Lithium-ion Battery Economy: Understanding the Various Components.

The author of this article is a clean energy and critical minerals enthusiast, a mining and metals leader with experience in supporting commercial mining and lithium recycling projects, an alumnus of the University of Nevada, Reno College of Business , Wharton Business School and a scholar at The Johns Hopkins University - Carey Business School . Views and opinions expressed in this article are not intended to facilitate political debate, do not represent the thoughts of the author’s employer and should not be taken as a basis for making investment decisions.

Introduction:

Lithium has been a buzz word for some time now and rightly so. Over the last few decades, there has been common consensus globally to transition to #clean #energy sources as a means of reducing emissions and enhancing environmental protection. Lithium, together with other critical minerals have become a topic of discussion given their critical role in the production of lithium-ion batteries, a product that’s essential to driving the electric vehicle revolution, battery power storage systems, enhancing energy security, supporting manufacturing of consumer electronics among others. But, why lithium and not sodium and magnesium batteries or hydrogen? The answer lies in the fact that lithium is light, has high ability to conduct electricity, has low resistivity, among other properties and such, is highly preferred as a catalyst for this clean energy transition.   

The Lithium Economy, lets break it down:

Before we discuss the global lithium economy, its critical to understand the sources of lithium. Generally, lithium is mined but can also be obtained through recycling of end-of-life lithium-ion batteries, batteries that do not pass quality tests on the production line among other sources by deploying mechanical separation and hydrometallurgy techniques. Currently, lithium arising from recycling efforts is still a growing market with a lot of economic potential. In the USA for instance, Redwood Materials Inc. and other recycling companies are leading this recycling agenda, a process that culminates in the production of either copper foil or cathode active materials or both, necessary ingredients/raw materials in lithium-ion battery production.

What value though does the lithium economy have? Answering this question requires us to breakdown the various stages of the lithium-ion battery economy. Mckinsey Battery Insights, 2022 broke this down into the following;

1.      Mining – Entails production of the raw material (lithium).

2.      Refining – Lithium in ‘’dirt’’ cannot be used directly in cell manufacturing for instance, it has to be refined to a grade acceptable for this manufacturing process.

3.      Active Materials – These refined materials, often called cathode active materials form a critical component of lithium-ion batteries.

4.      Battery Cell Manufacturing – This process sees the combination of battery materials namely, copper foil (anode) and cathode active materials. During this stage, adequate mixing, coating and drying is done.  

5.      Battery Pack Manufacturing – Stage four above culminates into battery packs. These can be sets of batteries or individual battery cells. They may be organized in a series, parallel or a mixture of both to develop the desired voltage, capacity, or power density.

6.      Re-use and Recycling – Battery packs eventually reach their end of life and these can be recycled, critical raw materials extracted and reprocessed and put back into the supply chain, essentially promoting circularity.

Understanding these stages of lithium-ion battery production helps us understand the value created at each stage and the potential revenue gains each stage possesses. The lithium economy is projected to jump to $400Bn by 2030 from $85Bn in 2022. Below is a breakdown of how much each stage of lithium-ion battery manufacturing process is projected to command (split between the USA, China, Europe, and the rest of the World) moving into 2030:

Conclusion:

Lithium will continue to be in demand as we journey towards a green world. Understanding the value it creates, at each stage of the battery manufacturing process is critical in understanding raw material production implications, labor requirements, and levels of investments needed to sustain such economic outputs. Further, it gives would be investors an idea of which stage to invest in to get an optimal return and above all, this should drive policy necessary to stimulate production, manufacturing and recycling efforts. I hope you found this article useful. Leave me a comment and glad to get the conversation going.