The world energy crisis has two satellites: deficiency of semiconductors and rising in price metals. Both beat, of course, on traditional power too, but more the blow on «green» power transition. Prime cost of wind-driven generators and solar panels grow, accumulators rise in price.

Do not be confused by the fact that the production of metals cannot be called «green». For carbon-free energy, only greenhouse gas emissions are significant. Therefore, in the field of renewable energy sources (RES) and electric transport, the use of «low-carbon» metals is expanding (not to be confused with low-carbonic ones). That is, metals with a low carbon trace. Apparently, there are no other pollutants in the world.
However, manufacturers are confused that consumers are not yet ready to overpay for low-carbon products. But this is a fixable thing. Buyers can be persuaded by taxes, fines and other effective tools, although not at current prices.

It is not enough of metal

«The prices of lithium rose to mad level», — the most famous businessman of the present Ilon Mask who is called mistakenly the founder of the Tesla Company complained in March of the current year. We concerned this subject earlier, and time came now to talk about it more detailed.
Lithium really rose in price. Since the beginning of 2021 on the beginning of 2022 its price grew by 560%. But the greatest heights the quotation of lithium reached for the first two months of spring. They closely approached a mark of 500 thousand yuans for 1 ton (about 74 thousand dollars). At the beginning of May lithium fell in price a little: to 462,5 thousand yuans for 1 ton (about 69 thousand dollars). However it is still 420% more than for the similar period in the previous year.
And here we will dare to refer on Ilon Mask who at the end of April demanded to increase investments into lithium production, «again to reduce a gap between supply and demand of this metal». The choice of a source of the quote is not casual. So it developed for the last decade that the name of this businessman became inseparably linked with the extending demand for electric cars, besides the markets sharply react to any of his statements. Why not to react or perhaps even to sympathize. After all the branch which Ilon Mask represents, is one of the main consumers of lithium.
According to Geological service of the USA (USGS), 74% of all lithium was directed on a share of accumulators in 2021. For different production of ceramics and glass another 14%, for lubricants — 3% were used; for polymers and in foundry production — on 2%, etc.
Of course, it is impossible to accuse only electric cars of sharp increase in demand for lithium in an accumulator segment. Eventually, there are also different electronics — from smartphones and laptops till «clever» clock and wireless earphones. But nevertheless specific consumption of lithium and other metals in accumulators of electric cars incomparably is more, than in any smartphone. So, the battery in Tesla Model S, according to the available data, weighs 540 kg.
For further conversation on metals and power we will notice that there are also nickel, cobalt and aluminum at batteries. But so far nevertheless we will concentrate on lithium.
Within 2010 it was, perhaps, the most fashionable metal, if, of course, characteristics of this sort are applicable to metals. Lithium was managed to be called new oil. It was predicted incredible prospects.
And here lies a monstrous irony. Judge for yourself: on the one hand, everyone understands perfectly well that the types of batteries currently in mass use have practically hit the ceiling in terms of energy density, which is significantly inferior to the energy density in traditional motor fuel. Therefore the majority of the forecasts drawing cloudless prospects of electric cars also foretell the future technological break in the field of stores. On the other hand, it is on lithium that the stake is placed; it is in its production that more and more money has been called for and is being called for, since there are no alternatives comparable in terms of price, quality and availability to expand the electric mobility of transport.
Money was really invested in lithium. It is besides so active that in the 2010s there was a surplus of the offer. And it, in turn, led to sharp reduction of the prices of batteries.
The bottom of the price of lithium was reached by the end of 2020, having fallen approximately to 40 thousand yuans for 1 ton (about 6 thousand dollars). Let’s not try to present, what delight it caused in suppliers. Especially as since the beginning of 2021 price began to grow. At first it was shy, and then all quicker and quicker. The real take-off began in November of last year: they did a way from about 200 thousand yuans for 1 ton (about 30 thousand dollars) to 500 thousand yuans for 1 ton (about 75 thousand dollars) for incomplete four months.

