The Elements of Innovation Discovered
The Elements of Innovation Discovered
Metal Tech News - February 20, 2023
Li-Bridge has published a blueprint for building a bridge that spans the chasm to a robust U.S. lithium battery supply chain.
Click on the cover for full Li-Bridge report.
A wide chasm lies between where the United States is today and securing the lithium battery mineral resources and manufacturing capacity required to achieve ambitious visions of a green energy future where electric vehicles are charged with low-carbon energy. An alliance of America's national laboratories and more than 40 companies representing the entire lithium battery supply chain have developed a blueprint for building a bridge that spans this rift.
This alliance, known as Li-Bridge, was convened by the U.S. Department of Energy in 2021 and is being led by Argonne National Laboratory, known for its ability to move battery innovations from the lab to the market.
To bridge the government-private sector divide, Argonne forged alliances with three U.S.-based groups – NAATBatt International, NY-BEST, and New Energy Nexus – that represent more than 600 industry stakeholders across the high-capacity battery ecosystem.
"While the U.S. has all the pieces to achieve these goals, they are fragmented. The Li-Bridge alliance will bring these pieces into a cohesive whole," said Venkat Srinivasan, director of the Argonne Collaborative Center for Energy Storage Science.
After more than a year of meetings with its members, Li-Bridge has published a national blueprint – Building a robust and resilient U.S. lithium battery supply chain – with 26 key steps to ensuring the U.S. has the raw materials, manufacturing capacity, and talent required to establish a globally competitive supply chain for lithium batteries, a fundamental technology in a world transitioning from fossil fuels to low-carbon alternatives.
Li-Bridge and its government and private sector members, however, know that the U.S. has already fallen well behind Asia and Europe when it comes to building lithium battery supply chains, and even if the strategy outlined in its plans were followed precisely, the nation will not achieve complete lithium battery supply chain independence by 2030.
"Although we are starting to see activity in the domestic battery manufacturing sector thanks in large part to the Bipartisan Infrastructure Law and the IRA (Inflation Reduction Act), U.S. industry is still 10 to 20 years behind Asia, and about five years behind Europe, in commercializing manufacturing of this critical technology," said NAATBatt International Executive Director James Greenberger.
Due to the role they play in powering the clean energy future, lithium batteries and the materials needed to build them are critical to America's low-carbon energy goals, economic well-being, and national security.
"From enabling renewable energy and providing reliability and resilience for our electric grid to powering our future electrified transportation systems, batteries are at the center of the clean energy transition," said NY-BEST Executive Director William Acker.
This transition to low-carbon energy is expected to drive a massive 600% increase in lithium battery demand in the U.S. by 2030. Aside from the geopolitical risks inherently associated with being reliant on imports to meet this demand, American industries will be competing in a global lithium battery materials and manufacturing market that is expected to expand by 500% over this same span.
And, with U.S. military equipment becoming increasingly dependent on lithium-based batteries, relying on imports for batteries and battery components is a strategic risk to the nation.
China, which recognized the importance of lithium battery technology nearly two decades ago, has positioned itself as a dominant global player along the entire supply chain, accounting for roughly 76% of the lithium battery cells, as well as a vast majority of the materials and components manufactured today.
With a later start and weaker foothold in lithium battery supply chains, Li-Bridge says the U.S. needs to take definitive actions in order to overcome some domestic challenges that could thwart the building of a robust and sustainable domestic lithium battery supply chain that extends from the mines supplying battery materials to the American EV drivers charging those batteries with renewable energy.
In addition to the geopolitical implications of depending on China and others for batteries and battery materials at a time when demand far outweighs supply, establishing a domestic supply chain under U.S. laws and standards offers enormous ESG advantages over sourcing these materials from countries with far less concern for the environment and human rights.
"Reshoring supply chains reduces environmental footprints and builds social resilience during the energy shocks we're facing this decade," said New Energy Nexus CEO Danny Kennedy.
Li-Bridge has identified three major challenges to establishing a lithium battery supply chain in the U.S. – impatient money, uncertain permitting, and a dearth of critical minerals.
Building an entire lithium battery supply chain from the ground up in the U.S. is going to take an enormous amount of money and patience.
From the mines to the mineral processing plants and onto the lithium battery materials and manufacturing plants, the facilities required to meet the energy storage needs for EVs and renewable energy must be built at giga-scale.
Not only do mines and factories at this scale take massive investments, but they also require a lot of time to design, permit, and build.
For example, a U.S. mining project that has already completed a feasibility study that demonstrates it could offer healthy returns on investment has a long runway before it is cashflow-positive – permitting a large mining project in the U.S. is expected to take at least four years, and often much longer, and then another roughly two years for development. This means that a large U.S. mining project entering permitting today would likely not begin delivering materials into the lithium battery supply chain until the end of the decade.
