GOVERNMENTS around the world, including our own in the UK, want us to use electric vehicles. It’s an imperative if we’re to have any chance of meeting zero carbon targetsc, particularly in London.
So, the news electric car battery prices have risen for the first time in more than a decade is especially timely and alarming. The surging cost of metals used in the manufacture of batteries, such as cobalt and lithium, has pushed the price of a battery pack up to $151 per kilowatt hour, a rise of 7% on a year ago, according to the BloombergNEF annual survey.
They’ve been compiling their study since 2010, and prices have remained steady. Not anymore, not this year.
Seeing as the car industry views the $100 per kilowatt hour as the point at which electric cars become competitive with combustion engine vehicles, that widening gap is worrying, and challenging for motor manufacturers and for the authorities anxious for us to switch from petrol and diesel.
Evelina Stoikou, an energy storage associate at BloombergNEF, said rising raw material and components costs had pushed carmakers to act to secure resources and bring costs down. “Amid these price increases for battery metals, large battery manufacturers and automakers have turned to more aggressive strategies to hedge against volatility, including direct investments in mining and refining projects,” she said.
To which can only be added, good luck with that. If, for example, they want to extract cobalt from the Democratic Republic of Congo, which has 3.5 million tonnes of reserves and accounts for more than half the world’s supply, they will be lucky. Cobalt is a by-product of copper and nickel. Of the 19 mining projects under way in Congo that produce cobalt, no less than 15 are now under Chinese control.
Chinese investors stepped in smartly after Western firms turned their back on the DRC following a series of scandals that saw the likes of Dan Gertler, the Israeli mining billionaire, accused of corruption and hit with US sanctions. Going after Gertler may have been the right thing to do, but its unforeseen consequence has been to leave the African country ripe for exploitation from others, in particular by Beijing.
It was announced last week that Gertler has handed back $2 billion-worth of mining interests to the DRC government. They too, may well end up under Chinese control. Despite reaching agreement with the DRC, Gertler, meanwhile, remains subject to US sanctions, a deterrent for other entrepreneurs wishing to enter the country.
China, it seems has got the DRC, and with it the supply of cobalt, nicely sewn up. Not for the first time where Beijing’s ambition and ability to plan long-term is concerned, the West is sleep walking into disaster. Russia’s invasion of Ukraine and dependence on Russian energy supplies, plus reliance on Ukraine’s grain harvests, provides stark warning as to what can happen. Somewhat late in the day, the US is waking up — possibly too late — to the realisation that the bulk of the globe’s cobalt belongs to China.
“What makes this a really significant challenge is China could use this the same way Russia can use oil, or in the same way that the world is impacted because of grain supply,” said Brad Martin, director of RAND Corporation’s institute for supply chain security. China’s ability to deny access to cobalt “creates a national security vulnerability,” he added.
It’s not just that China understands the need for access to strategic materials, such as cobalt, it’s stockpiling as well. On the contrary, the US has been selling off large amounts of its critical materials stockpile, including cobalt. According to Revitalizing the National Defense Stockpile for an Era of Great-Power Competition, a Heritage Foundation report published earlier this year, the supply contained $22 billion-worth — at today’s rate — of critical materials in 1989. Currently, it’s down to $888 million.
The Biden administration is encouraging domestic mining for cobalt and recycling of metals to try to build up the US source and not to be so reliant on China. In Britain, we’re opening abandoned copper mines and surveying tracts of land in the Lake District, Snowdonia and Pennines for further pockets. Whatever we produce will not be enough and nothing like the amount already held by China.
The next major, untapped source for cobalt and lithium after the DRC is thought to be Indonesia. Guess what? That country is undergoing a mining stampede, led by companies that hail from… Beijing.