70% of the battery price

We already told about record (about 6,6 million units.) gain of electric cars in 2021. They created the unknown pressure upon mining branch. That was not ready to such. Excess of demand generated deficiency.
At first the increase in prices for lithium was ignored by many analytical organizations as a factor of an inevitable rise in price of batteries. Moreover, courageous forecasts about further reduction in cost of electric cars as batteries had to become cheaper at the expense of a scale effect were issued. If you do not know how to prove the forecast about falling of the prices of some product, safely write «scale effect». This phrase explains everything in a magic way.
Then, when it became clear that the prices of lithium are not going to fall, shy assumptions started sounding that accumulator can rise in price. And here by the end of last year Bloomberg NEF (BNEF) within the next report «foretold» that lithium — ion accumulators will rise in price for the first time since 2012 but for 2,3% only (to 135 dollars for 1 kilowatt-hour) next year.
In the middle of February, 2022 there came time of surprising opening. So, GlobalData in the index of vulnerability of chains of delivery showed that the most vulnerable concerning supply of the major minerals are the countries with the greatest sales volumes of electric cars.
The LG Energy Solution Company, the supplier for the electric cars Tesla and General Motors, declared that the raw materials make 70% or 80% of cost of its batteries. It is quite indicative size. Which, by the way, does not leave a stone on a stone from the forecast of BNEF about growth by 2,3% as from the moment of its publication of lithium rose in price twice. Much more approximate to reality the data of SNE Research according to which South Korean producers of accumulators can raise the prices by 30-40% look to compensate the increased costs of raw materials. Negotiations with producers of electric cars on new long-term contracts taking into account the new prices are now conducted.
Against growth of cost of lithium — ion accumulators the Tesla company even declared that plans to change type of batteries which are used in its cars, to lithium — iron-phosphate. They have a lower energy density than batteries containing nickel, cobalt and manganese, but benefit from a third lower price.

Schedules go to hell

In early March, major Western media began to attempt to link the problems of electric transport with Russia’s special operation in Ukraine. Few problems today are trying to explain in any other way. But in this situation, it is sad that not only the media, but also respected analytical organizations show a surprising reluctance to look for reasons for the rise in price of the same lithium in some more reality-related things.
Although, perhaps, this reluctance is due to the fact that physically possible lithium production, plans to expand this production and the growth rate of demand from the automotive industry will have to be taken into account in the forecasts. It’s not difficult, but taking into account all these factors will not allow you to draw quite beautiful graphics.
Let’s simply assume that in some areas (especially such fragile as «green» power transition) optimistic pictures on which cheerful schedules of demand aspire on Olympus top are sometimes very necessary, and sad price charts go to hell.
For luck reputable organizations, today they have a new argument in favor of refusal of all progressive mankind of internal combustion engines — the high prices of motor fuel. And promises of falling of the prices of accumulators did not get to anywhere. They only moved in a certain long-term future.
Perhaps it will be so. But let’s believe for a second in the forecasts of the International Energy Agency (IEA), among which there is the following: the growth in sales of electric vehicles by 2040 will lead to an increase in demand for lithium by 133 times, for cobalt – by 33 times, for nickel — by 30 times. Is the mining industry ready for this? Does she have any relevant plans? And how do these plans relate to the available resources?