While lithium battery processing and manufacturing facilities tend to take less time to permit and build, they require large initial investment in research and development, time to design and build the manufacturing equipment, and a somewhat lengthy runway to scale up to full commercial production.
These long timelines, coupled with the associated risks, tend to dissuade U.S. investors that determine their cash would be better allocated in areas with proven technologies and returns in the nearer term.
Due to differences in business culture, however, Asian investors tend to take a longer-term view.
"Consequently, Asian investors fund a disproportionate share of U.S. battery-related projects. This has historically resulted in the transfer of much U.S.-based know-how and battery-related intellectual property offshore," Li-Bridge inked in its report.
The alliance believes that expanded and better-designed incentives on both the supply and demand sides of the equation will make the U.S. battery supply chain more attractive to American investors.
While the battery supply chain incentives in the Inflation Reduction Act go a long way to addressing this issue, Li-Bridge says that more must be done.
The public-private alliance recommends the following:
• Capex incentives: Expand incentives to offset capital expenditures for upstream (mining), midstream (processing), and downstream (manufacturing) capacity.
• Production incentives: Expand incentives, such as a production tax credit, to offset production-related costs.
• R&D incentives: A fast-track study of research and development tax treatment and incentives, and a quick implementation of recommendations to make investment in the intensive battery industry more attractive.
• Demand incentives: Expand EV sale incentives to include medium- and heavy-duty trucks, buses, construction, agriculture, mining, and other offroad equipment. Attach domestic material requirements to promote the use of U.S.-based midstream and upstream production.
• Government procurement: Leverage government procurement programs to support next-generation technologies and provide advanced market commitments that reduce commercialization risk.
• Insurance pools: Create insurance pools for battery and battery material producers to hedge against the risk of product recalls and make it easier for new U.S. companies without large balance sheets to compete with established foreign suppliers.
"The U.S. government must take actions to enhance the expected returns on financial investments in U.S.-based lithium battery supply chain-related projects (e.g., battery materials, components, cells, or manufacturing equipment) and reduce the perception of demand uncertainty in the U.S. battery market," Li-Bridge penned in its report.
One way to provide American lithium battery investors with more confidence and a quicker return on investment is to bring some predictability to the uncertain and lengthy permitting process in the U.S., especially when it comes to the mining projects that feed materials into the supply chain.
"Several Li‑Bridge participants cited delays in their projects ranging from six months (cell manufacturing and grid energy storage projects) to a full decade (mining projects)," the battery supply chain alliance inked in its report.
Li-Bridge pointed to four major factors that contribute to long and unpredictable permitting timelines in the U.S. – opaque bureaucratic decision-making, a lack of firm permit process deadlines, inconsistent appeals process, and resistance from community groups.
The long mine permitting timelines in the U.S. is something that is weighing heavily on the minds of American auto executives scrambling to find reliable, sustainable, and preferably domestic sources of the raw materials needed to build EVs that were not required for internal combustion vehicles.
Ford Motor Company, a member of Li-Bridge, has been particularly vocal about the need for mine permitting reform in the U.S.
"Today's lengthy, costly and inefficient permitting process makes it difficult for American businesses to invest in the extraction and processing of critical minerals in the United States," Christopher Smith, the chief government affairs officer at Ford, penned in a 2022 letter to the U.S. Department of Interior.
While automakers like Ford want to ensure that the materials going into their batteries are sourced from the U.S. or allied countries, which will make the EVs they build eligible for tax credits offered to American car buyers, they also want to be able to tout the ESG credentials of their electrified models – something that would be easier to do if the mined materials came from a country with strong environmental and labor laws.
"As I've stated before, we currently get our materials for EVs from China, where environmentally responsible mining and processing is non-existent and has caused significant harm to surrounding areas and populations (yet good enough for us to use in EVs, wind turbines and other renewables)," Smith penned in his letter to DOI.
"And still, there's opposition to environmentally responsible mining in the US!" the Ford exec added. "I am yet to hear any logical reason behind this other than that which few people have the courage to say openly; 'we don't care if there are environmental issues in China, so long as it's not here.'"
Further coverage of Christopher Smith's letter to DOI can be read at Ford calls for US mine permitting reform in the September 1, 2022 edition of Metal Tech News.
Li-Bridge's top priority for the U.S. Congress is to pass mine permitting reform that will help U.S. companies secure the minerals needed to build the low-carbon future.
This includes improving mine permitting predictability with time limits, transparency, and a lead agency that guides a harmonized permitting process.
The Li-Bridge blueprint also calls for initiatives that build public support for critical minerals mining in the U.S. This includes developing a handbook for community engagement best practices deploy and community outreach to build support and accelerate project approval.
