Where Do Battery Materials Come From?

There are many common materials in batteries like iron, those materials are sourced locally from where the batteries are made. Most of the world’s batteries are made in China. Therefore, most of the materials would be sourced in China. China also has quite a bit of lithium which is one of the primary more scarce minerals for batteries. However, most of the lithium comes from Australia and Chile. More than 80% of global lithium production comes from Australia, Chile, and Argentina.

The old demand for materials for lithium ion batteries in 2016 is only 5% of the EV battery demand in 2022. In 2016, the demand was 31 GWh but in 2022 it is about 600 GWh (Gigawatt hours).

Cobalt and Nickel are being either greatly reduced or completely eliminated from many batteries.

Looking at scaling up 10X the lithium (20X for demand increase but halving for greater energy density efficiency), we get to about 50,000 tons of lithium demand in 2022. If lithium batteries scale up to 6 TWh per year then this would be a further 10X increase to about 500,000 tons per year. Beyond 6 TWh/year it is generally believed that some non-lithium battery is needed and the most likely candidate is sodium ion batteries.

Scaling Graphite is likely 700,000 tons per year today and scaling to 7 million tons per year for the 6 TWh/year scenario.

Cobalt

Cobalt is highly concentrated in a few countries. From 2014 through 2016, an average of 53% of global mined cobalt production came from the Democratic Republic of Congo (DRC), while an average of 47% of global cobalt refining took place in China.

Manganese

More than 60% of manganese is mined in South Africa, China, and Australia (USGS 2018).

Nickel
Nickel is another scarce mineral for about 30% of the world’s batteries. The largest suppliers for nickel are Indonesia and then the Philippines.

Graphite

Graphite is also an important mineral. The countries for graphite are China and then Brazil and Mozambique. China is by far the dominant source of quality graphite with about 80% of the current global market share. China was making about 820,000 tons per year of graphite. China dominates both the mining of graphite and upgrading this carbon material into the coated spherical graphite that is packed into the anodes of lithium-ion batteries.

The Mercedes EQS EV being produced in Alabama needs roughly 250 pounds of graphite for each 107.8-kilowatt-hour battery. The standard range Tesla Model 3, which needs about 120 lb of graphite for its 60 kWh battery, and full-size SUVs like the GMC Hummer, which requires roughly 500 lb of this anode ingredient. Tesla needs about 2 lbs of graphite per kWh of battery. Tesla is using 150 GWh of batteries for its products in 2022 and so likely needs 150,000 tons of graphite in 2022 (300M lbs).

Inflation Reductions Act give companies produce lithium-ion battery materials in the U.S. a tax credit equal to 10% of the production costs. This credit begins to fade by 25% per year starting in 2030. The Inflation Reduction Act also offers a second tax credit equal to 10% of the costs incurred in respect to the production of 99.9% graphite in the U.S. This credit does not have a sunset date.

By 2030, batteries will likely need more than 5x all the graphite mined in 2021.

According to the global lithium-ion battery supply chain experts at Benchmark Mineral Intelligence, a megafactory capable of producing 30 gigawatt-hours of battery storage annually requires about 33,000 metric tons of graphite per year.

When you extrapolate this out over the more than 300 gigafactories that are being built or are in the pipeline, this equates to up to 9.9 million metric tons of graphite per year to feed all these lithium-ion battery plants running at full capacity. Using the 70-70 rule – a more realistic measure that 70% of these battery plants go into production running at an average of 70% design capacity – the global lithium battery sector would need about 4.9 million metric tons of graphite per year.