Champions on lithium

According to the Rare Lands magazine, the first lithium mine was put into operation in the USSR in 1941 — in East Transbaikalia. And by the time of disintegration the Soviet Union was the second-large producer of lithium in the world (about 17% of world consumption). Only the United States was ahead of it. But also demand at that time was incomparably less flowing — only 7,6-8,2 thousand tons.
From the last large projects in the field of production of lithium in the territory of modern Russia it is possible to mention perspective production on the Kovykta field (one of basic fields «Forces of Siberia»). Documents on Kovykta were signed in February, 2022.
According to USGS, production of lithium increased from 82,5 thousand tons in 2020 to 100 thousand tons in 2021. And over the last ten years demand grew four times.
Australia (55 thousand tons) became the all-around champion in the field of production of lithium in 2021. With a big separation is farther in the first three — Chile (26 thousand tons) and China (14 thousand tons). Rather noticeable producers are Argentina (6,2 thousand tons), Brazil (1,5 thousand tons), Zimbabwe (1,2 thousand tons) and Portugal (0,9 thousand tons).
Production statistics of the USA is a trade secret. But it is known that this country last year exported about 1,9 thousand tons. Most likely, Fortune when writes proceeds from these data that the States «provide less than 2% of the world offer now».
If to speak about the reconnoitered lithium resources, Bolivia (21 million tons) and Argentina (19 million tons) will be champions. Indicators of other countries from the first ten do not exceed 10 million tons. Among them are Chile, the USA, Australia and China.
The increase in prices induced a number of producers to return to plans of expansion of production which were postponed in 2020 because of a pandemic. However, according to Bloomberg, in the next two years the offer will hardly be able to catch up with demand. Producers from South Korea are also pessimistic concerning the fastest solution of the problem of deficiency of lithium. In their opinion, the rise in price of lithium, nickel, cobalt and manganese will inevitably lead to 2024 or 2025 to further increase in prices for accumulators.
Since March producers of electric cars (including Tesla) started raising the prices of the production.

Cobalt record

Earlier we already gave the assessment published in the Nature magazine. But it is so eloquent that it is worth repeating. To transfer vehicle fleet of Great Britain (31,5 million cars from internal-combustion engine) on «pure» electric cars, 264,6 thousand tons of a carbonate of lithium, 207,9 thousand tons of cobalt, 7,2 thousand tons of neodymium and dysprosium, and also 2362,5 thousand tons of copper will be required. It will be required in 40 times more of these volumes worldwide for replacement about 1,4 billion cars with internal-combustion engines. In other words, to transfer only the British vehicle fleet to electric draft, it is necessary to increase production of lithium almost by 2,5 times.
As for cobalt, world production in 2021, according to USGS, reached record values — 170 thousand tons (in the 2020th — 142 thousand tons). Respectively, for satisfaction of demand only from buyers of electric cars of Great Britain it should strain oneself and increase record volume by 22%.
If to be guided by the existing forecasts, production of lithium by 2040 has to reach nearly 11 million tons (a half from the proved stocks and one eighth from world reserves) and cobalt — 5,6 million tons. The proved reserves of this metal make 7,6 million tons, and resources — about 25 million tons. Nobody cancels possibility of secondary processing. But they are not infinite.
The leading world source of cobalt providing more than 70% of world production is Congo — 120 thousand tons in 2021. For comparison: Russia which is at the second place makes 7,6 thousand tons. Congo as the supplier is uncontested therefore no wonder that the western well-wishers attended to destiny of local population.

The management shouts

Which country is not listed in USGS lithium reserves?
Afghanistan. Since the beginning of the 2010s, reports have been published about the lithium wealth of this country, in which far-reaching conclusions were made, limited only by the fantasies of the authors. But for some reason, American geologists do not recognize significant reserves of this metal in Afghanistan.
But on the seventh position with 3 million tons is Congo. On cobalt reserves this country is the leader at all — 9,2 million tons. On surprising combination of circumstances the western mass media in 2021 very much attended to destiny of local population, at least the part of it that works in enterprises controlled by China.
Perhaps, at once it is worth explaining that the People’s Republic of China is the leading world consumer of cobalt which about 80% was a share of batteries production. The Chinese company Contemporary Amperex Technology Company Limited from the People’s Republic of China controls about 30% of the world market of accumulators for electric transport. In 2020 the Chinese plants delivered 85% of cobalt, ready to use. And its most part arrived from the Democratic Republic of Congo where a share of the Chinese companies in mining sector makes nearly 70%.
In August, 2021 China Moly Co declared investments of 2,5 billion dollars into production of copper and cobalt in the territory of Congo. By 2023 expansion of production will allow to increase production of copper by 200 thousand tons, and cobalt — by 17 thousand tons.
So, The Guardian edition interrogated a number of employees of the Chinese enterprises in Congo and found out the terrible: the Chinese management raises the voice on Congolese subordinates: «Chinese treat Congolese very badly. <…> they like raising the voice».
Concern about destiny of unfortunate Congo is clear: China is the dominating player in an electric transport segment. It has closed on itself a significant part of the supply chains of those materials that are associated with electric vehicles. Europe is forecast to have 28 lithium-ion cell factories by the end of this decade, with production capacity expected to increase by 1,440% from 2020 levels. To a large extent, this growth will be provided by Asian companies.
According to the CEO of Benchmark Mineral Intelligence (from the statement before the senate of the USA), China builds an equivalent of one megafactory on production of accumulators in a week in comparison with one each four month in the USA. Both the States and Europe hopelessly lagged behind in this area.
All participants of the market understand that at present global lithium — ion economy is only formed. So far its prospects are not clear. But this does not prevent the parties from making attempts to take away individual links from the value chains from the current leader of the race.
In the current conditions, the intensity of the battle of lagging behind players for the skin of an unkilled cobalt bear will only increase.
As for the prices, cobalt repeats destiny of lithium. It rises in price since the end of 2020: from 32 thousand dollars for 1 ton to 82 thousand dollars for 1 ton, although cobalt is still far from the record $95,000 in March 2018.

