The rush for strategic metals to produce batteries, the key parts of electric vehicles, is raising fears of a shortage in the world. But is it justified? To read the analysis of the American bank Goldman Sachs led by Nicholas Snowdon, entitled “Analysis of metals for batteries: the end of the beginning”, this dark scenario must be tempered. The report, which focuses on the lithium, cobalt and nickel markets, says so “The growth of metal battery markets has reached its peak”.
Price drop in 2023
In terms of price, a ton of lithium should cost an average of $ 54,000 in 2022, while in 2020 it was worth about $ 6,000. And it should return to $ 16,400 by 2023. This variation is explained by the acceleration of mining-driven production. due to high prices and the growing demand from car manufacturers. While the market had a volume deficit of 11% in 2021, it should have a 25% surplus in 2025.
Various mining projects have been launched or will soon be launched around the world, especially in China, Australia and Chile. Following the example of the French group Eramet, which produces nickel in New Caledonia and manganese in Gabon. It will start producing lithium in Argentina in early 2024, associated with the Chinese steel group Tsingshan. And it is studying the operation of new lithium production centers in Chile and Bolivia.
For nickel and cobalt, the situation is less spectacular. For the latter, Goldman Sachs expects an average price of $ 78,500 per tonne this year and $ 59,500 in 2023. On the other hand, nickel, which is expected to show at $ 31,000 a tonne in 2022, will remain stable. by $ 30,250 in 2023., “even if the price could reach $ 36,500 before suffering a downward correction at the end of the year”says the report.
In volume, during the period 2022-2025, Goldman Sachs expects an average annual increase of 33% for the supply of lithium, 14% for cobalt and 8% for nickel, which will exceed the annual rate of its demand, which will stand at 27%, 11% and 7% respectively.
Battery demand is not cyclical
However, yes “This phase of oversupply will allow a supercycle of battery materials to emerge in the second half of this decade”underlines the report, on the other hand, during this same period, “demand growth will be structurally more important than supply growth”, warn. In fact, the demand for metals for batteries will grow steadily, 440% by 2030. “The demand for batteries is not cyclical, it is supported by strong political incentives and the rapid development of the electric vehicle market”emphasize the experts of the American bank.
A notice consistent with the annual report on vehicle fleet electrification, published last month by the International Energy Agency (IEA). Although electric car sales soared globally in 2021, the future availability of raw materials such as lithium is a concern, the IEA says. With 6.6 million units sold worldwide in 2021, half of which in China, electric car sales have doubled in one year and have a 10% share of new car sales . And in the first quarter of 2022 they accelerated even more, with 2 million units sold, or + 75% in one year. These sales benefit from public subsidies, which in 2021 have doubled to nearly 30 billion euros worldwide.
For automakers, therefore, it is vital to secure the supply of metals to produce batteries. Like Renault, which announced yesterday that it had signed a cobalt supply contract with the Moroccan group Managem Group. The agreement provides for the annual delivery of 5,000 tonnes of cobalt sulphate from 2025, for seven years. The diamond brand had already signed nickel supply contracts with the Finnish group Terrafame, and lithium with the German Vulcan Energy.
The evolution of the price of these metals is all the more important for car manufacturers as the battery is the most expensive element of an electric vehicle. Its production cost increases or decreases the final price of the vehicle.
Decrease in the average price of batteries
In its annual survey, published in November, BloombergNEF’s stated this “Lithium ion model prices had dropped by an average of 6% between 2020 and 2021 to $ 132 per kWh, while in 2010 they were $ 1,200 per kWh, down 89% in But there are regional differences: the average battery price in China was $ 111 per kWh, while it is 40% higher in the US and 60% higher in Europe. “
In fact, China has not only taken a step forward, but also dominated the metals markets. Europe produces a quarter of electric cars, but controls very few raw materials, as does the United States. “The European and US governments have made a strong commitment to developing battery production capabilities, but most of the supply chain is expected to remain Chinese by 2030.” recalls the IEA.