Zach Schumacher, deputy editor for scrap markets, and Andrew Saucer, market reporter for minor metals and EVs, pointed out that raw material costs for EV batteries have gone down since October 2022. Cathodes in EV batteries are either lithium or nickel and cobalt compounds.
Costs for lithium carbonate and lithium hydroxide have dropped significantly, the analysts said, with some fluctuation between April and July. Falling lithium costs were attributed to a steady supply from Australia, which continues to be the world’s largest producer of spodumene, the unrefined material used to synthesize lithium carbonate and lithium hydroxide.
An article from McKinsey in June this year identifies that ‘Australia has limited capability and capacity to refine spodumene into the lithium hydroxide needed for lithium-based batteries’.
The same article suggests that the major market for lithium batteries presents an opportunity for Australia to grow its lithium production infrastructure, meaning that lithium supply is likely to at least remain steady, if not grow in the coming years.
Meanwhile, Argus says prices for nickel and cobalt sulphates have fallen in the last year, though not nearly as dramatically as lithium.
‘In many ways, the ramp up in EV production is coinciding, at least momentarily, with a period where prices have abated quite a bit,’ says Schumacher. ‘This is due in large part to, at least for nickel and cobalt markets, that they are very diverse.
They are affected by aerospace, stainless steel (in the case of nickel), production processes, supply, and demand dynamics. Lithium, although quite reliant on the EV market, is also seeing that real easing in prices.’
From the perspective of demand for raw materials, Argus says there have been concerns over the Chinese EV battery market, though China has the highest global demand for lithium compounds. Compared to the US, China has a well-established battery production market, suggesting its demand for lithium is likely to remain steady.
Meanwhile, Schumacher and Saucer say North American battery production capacity is projected to grow at a constant rate of 65% till Q4 2027, which may push raw materials prices upwards.
They expect this growth in battery production capacity to be complemented by US manufacturers reaching a production capacity of nearly four million EVs per year by Q4 2028. Argus also projects global EV sales to exceed 40 million by 2030.
While the overall costs associated with EV batteries, such as anode materials and labour costs, have gone down, cathodes have increased in value over the last decade. Data from the International Energy Agency shows that cathodes account for increasingly higher percentages of the overall battery production cost, having recently reached around 33%. This is due to the cathode’s nickel and cobalt content.
Even though their price has gone down this year, the metals have an intrinsically high market value that makes them especially desirable for recyclers who can generate profits by reintroducing nickel and cobalt to the circular economy. By contrast, lithium batteries without nickel or cobalt are cheaper to produce and less valuable to recyclers.
One way in which this value disparity manifests, according to Argus, is that recyclers are willing to pay for nickel and cobalt-based feedstock, whereas they charge to process lithium-based batteries to offset the recycling costs.
Currently, the US EV battery market favours nickel and cobalt compounds with aluminium (NCA) and manganese (NCM), though Schumacher and Saucer say lithium batteries have gathered more traction in the US market over the last few years.
While nickel- and cobalt-based batteries have a shorter life span than lithium-iron, averaging 13 and 16 years respectively, NCA and NCM batteries have a longer range per charge than lithium batteries.
Battery life is also an important consideration for recyclers who are now receiving vehicles from 2013-15 in their feedstock. With the growing popularity of EVs, they should expect a significant influx of EV batteries in the next seven years. Increased production capacity for batteries and EVs will further contribute to a stable battery recycling market through 2030, says Argus.
Saucer also touched upon battery reuse in the US, explaining that used batteries retain 80% of their overall capacity but, because drivers prefer to maintain their vehicle’s maximum range, they are unlikely to want reused batteries. Manufacturers are also unwilling to ship products with reused batteries due to potential liabilities.
Consequently, Saucer said, the most viable secondary application for used batteries is golf carts or drones. Because recyclers want to recover nickel and cobalt, reuse applications are generally limited to lithium-based batteries.
Fuente: Recycling International.com