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Speaking at the Building North America’s Sustainable EV and ESS Supply Chain panel during Fastmarkets 17th Lithium Supply & Battery Raw Materials Conference that ran between June 23 and June 26 in the US state of Las Vegas, panelists highlighted the need to build cathode and precursor cathode active material (pCAM) capacity in the US.
While the past few years have seen increased investment for cell manufacturing, the current 400 gigawatt-hour (GWh) of battery demand in North America that translates roughly to between 600,000 and 700,000 tonnes per year of cathode demand, “which hardly exists in the United States and Canada,” necessitating the importing of pCAM material into the region, according to Ashish Patki, Rio Tinto’s business development and market intelligence director.
Besides the need to build cathode and precursor capacity in North America, the US also needs to ramp up recycling capacity, Tara Berrie, battery cell materials and rare earth director at Rivian, said.
“I think cathode and recycling [go] hand in hand; [the US] needs to create the ecosystem and the next step after the cell,” Berrie added.
Financing is another issue in front of sustainable EV and ESS supply chains in North America, according to Gary Godwin, vice president of critical minerals at KBR.
“[The biggest challenge] is ensuring that a project has the correct structure, approach and de-risking in order to ensure [backing from financiers,]” Godwin said.
“Especially for small- to medium-sized developers, [it] is ensuring that their projects are correctly developed in a stage-gate approach, and you have to de-risk the project as you go through those stage-gates,” he added.
The challenge is getting financiers to invest in the field, while a stage-gate approach that requires relatively small capital investment in the early stages of a project, creating the appropriate flow scheme that de-risks the project, offers a solution, according to Godwin.
The biggest bottleneck in front of scaling pCAM and cathode active material (CAM) production in North America is cost competitiveness, according to the panelists.
The evolving cathode chemistries, alongside differences in consumer behavior between regions, affects the cost competitiveness of CAM production, making building cathode capacity in Asia much more cost-competitive than in Europe and North America, according to Patki.
“I think the cost of production is absolutely critical,” Godwin agreed.
He said that direct lithium extraction (DLE) and processing geothermal waters and oilfield brines would help bring down overall costs and could make producing lithium carbonate in the US more cost effective, eliminating the need for long supply chains and opening the door for domestic production.
Technical know-how is another factor impeding the development of domestic CAM capacity and the US needs to boost innovation to achieve this.
“There’s a reason why you can count on one or maybe two hands, the number of scaled globally dominant cathode or pCAM producers and it’s because it’s extremely difficult to master,” Chris Berry, founder and president of House Mountain Partners, said.
“If we are going to build something unique in this country and scale it and again try and compete on cost, it’s not going to come through trying to find the lowest cost materials or what have you. It’s going to come from innovation,” he added.
The current tariffs that make raw materials for CAM production more expensive is another factor impeding build-up of cell capacity in the US, according to Berrie, who said making energy and acids used in the midstream domestically available was essential.
“A relatively new factor that has sort of encumbered the development has been the tariffs,” she said, adding that while tariffs increase operational costs due to increasing the price of imported importing equipment increases the mainstream’s “CAPEX astronomically.”
“So, when the CAPEX is impacted and the OPEX is impacted, it makes it very unattractive jurisdiction.”
Panelists agreed that there are tremendous growth opportunities in the supply chain, but some challenges remain.
Among them is the real interest rates that make borrowing more onerous for businesses, the lower battery metal prices, and lack of policy certainty which makes it difficult for investors to make a decision, according to Berry.
“If there were some policy certainty, even if you knew that tariffs were going to go up by 25% or 30% or 50%, that would be a one-time shock to the cost structure for a lot of these projects, but at least you could then [make] a deal that made sense for all involved,” he said.
An opportunity is onshoring the know-how through partnerships with Chinese companies that lead the CAM field, such as the Ford-CATL battery plant under construction in the US State of Michigan that will be using licensed CATL technology, according to Berry.
Collaboration with China is needed for the US industry to stay competitive, the panelists said.
“[The trade between the US and China] is a $500 billion a year relationship and I don’t even know if it’s feasible to unwind that and completely break it off,” Berry said, adding: “With respect to the EV supply chain, I just think why wouldn’t we try and find a way to selectively partner and leverage each other’s strength?”Collaboration with China in many areas would help both the supply chains and would be necessary for the US EV and ESS manufacturing, Patki agreed.
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