Dig This: The Shift To EVs Requires A Massive Expansion Of Battery Metal Mining

The transition away from fossil fuels will likely cause shortages of some key metals used in electric vehicle batteries. According to industry experts, demand for EV batteries will increase to tens of millions of units per year in the years to come.

A projected sixfold surge in demand for batteries for electric vehicles over the next decade means up to 384 additional mines may need to be built. The number of new mines would only be cut to 336 by the increase in battery recycling.

The industry needed to invest $100 billion five years ago to avoid an extreme cliff, according to Brian Menell, chairman and CEO of TechMet. The pain is going to get worse over the next two to three years. From a constrained supply of battery metals, that pain is going to grow over the next 5 to 8 years.

Billions of dollars have been invested in new production lines for electric vehicles over the past two years. The hard part is done. Ensuring adequate supplies of metals and minerals to make batteries means that automakers need to either become skilled commodity traders or partners with firms that are. The market prices for critical materials are already going up. The metal hit a new high of $71,315 per metric ton on September 16.

In order to meet its goal of selling only electric vehicles by 2035, General GM has been especially aggressive this year in lining up supplies from multiple sources, including from South America and from Canada. The company thinks it has what it needs for the time being.

Mary Barra, chair and CEO of GM, said in the company's earnings call in July that all battery raw materials were secured to support the company's goal of 1 million units in annual capacity in North America in 25 years. The full cathode anode material is included.

We'll need to mine more if we want to recycle our way to 500% demand.

By the end of the decade, the company says it will be able to make two million vehicles annually, ten times the current level.

It will take close to two times the current global annual supply to produce 20 million electric cars by the year 2030. China is an important supplier of battery materials for the company.

Menell said thatTesla buys 85% of their inputs from China. China could close down the company in a matter of weeks if there was any change in the company's relations with the government there.

The company didn't reply to the request for comment.

For more on battery minerals, see California's lithium rush for EV batteries.

Adding new mines will take time and can cause environmental damage, such as pollution from chemicals used in some mining operations and pollution from the residual materials left after precious metals have been removed. GM and TechMet are investing in projects near the Salton Sea that will pull the silvery metal from hot volcanic brine that is already being used to power renewable energy plants. The amount of lithium that can be found in that part of California is huge, but the process of getting it from the brine is still experimental.

Moores says we won't fulfill demand by 2035. The miners are getting the material out of the ground at a slower rate than the EV industry needs. Demand for electric vehicles will not be satisfied until we enter the 2040s, even if this decade improves.

Expansion of supplies is complicated by the need to limit damage to the environment and ensure sustainable methods. A potentially promising alternative to mining and volcanic brine includes collecting stone nodules on the ocean floor that are rich in sought-after minerals but that risks damaging aquatic environments. Environmental groups have objected to Deep Sea Metals' plan to deploy large robots to mine the ocean floor for minerals such as cobalt and nickel.

Legislation signed into law that creates incentives for domestic production of batteries, minerals and source of components from within North America and from U.S. allies is a big help, according to Menell.

He says that one of the big solutions is for the big pools of climate change, impact- investing ESG capital and focus on facts. We're not going to meet climate change goals unless they put tens and tens of billions of dollars into mining and metals.