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In this January 13, 2021 issue:
- Europe seeks responsibly sourced EV batteries
- 'Benchmark Week 2020' highlights lithium supply challenge
- Lithium carbonate prices on the rise in 2021
- Biden administration to support EV growth and energy transition
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Europe seeks responsibly sourced EV batteries
New rules on batteries supplied to the European market have highlighted the growing push for responsibly sourced, traceable materials in the electric vehicle (EV) supply chain. ESG (environmental, social, governance) is central to the European Union’s lithium-ion battery strategy.
The timing could not be better for Lake Resources, with its development of ‘clean lithium’ via an environmentally friendly direct extraction process.
On December 10, the
European Commission proposed tightened regulations on all types of batteries as part of its “Circular Economy Action Plan.” Under the measures, the Commission will impose legal requirements for all batteries (EV and others), including the use of responsibly sourced materials and carbon footprint labelling.
These improved batteries are expected to make a major contribution towards the electrification of road transport, thereby curbing emissions, increasing the uptake of EVs and facilitating higher usage of renewables.
The Commission also aims to enhance the “circular economy” of battery value chains and promote the more efficient use of resources, seeking to minimise environmental impacts.
From July 1, 2024, only rechargeable industrial and EV batteries with a carbon footprint declaration can be sold in Europe. From July 1, 2027 they will have to comply with maximum carbon footprint thresholds, including mandatory third party verification as part of a ‘digital passport’ system.
"Clean energy is the key to the ‘European Green Deal,’ but our increasing reliance on batteries, for example, in transport, should not harm the environment," said Frans Timmermans, executive vice-president for the European Green Deal.
"The new batteries regulation will help reduce the environmental and social impact of all batteries throughout their life cycle. [This] proposal allows the EU to scale up the use and production of batteries in a safe, circular and healthy way," he added.
The Commission also aims to facilitate the reuse of EV batteries, such as in stationary energy storage or in electricity grids. New IT technologies will be used to increase the transparency of the battery market and the traceability of batteries throughout their life cycle.
30 million EVs by 2030Europe’s green batteries push supports its plan targeting 30 million EVs on the region’s roads by the end of the decade, accelerating its clean energy transformation.
Currently there are 1.4 million battery-electric vehicles on the roads in Europe, highlighting the scope of the expected demand growth.
By 2050, nearly all cars, vans, buses as well as new heavy-duty vehicles will be zero emission, according to the Commission's "Sustainable and Smart Mobility Strategy."
“To reach our climate targets, emissions from the transport sector must get on a clear downward trend. Today’s strategy will shift the way people and goods move across Europe and make it easy to combine different modes of transport in a single journey,"
Timmermans said.
"We’ve set ambitious targets for the entire transport system to ensure a sustainable, smart, and resilient return from the COVID-19 crisis.”
Lake’s Managing Director, Steve Promnitz said Europe’s move on batteries and EVs would support the company’s development of its clean lithium technology.
“Europe’s legislation is a massive step forward for the lithium and EV sector. It mandates that EVs are truly sustainable and requires the whole lithium battery supply chain to follow suit," he said.
“Lake Resources’ vision of producing responsibly sourced, high purity lithium from environmentally friendly, direct extraction technology has now been legislated as the only acceptable product by this powerful economic bloc.
“We are delighted to support Europe in its efforts. Other nations will surely follow. Lake looks forward to advancing our lithium product’s development to satisfy the increasing demand from battery and cathode makers for a clean lithium product.”---------------------------------------------------------------------------------------------------------
'Benchmark Week 2020' highlights lithium supply challenge
Lithium demand continues to rise, while supply lags. This "disconnect" was again highlighted at 'Benchmark Week 2020,' the latest conference by leading battery supply chain researchers,
Benchmark Mineral Intelligence (BMI), which included presentations from
Lake Resources.
"Over the next 10 years to 2030...lithium wants to grow at [approximately] 22% a year, but lithium supply is only responding at [around] 11% a year," pointed out BMI's managing director, Simon Moores.
