Much of the world's electricity is still powered by coal so will ramping up electrical car production be offset, at least in the short term, by increased coal consumption to generate the power to run them? Sure, green sources of power are slowly being phased in but will they happen fast enough to keep pace with the ambitions of electric car manufacturers? Some of those sources of power also use the same REE's needed for electric car manufacturing.

Furthermore, is the world equipped to deal with the mind-boggling number of batteries that will be produced as part of the electric car revolution? There is still no 100% environmentally safe way to recycle all the components in lithium-ion batteries. The issue of non-exhaust emissions also rears its head. This is the particulate matter that enters the atmosphere from things like brake wear, tyre wear, road surface wear, road dust and so on. Electric cars are heavier than internal combustion vehicles, which increases the amount of wear they produce, and hence the amount of non-exhaust emissions.

Then there are the reasons why some rare earths have been allowed to remain safely in the earth. Extracting them is dangerous, potentially toxic, expensive, and an environmental disaster waiting to happen. Some of them for example have to be extracted from highly radioactive ores as we explained in this article. Therefore, extremely tight environmental and safety regulations are required to mine them. In some countries where these minerals are, or have been mined, those regulations are either non-existent or extremely lax. China for example has been forced to close down a number of illicit REE mining operations due to environmental damage and health risks associated with them.

Other ethical and environmental considerations also plague the supply chain for the electric car industry. Well over half the world's cobalt for example comes from a country where child labour is commonplace, leading to serious ethical considerations. Some electric car manufacturers are investigating other types of batteries to those that rely heavily on cobalt. They're also looking at ways to effectively recycle the cobalt they have used. Not only will this help reduce supply shortages in the future, but it will also reduce reliance on supply from countries with less than stellar labour laws.

The world's major nickel producing country, the Philippines, was also forced to shut down at least 17 of its mines in 2017 after serious environmental and health concerns were raised over mining practices. Nickel is toxic to extract. It's a known human carcinogen when inhaled and for this reason makes the US's Hazardous Substance List. In most developed countries its use is regulated by O, H and S laws just like asbestos is, and we well know how toxic that is! Major electric car producer Tesla, who claims at least 70% of the nickel in its vehicles can be recycled, is nevertheless not open to discussions about where that nickel came from originally.

However, all these issues notwithstanding, there's little doubt that the electric vehicle industry is forcing mining companies to reconsider their portfolios and look at previously uneconomical REE commodities. It's also led to investment in mining companies on the part of major car manufacturers who are looking to ensure their supply chain of some of these minerals. Toyota for instance indirectly owns a share of Australian lithium producer Orocobre. Great Wall Motors, a Chinese car manufacturer, has invested in Pilbara Minerals, which supplies some of its lithium. Chinese interests own 51% of another Australian lithium mine in Greenbushes.

It's also brought about the development of alternative methods for mining some of previously nonviable and inaccessible deposits. The seabed around Papua New Guinea for instance is rich in copper, gold, cobalt, and manganese. This has led to interest in deep-sea mining. The next few decades will certainly be interesting in terms of new developments for some commodities.

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