Even with a streamlined permitting process, the mining sector faces a challenge when it comes to feeding enough battery minerals and rare earths into the automotive supply chain until the first generations of EVs traveling American highways are recycled.
Based on current formulas and technologies, EV batteries alone are expected to consume around 2.4 billion lb cobalt, 1.6 billion lb of lithium, 12 billion lb of graphite, and 7.2 billion lb of nickel per year by 2040.
This equates to six times more cobalt, six times more lithium, nearly five times more graphite, and roughly the same amount of nickel produced for all sectors at every mine on Earth during 2022.
Further details on the minerals and metals needed to build EVs can be read at Minerals critical to the EV Revolution in the Critical Minerals Alliances 2022 magazine published in September 2022.
To fill this demand, a lot more battery mineral deposits must be discovered, explored, permitted, and developed into mines.
Benchmark Mineral Intelligence, a global leader in lithium battery supply chain analysis, estimates that more than 300 new mines will need to come online by 2035 to meet the demand for the cobalt, graphite, lithium, manganese, and nickel for the lithium batteries powering EVs.
This is a tall order when measured against the typical decades-long mineral discovery-to-producing mine timelines, which tend to be longer in the U.S. due to the longer permitting process.
In addition to streamlining U.S. mine permitting, Li-Bridge has seven recommendations to ensure plenty of minerals are fed into the American battery supply chain:
• Critical minerals databases: Expand and accelerate the creation of a national database of critical mineral resources and make this data available through an online portal and interactive map. Similarly, develop a tracking dashboard that monitors and forecasts international supply chains.
• Foreign partnerships: Support prioritized access to critical mineral mines in partner countries through financial support from the U.S. International Development Finance Corp. and continue to strengthen country-level cooperation.
• Circularity: Establish an industry-led waste battery end-of-life program, harmonize regulations for transporting waste batteries, and support the recovery and use of domestically recycled content.
• Trade control: Recalibrate trade controls to encourage U.S. companies to develop high-energy-density solutions and compete for global business. Consider export controls to reduce leakage from the U.S. energy materials supply chain.
• Critical minerals sea mining: Conduct definitive environmental studies on critical mineral sea mining that serve to remove uncertainty regarding U.S. company participation in sea-based mineral extraction and purchasing
• Stockpile: Bolster the National Defense Stockpile for battery-critical minerals and materials in a manner that smooths commodity pricing cycles and does not exacerbate supply shortage or inflate raw material costs for U.S. industry.
• Infrastructure: Invest in more clean energy generation and upgrade port and rail systems to make the U.S. lithium battery supply chain more economically competitive.
• Industrial zones: Select and designate special industrial zones for battery production to support the efficient clustering of battery-related operations. Steer government financial support to those zones. Implement within those zones streamlined regulatory processes recommended by industry and approved by local authorities and communities.
"The United States must work simultaneously to encourage the development of minerals and materials mining domestically and to secure the supply of raw products from reliable trading partners abroad," Li-Bridge penned in its battery materials blueprint. "An effective raw materials strategy must also include significant support for lithium battery recycling and developing a battery materials export control policy."
While the U.S. battery material blueprint is an important asset that offers solutions to nearly every conceivable challenge associated with building a North American lithium battery supply chain, the Li-Bridge alliance itself may be the capstone.
"The public-private partnerships described in this report will be crucial to realizing that safer, cleaner future that will benefit generations of Americans to come," said Deputy U.S. Energy Secretary David Turk.
Bringing together the pollical clout of government agencies such as the U.S. Department of Energy, the brainpower of American academia and the national lab systems, and the expertise and financial wherewithal of companies that span the entire lithium battery supply chain creates a powerful alliance that can tackle the challenges much more efficiently as a group than they can individually.
This includes a united front in gaining bipartisan support in Congress and the White House for policies that support building a domestic supply chain at the pace needed to achieve America's energy transition and climate goals.
The alliance also offers the potential to create a consortium for purchasing critical battery-related minerals and materials from domestic and foreign sources that improve buying power. This would make the U.S. battery industry more competitive against countries, such as China, that have large state-backed companies and are more directly involved with materials production and purchasing.
Li-Bridge believes the formalization of its alliance, coupled with the U.S. government implementing the recommendations in its blueprint, will ensure the U.S. can capture 60% of the economic value from U.S. domestic demand for lithium batteries by 2030 and become a global power in the lithium battery industry and a major exporter of finished batteries and battery-related technology by 2050.
"By moving forward aggressively with the recommendations Li-Bridge is advancing today, the U.S. will be well positioned to unlock the benefits batteries can provide to improve our environment and our economy," said NY-BEST's Acker.
With more than 16 years of covering mining, Shane is renowned for his insights and and in-depth analysis of mining, mineral exploration and technology metals.
Reader Comments(0)