The demand-supply imbalance reflects a number of factors, with demand drivers including:
* The surging growth in battery 'megafactories,' with 181 in the pipeline through to 2030 compared to more than 100 in 2019 and just five in 2015
* Stationary storage market growing at a compound annual growth rate (CAGR) of 41% through to 2030
* The accelerating EV revolution, with EV penetration rates increasing across Europe, including in Germany, France and the United Kingdom, leading to a CAGR of 31% through to 2030
On the supply side, BMI points to a number of issues, including the stalling of planned expansions "at a critical stage" and the delay of new investments by major producers.
As a result, BMI now sees the lithium market moving into a "structural deficit from 2025 onwards," requiring new sources of supply.
Analysts UBS have also pointed to the increasing challenge for battery makers in securing supplies of key battery metals such as lithium.
The investment bank has predicted a 13-fold increase in battery demand by 2030, driving a step change in demand for raw materials. This results from an estimated 40% EV penetration rate by the end of the decade, increasing lithium-ion battery demand to 2,596 GWh (gigawatt hours) compared to 148 GWh currently, with an additional 136 Gwh in demand from energy storage systems.
"We project an eight-fold increase in lithium demand, a five-fold increase for natural graphite and a tripling in the size of the rare earths and cobalt markets," it said in a November 26 report.
"The rapid rise in raw material demand sees deficits forming over the next decade even if we assume all known projects come to market. We believe prices need to rise to incentivise not only idle capacity to return to ensure supply in 2021, but to encourage exploration and investment to meet medium to longer term demand," it said.
"Accordingly, we have lifted our lithium price forecasts by 10-25% over the next five years while also upgrading our long term prices by 20-30%."
The investment bank's analysts concluded: "
There is not sufficient supply to meet this demand projection based on our knowledge of known projects today. That includes all projects whether they are under construction, in feasibility or still in exploration."As
Forbes contributor Dan Runkevicius
states: "You don’t have to be a Wall Street trader to connect the dots here...Lithium demand will go up. One bullish point to lithium producers who will sell more lithium.
"Then as lithium demand soars, so will lithium prices to spur the build-out of new mines and meet the growing demand from EVs. Another bullish point to lithium producers."
Japan, home to some of the world's biggest automakers, has announced plans to electrify its car fleet by the mid-2030's. Tokyo has
gone a step further, with Governor Yuriko Koike setting a goal for all new cars sold in the city to be hybrids or electric vehicles by 2030.
Already, Toyota Motor has said all new vehicles will be equipped with EV functions (including hybrid models) by 2025, while rival Nissan plans to increase its ratio of Japan EVs to 60% by fiscal 2023.
These latest moves follow
actions by other governments across the world to phase out ICE vehicles, including the United Kingdom, which has banned the sale of new petrol and diesel cars by 2030 and California, which has banned such sales from 2035 and Canada from 2040. China's Hainan province has set a target of 2030, further boosting EV sales in the world's largest EV market.
Growing demand for batteries used in EVs has driven a resurgence of investor activity in the lithium sector, highlighted by IGO’s $1.4 billion investment in Tianqi Lithium Energy Australia for a stake in Western Australia’s Greenbushes mine and Kwinana lithium processing plant.
For emerging producers such as Lake, it all points to a bright outlook ahead, particularly as EV makers seek sustainable sources of supply.
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Lithium carbonate prices on the rise in 2021
Lithium has started the new year on a bright note, based on the latest analysis from
Benchmark Mineral Intelligence (BMI).
Prices within China are showing a sustained rise for the first time in three years, BMI noted in its
January 6 report. This has been marked by rises in Chinese domestic chemical prices throughout the fourth quarter of 2020, "bringing an end to lithium’s two-and-a-half year bear market."
Benchmark’s Lithium Carbonate, Ex-works China Battery Grade, prices increased by 11.7% in the three months to the end of November. Spot pricing of battery grade lithium carbonate in China also jumped, rising by 20% in the last two months of 2020 to US$8,500/t as at December 30.
Improving sentiment is creating positive momentum for contract negotiations from the first quarter of 2021, according to BMI.
The main driver behind the upward movement of lithium carbonate prices in China is the strong growth in lithium iron phosphate (LFP) cathode, which is finding renewed interest in passenger EVs in addition to electric buses. China has less incentive to push towards the higher-nickel chemistries such as NCM 811 and LFP can now compete on energy density terms with mid-nickel NCM variations, according to the consultancy.
