Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
MINING.COM’s EV Metal Index increased almost fourfold from April 2020 but fell back from the record set in March as metals deployment in batteries eased and a slide in prices of cobalt and nickel used in the battery supply chain offset continued gains for lithium.
The EV Metal Index, which tracks the value of battery metals in newly registered passenger EVs (including hybrids) around the world, came in at $405 million in April, an increase of 374.8% over the same month last year.
The haul for the first four months is up 211% from January to April 2020 and is also higher than total business done during all of 2017, when average lithium and cobalt prices were substantially higher than today.
Total battery capacity of EVs sold during the month increased 223% year on year to just shy of 16 GWh, according to Adamas Intelligence, which tracks demand for EV batteries by chemistry, cell supplier and capacity in over 100 countries.
To produce the most accurate data, the monthly battery capacity deployed numbers in the MINING.COM EV Metal Index do not include cars leaving assembly lines, those on dealership lots, or in the wholesale supply chain — only end-user registered vehicles.
Cobalt and nickel deployment tripled compared to the same month last year. According to Adamas data the global sales-weighted average amounts of nickel per vehicle (including hybrids) increased 1% year on year in April.
That compares to a 8% decline in average nickel use the month before as nickel and cobalt free LFP-equipped models – particularly the popular made-in-China Tesla Model 3 – left showrooms in droves. From just a fraction before the LFP Model 3 launched, the technology has reached 15.7% market share based on Q1 2021 battery capacity deployed.
Volkswagen has said LFP would be its go-to battery for its entry level models and world no 2 EV maker BYD is going all-in on LFP batteries for its own range. BYD does provides other carmakers with NCM batteries, most notably for Ford’s popular Mach-E crossover which went on sale in China in April.
Another sign of increasing demand for nickel rich chemistries is the fact that lithium hydroxide is once again trading at a premium over lithium carbonate following a period that saw the historical price relationship inverted, according to Benchmark Mineral Intelligence.
According to Benchmark, an average of 6.1 GWh of NCM and NCA (nickel-cobalt-aluminium) cathode batteries were produced every month in China year to date, compared with the two-year average across 2019 and 2020 of 4.3 GWh per month.
“Downstream demand from Japan and South Korea supports this notion, with lithium hydroxide exports out of China to the rest of Asia increasing by an average of 5% per month so far in 2021 compared to average monthly exports in 2020,” according to BMI.
Average cobalt use in March was up 5% year on year with a 198.7% jump in total tonnage deployed of the metal that provides thermal stability for high nickel batteries. While Tesla dominated all other categories, the top user of cobalt was German automaker Mercedes-Benz.
Nickel sulfate prices have wiped out all its 2021 gains while cobalt used in the battery supply chains, according to Benchmark, declined to an average of $55,000 a tonne for the month, down more than $10,000 from its peak in February this year.
Average lithium use was up 15% year over year while total material deployed was up 240% over last year with carbonate making up 55% of the total versus hydroxide. Lithium prices continued to recover, hitting a two-year high of $11,664 a tonne (LCE) in April.
As a percentage of the overall index value, lithium represents 28.5% up from a low of 20% in August last year.
In April 2021, just over 14,000 tonnes of synthetic and natural graphite were deployed globally in batteries of all newly-sold passenger EVs combined, a 233% jump over the same month last year.
Graphite prices have held steady above $700 a tonne in 2021, after spending all of 2020 below that mark and hitting a low of $644 in September.
