Successful Electrification May Require Cooperation with China as the Fight Over Battery-Grade Materials Ramps Up

Battery-Grade Materials in Short Supply

        Due to China’s growing control of the world’s supply of battery-grade materials, it’s possible nobody will be successful transitioning to EVs without having some type of cooperation with China.

Image from Tesla’s announcement of the beginning of construction on their in-house lithium refinery in Corpus Christi, Texas. Image via Tesla [linked].

Tesla: Too Little Too Late?

         In May 2023 Tesla started building their $375 million lithium refinery in Texas, expected to be completed in two years. This comes at a time when almost all precious metals mined domestically are shipped to China to be refined into battery-grade materials. With its relative monopoly on processing aside, China is well ahead of the competition in the EV battery industry in terms of establishing and securing itself a steady supply of these materials.
            According to a recent New York Times article, China owns most of the cobalt mines in Congo (41% of the world’s scarce supply), owns the most mining for lithium, and will be the largest controller of nickel soon.
          So amidst China’s market domination and the related deglobalisation of new energy supply chains, the U.S. is still looking to secure its place in the industry to ensure that its own supply of battery-grade materials doesn’t depend on China, a nation with which our diplomatic ties are, at best, tricky. Tesla’s lithium processing facility is a major step towards that, albeit just one.
          Venkat Srinivasan, Former Director of the Argonne National Library’s Argonne Collaborative Center for Energy Storage Science, takes an honest assessment of the U.S.’s current situation,

“Where is the supply? We don’t make electrode materials. We don’t make materials that go into the rest of the battery. We don’t process the minerals. We don’t even mine them.”

           Lithium has widely been dubbed the “new white gold”, or in some cases, “the new oil”; dissimilar to oil, lithium batteries can be used, reused, and recycled.         

          So while we are immensely behind in terms of securing our own supply of battery materials, some argue that we should switch our focus to the processes necessary to recycle these materials for reuse, back into battery-grade materials.
          Of course, in order for this to come to fruition it needs to become an economically viable pursuit. For now, the scarcity of these materials alone does not make it make sense. Instead, the focus is shifting to interventions that may make battery recycling more profitable. The California EPA formed an advisory committee in early 2022 that explored and later published a piece on how to improve U.S. Lithium-ion battery recycling rates.
          According to their policy recommendations (page 36), the transportation of these materials is estimated to be between 40-60% of the EOL costs. Their proposed solution is to create a collection system “with strategic infrastructure that enables batteries to be regionally accumulated prior to transport” (36). This solves two issues: transport becomes more cost-effective and transport-related emissions are reduced.
          This solution also solves another pertinent issue in the world of battery recycling: responsibility. The California EPA’s working group highlights how complicated the second-life industry is. There are many players in this space with unclear boundaries on where their work begins and ends. A centralized battery recycling facility might be what dealerships, auto-dismantlers, insurance auctions, and scrap-metal recycling facilities need in order to begin working together.

*SHiFT Enters the Chat*

         SHiFT has begun the process of building collaboration and trust between different actors in the industry and part of the motivation behind this is to build the foundation for a circular recycling system for all parts of a vehicle. Good things happen when skilled individuals work together.
          All in all, the business of battery making has huge capital costs and thin profit margins. If the upfront capital costs can be avoided via the use of more recycled materials there is a real opportunity to make electrification cheaper, and therefore more accessible.
          Getting ahead of full-scale electrification and setting up a more circular economy before these vehicles reach their EOL points might just be the only way left for the U.S. to secure themselves a supply of the materials, namely the precious metals, necessary for EV production at scale.