The price rises follow strong sales of EVs in China, the world's biggest EV market. EV sales were estimated at more than 1.3 million units in 2020 and could climb to 1.8 million in 2021, up nearly 40% year on year, spurring increased demand for battery metals, according to
S&P Global Platts.
Commenting on the upturn, Lake's Managing Director Steve Promnitz said: "
This supports the view that new producers like Lake will be delivering product into a rising market, with many new potential battery makers seeking long term supply contracts."
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Biden administration to support EV growth and energy transition
The incoming Biden administration is expected to supercharge the global clean energy push, with some US$40 billion already committed to the sector,
according to Politico.
The U.S. Department of Energy (DoE) is poised to play a key role as the new U.S. president looks to leverage clean energy investments toward twin goals of pulling the economy out of its pandemic-hit downturn and delivering on ambitious climate pledges.
The DoE will aim to slash emissions from the transportation sector, the largest contributor to climate change. Electrifying the nation's fleet of vehicles would represent one of the most seismic market and technological upheavals in recent history, according to the January 1 article.
Running the Energy Department will be former Michigan Gov. Jennifer Granholm, a clean energy advocate who worked to bail out her state's auto industry during the global financial crisis and directed stimulus funds to build the LG Chem battery factory that produces batteries for the Chevy Volt.
The $40 billion DoE loan guarantee program, set up under the Obama administration, could be tweaked to make it the backbone of a government-wide clean lending bank that enables the rapid deployment of new innovations, like the installation of batteries and other energy storage technology to support the growth of renewable power,
Politico says.
With the world's biggest economy set to reinforce the EU's transition to EVs, the global clean energy drive is set to gain a significant boost from the new U.S. president, particularly after the Democrats gained control of the Senate.
Wedbush Securities analyst Dan Ives
commented: "A Blue Senate is bullish for the electric vehicle sector, with a more green-driven agenda now certainly in the cards for the next few years.
"We believe a doubling down on EV tax credits and further consumer incentives and government initiatives around the EV sector will be on the horizon, which is a major positive for Tesla, GM, Fisker, and other auto players/EV supply chain."
He added: "One of the core underpinnings of the Biden platform will be around pushing clean energy and zero-emissions vehicles with hopes of accelerating the deployment of electric vehicles and public charging outlets by 2030.
"A linchpin to a steeper demand adoption curve for consumers within the U.S. is centred around the restoring of the the EV tax credit for the EV stalwart, Tesla, which continues to have an iron grip on the market today."
The political shift in Washington will further benefit companies such as Lake, with an advanced project capable of producing the highest quality lithium carbonate available in a sustainable manner.
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Lake in the media and on the conference trail
Lake continues to attract international attention, having participated in last month's Benchmark Week 2020, the leading international industry gathering by Benchmark Mineral Intelligence.
Lake's Managing Director, Steve Promnitz also presented to investors at the 121 Mining Investment EMEA Online conference and to North American investors.
If you have missed one of Lake's recent investor presentations, please access available recordings via the
website homepage. Recent media articles and video interviews are also available via the website.
With the recent
launch of the Definitive Feasibility Study for Lake's flagship Kachi Project, more groundbreaking milestones lie ahead in 2021.
As Lake's Chairman Stu Crow
told shareholders at the Company's latest Annual General Meeting:
"We are now entering a period of considerable opportunity in the lithium sector as global demand grows exponentially as increased penetration of EVs occurs across Asia, Europe and North America increases the need for more batteries to be produced and the rollout of renewable energy storage continues to expand rapidly adding further demand.
"The industry is struggling to deliver enough supply with bottlenecks appearing in conversion of hard rock into chemical in China combined with problems of maintaining product quality on those projects that have increased production.
"The need for a scalable, highly efficient and cost competitive solution that consistently delivers high purity product is high and your Company has the ability to deliver into that growing demand in the years ahead. It’s an exciting time to be invested in an emerging clean tech lithium producer!" For more on Lake’s plans, please subscribe to our e-news service (via our
website's homepage) or follow us on our
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LinkedIn pages for the latest updates.
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Yours sincerely
Steve Promnitz
Managing Director"
