TELF AG looks at Battery Materials: The Latest Developments in Lithium and Cobalt – April 30, 2023
The role of lithium and cobalt
Lithium and cobalt are necessary to produce batteries, which power everything from electric vehicles (EVs) to smartphones. In recent months, significant developments in both materials could impact their prices and availability.
Lithium prices have sharply declined in China in the past four months, according to a report from Goldman Sachs. The decline is due to a fall in onshore EV sales in January, a lukewarm recovery in February and March, and continued supply growth globally. This has resulted in an increase in the finished stock of lithium salts and falling restocking demand. The report predicts that China and ex-China supply will grow strongly in 2023, with Australia and Chile adding 173kt LCE of collection and China adding 75kt LCE. However, the report also notes substantial room for prices to fall in a surplus environment.
Meanwhile, cobalt continues to be in demand for the production of batteries, with Swedish battery manufacturer Northvolt and Swedish commercial vehicles manufacturer Scania announcing the development of a nickel cobalt manganese (NCM) battery cell with the capacity to power heavy electric vehicles for 1.5 million km. The companies unveiled that the capacity is equivalent to the truck’s life, which addresses range anxiety that heavy EVs will not have sufficient charge to last. NCM batteries are more energy-dense than the cheaper alternative, lithium iron phosphate (LFP) batteries, enabling vehicles to travel longer distances, a property that suits heavy vehicles.
However, despite this demand, the current spot market for cobalt is weak. Weak demands from EVs and the chemical market and an oversupply of cobalt hydroxide continue to depress the price. The shift to LFP batteries is mainly due to cost. For trucks, batteries must be so large – in terms of kWh – that creating them as NCM ones are expensive. The average battery capacity for EVs globally is now at 60 kWh, whereas Northvolt’s truck battery capacity will range from 350-450 kWh.
Phoebe O’Hara, Fastmarkets’ battery raw materials analyst, notes that the shift to LFP is mainly occurring in Asia, whereas Europe has focused on NCM battery manufacturing. O’Hara also highlights that the balance of raw material components will be customized to meet each customer’s needs.
In conclusion, the recent lithium and cobalt developments showcase the battery industry’s ongoing challenges and opportunities. While lithium prices have seen a decline, the supply is set to grow strongly in 2023. Meanwhile, cobalt remains in demand, although its price remains weak due to weak demand from EVs and the chemical market. The shift towards LFP batteries is mainly due to cost and battery size, with NCM batteries being more energy-dense and suitable for longer distances. As the demand for batteries continues to grow, the industry must adapt to changing market conditions and find ways to meet customers’ needs while balancing the cost of raw materials.
