“No Time to Waste” in Bringing Critical Raw Materials Supply Online

Building out regional supply chains

From the US to Europe, the push to build out regional supply chains has become critical. Legislation aimed at securing supply of raw materials for batteries and reducing vulnerabilities — such as the US Inflation Reduction Act and Europe’s Critical Raw Materials Act — are set to continue shaping the lithium-ion industry going forward.

“We have to ask ourselves from a first principle basis, what is fundamentally the most efficient supply chain?” Maryssael said. “I’d like to challenge the view that puncturing through refining capacity in Europe or North America might not always be the right thing to do. Even though a lot of western policy has been predicated on this idea.”

When building supply chains, a key factor to consider is how to reduce end-to-end costs while balancing environmental footprint factors. “We cannot look at each step of the supply chain in isolation; we need to think about this entire value chain, designing from mine to cell,” Maryssael told the audience in Budapest.

Another element that the executive believes is critical to consider is speed to market.

“How do we get scale? How do get these materials qualified as quickly as possible into the midstream, as well as the downstream?” she questioned. “We also have to think about sharing the value created with the countries that produce many of the minerals we depend on, especially in places like Africa and South America.”

The Democratic Republic of Congo is the top cobalt producer and the third largest copper producer in the world. Last year, Chile was the second largest producer of lithium, with neighbor Argentina having the fourth spot and Brazil coming in fifth.

“This is also an important strategic consideration in diversifying refining capacity to ensure that we don’t end up in a situation like today with China’s concentration of refining capacity,” she said. “How do we ensure our policies are more inclusive and less protectionist so that other countries stand to benefit from the energy transition?”

For Maryssael, supply chains will need to be designed differently across jurisdictions and across different metals.

“But the point is, we need to take a holistic view of how we build them, and don’t enable just a handful of players to catch all the financial upside,” she explained during her presentation. “I don’t think that it’s going to be beneficial, again, from a scale to market perspective, to try and isolate China — I think we need to work with them.”

Consolidation in the lithium space

With lithium prices in China falling from all-time highs, now might seem like a good opportunity for mergers and acquisitions to happen in the space. In fact, at the end of March, Albemarle (NYSE:ALB) made a takeover offer for Australia’s Liontown Resources (ASX:LTR,OTC Pink:LINRF). The bid was rejected, but could signal what is to come in the space.

Consolidation will need to happen if the industry is to supply battery raw materials in large volumes and quickly, Maryssael said.

“We need to focus on what we’re good at, and we need to do that through partnerships,” she added. “So let’s not underestimate the complexity and know-how required to consistently and reliably produce better graduate chemicals at scale and get those qualified into the supply chain. There is no room for error when supplying qualified lithium hydroxide to cathode.”

For the industry leader, going forward it will also make more sense for OEMs to qualify materials from fewer producers.

“When you’re dealing with multiple producers producing small volumes, it slows down the qualification process and introduces more risk from a supply chain management point of view,” she said. “Consolidation is going to happen across the industry — that’s going to be necessary to ensure that we get these materials into batteries as quickly as possible.”