The 4 key drivers of change in the battery raw materials industry

What are the key themes impacting the battery raw materials (BRM) industry? We take a deep dive into the headlines that are front of mind for BRM market participants today.

1. BRM supply and demand imbalance

The demand for BRM from automakers, battery producers and energy storage system providers has grown significantly in the past few years. Supply chain challenges, shortfall in global mining capacity, lack of upstream investments and the time taken for materials to come online are just some of the factors affecting the supply of BRMs.

Where is the supply going to come from to meet this growing demand? Innovative solutions such as direct lithium extraction (DLE) technologies have increased in popularity to help produce lithium quickly and sustainably.

With the shortage of supply in mind, many original equipment manufacturers (OEMs) are also taking steps to secure future supply to meet their goals by doing direct deals with miners and off-take agreements with junior miners.

2. Price volatility

After a price slump in 2018, lithium prices increased by more than 400% in 2021 and continue to surge. The rise in prices in BRMs has been driven by strong demand from the electric vehicle (EV) market and residual impacts from Covid-19.

Some other risk factors contributing to price volatility include:

• Geopolitical implications: Russia-Ukraine conflict resulting in tightness in global metals markets
• Pandemic-induced restrictions: localized lockdowns in China in May 2022 impacted both BRM buying appetite and EV production, including a 20-50% decrease in cathode production
• Logistic obstructions: copper and cobalt exports out of Democratic Republic of Congo facing challenges with trucking services

3. ESG and battery recycling

Battery recycling has been propelled into the spotlight in the BRM industry, driven by:

• The race to ensure sustainability
• The need to create a circular economy
• The demand to be less reliant on dominant BRM suppliers for imports

According to Li-Cycle, the global lithium-ion battery recycling industry could have more than 3 million tonnes of material available for recycling by 2030.

Hydrovolt – the largest EV battery recycling plant in Europe – has begun commercial recycling operations at its Fredrikstad plant in Norway as a response to the worsening lithium supply deficit.

A lot of projects are currently in their infancy and more investment is required to keep driving the development of battery recycling technologies.

4. EV battery innovations

The heightened interest in EVs has triggered more innovations in EV battery technology. Creating efficient, grid-scale energy storage infrastructure and advancing battery storage technologies are just some of the challenges faced on the road to scaling up EVs.

With bottlenecks in BRM supply and record-high prices for nickel, cobalt and other core BRMs in mind, it has highlighted the decisions battery makers need to make in the long-term when it comes to battery chemistries and whether to pivot towards specific types of batteries, such as lithium iron phosphate (LFP) batteries.

Visit our dedicated battery raw materials page to discover more insights on the factors at play in the industry in 2022 and beyond.