Painful point in hands of Russia

Russia is not a large player in a lithium segment. But its position in the field of cobalt more essential — it takes the second place. But it is only 4,4% of world production.  It is too far behind the leader. In the field of aluminum, according to USGS, our country was at the third place after China and India, but from shares of 5,44%. It is more than significant indicator.
But there is a segment in which we can safely say that there are no alternatives to Russia. World production of nickel according to GlobalData in 2021 made 2427,4 thousand tons (growth by 6,8% after falling for 4,2% in 2020). Three quarters of this volume were provided by production in five countries: Indonesia (884 thousand tons), on Philippines (351 thousand tons), in France / New Caledonia (206 thousand tons), Russia (202 thousand tons) and Australia.
Meanwhile the position of our country can seem though essential, but difficult to speak about lack of alternative. Therefore it is necessary to explain that nickel differs on purity. In the western sources division into a class 1 (purity from 99,98%) and a class 2 is accepted. The class 1 is closest to H0 purity of 99,99% by the Russian state standard specification. Metal of such quality is used for production of batteries.
According to McKinsey, the class 1 occupies about 46% in world demand. However, it is worth making the reservation that, according to the same data, about 74% of nickel is applied to production of stainless steels and to production of batteries — 5-8%.
According to BloombergNEF, the five of leaders among suppliers of nickel of high purity looks as follows: China (20%), Russia (17%), Japan (14%), Canada (12%) and Australia (10%).
According to the forecast of BNEF it is expected that demand for nickel in sector of batteries will grow from 400,7 thousand tons to 1,5 million tons by 2030. Total production of nickel, according to expectations of McKinsey, by this moment will increase to 3,5-4 million tons.
Nickel avoided an essential rise in price during 2021. However at the beginning of March, 2022 there was a sharp price hike: from marks about 25 thousand dollars for 1 ton to 48 thousand dollars for 1 ton. Behind it not less fast decrease — to 28 thousand dollars followed 1 ton. Take-off was connected with that participants of the market were frightened of introduction by the western countries of a ban on deliveries from Russia as they in fact are uncontested.
The world energy crisis, shortage of the offer of key metals, increase in prices for lithium and cobalt as set of factors reduce chances of the European Union and the USA to introduce large-scale systems of accumulation of energy, reduce competitiveness of electric cars and conduct to growth of prime cost of the equipment for «carbon-free» electric generation. And sanctions opposition only aggravates the situation for consumers.
But even after completion of economic opposition of the West and Russia there will be Napoleonic plans for increase in demand for accumulators within «green» power transition. To satisfy them, either a couple of additional planets with reserves of lithium, cobalt and nickel will be needed, or some incredible technological breakthrough. But, as practice shows, in reality, no one counts on the latter. And about how to moderate battery appetites, apparently, they will think sometime tomorrow. This means that Napoleonic plans will have to be shattered more than once against the harsh reality.