Basically everything seems simple. “We are building up the core competencies for battery cell technology,” says Herbert Diess into the camera. “With the chemistry, the raw materials, with the loading …” The VW boss hurries through the corporate strategy in staccato and is over the cliff before anyone gets stuck: raw materials. They are scarce, expensive, and often of questionable origin.
It won’t be easy at all
Many commodity prices rose extremely during the pandemic because production did not get back on track as quickly as demand. For the most part, this should level off again in the next few months, but experts believe that some will stay up there. “The current situation acts like a magnifying glass on the long-term challenges,” says Sarah Hillmann, raw materials expert at the Federation of German Industries (BDI). “Due to digitization, the energy transition, e-mobility and other future technologies, the demand for raw materials will change in the long term.”
Many industries are faced with the same dilemma as car manufacturers. You develop technologies for climate protection or digitization, design visions of sky-blue purity – and need materials such as graphite, cobalt or lithium. Ar cha ical, dirty, limited availability. “Bodenschatz – that really says it all,” says Thomas Seifert, professor at the TU Bergakademie Freiberg: “There is one. When he’s gone, he’s gone. “
According to a current study by the German Raw Materials Agency (Dera), materials could become the decisive bottleneck for many future technologies. The scientists have calculated several scenarios and warn that a dozen raw materials threaten a shortage economy. In the course of the next two decades, the demand could be “well above the current level of production”.
The Dera list includes, for example, neodymium and disprosium, metals that are used for magnets. Without this commonplace part, no electric motor and no generator that generates electricity behind the wind rotor will work. Neodymium is also found in sensors for autonomous cars, and demand is likely to double.
Ruthenium and platinum are used for the hard drives in data centers. The processes for hydrogen electrolysis, which is to become a core element of clean energy supply, use, for example, iridium and scandium. According to the Dera forecast, the demand for precious metals will multiply everywhere over the next 20 years – double or even 19-fold, depending on the substance and scenario. “The list of critical raw materials is getting longer and longer,” says BDI expert Hillmann.
Even copper is an issue
Dera boss Peter Buchholz advises companies to be vigilant. They should “examine their supplier relationships, identify weak points and work out strategies with the suppliers on how they can protect themselves from failures and strong price volatility”.
This does not only apply to exotic materials. Much more electricity will be transported in the future – and the best conductor of electricity is copper. “Copper is indeed an issue,” says Cornelia Müller from the Hamelin machine builder Lenze. In view of the shortage, the top priority is to secure production in the long term. So the demand will be ordered until 2022, “despite the higher costs”.
The copper price, which has been relatively stable for years, is around twice as high as it was before the Corona crisis. According to the analysis company CMC Markets, the price of lithium, which is not traded on the stock exchange, has tripled since spring 2020 and has established itself well above the previous level.
Investors have long since jumped up, with the keyword “lithium” you can currently sell a lot to large and small speculators. Some are already seeing the next “super cycle” coming – years in which more or less all raw material prices will rise sustainably.
Fluctuations in the raw material market
The commodity market is known for its fluctuations. But the need for new technologies gives the topic a strategic dimension. The federal government presented its second raw materials strategy in 2020; Dera was founded in 2010. The EU Commission forged a raw materials alliance in autumn. But the options available to governments are limited. “The supply of raw materials is primarily a task for the economy,” says Hillmann. “Politics must create reliable framework conditions.”
At least the need for lithium has now been clarified. The EU has pushed its climate plans so that they can only be fulfilled with battery-powered cars, China is on the same path, the USA are currently following suit. So the manufacturers outdo each other with announcements about electromobility. Millions of battery vehicles will roll off the production line as early as 2022, and the combustion engine will become a niche product from 2030.
And every electric car has a lithium-ion battery.
For a century, lithium was only used in one place in cars: for the manufacture of the glass panes. Now it will also be stored in the vehicle floor, where the battery is usually housed. According to Dera, the demand in 2040 will be around six times the previous annual production. What the scientists estimated as the maximum a few months ago will soon be out of date. In Europe alone, the Center Automotive Research (CAR) counted 20 planned battery factories last November – also an outdated number. CAR boss Ferdinand Dudenhöffer predicts serious supply problems for the industry.
Buyers have long been around the globe on behalf of global corporations. Lithium is not scarce, but it is unevenly distributed: it is mainly stored in Australian and South American soil. There are also larger deposits and, above all, the processing industry in China. According to a Dera study from 2017, China only has a 6 percent share in raw material extraction, but 40 percent in further processing.
That creates political dependencies. Hildegard Müller, President of the Association of the Automotive Industry, would like to see a new “raw materials foreign policy”. But manufacturers cannot wait for that, any more than they can for alternative sources to be developed.
In the Zinnwald in the Ore Mountains, for example, TU Professor Seifert has been researching a lithium deposit for years that Deutsche Lithium GmbH intends to exploit soon. But there is no start date yet. “There is probably not another occurrence like this in all of Europe,” says Seifert. Underground mining would be “exemplary in terms of the environment”.
That is the greatest shortcoming of the deposits in the “lithium triangle” of Chile, Argentina and Bolivia. “In South America, the little water in the Atacama Desert is used to produce lithium, and it is then sold to us as green technology,” says Seifert.
A question of human rights
The car companies fear nothing more than such dirty stains on clean technology. Your suppliers must provide certificates about the origin of raw materials and the production conditions, standards such as the Initiative for Responsible Mining Assurance must be proven. Specialized testing agencies are booming.
Standards difficult to control
Because standards are written down quickly, but difficult to control. “We do not purchase any raw materials directly,” says VW Board Member Murat Aksel, but the supply chain is controlled “right down to the source”. It can have nine stages, and when the company recently scrutinized its raw material supply it heard about more than 1,000 companies in its own supply chain for the first time.
16 raw materials are monitored in the new management system. Cobalt, lithium, nickel and graphite are used for battery production. But it is also about so-called conflict minerals from areas of civil war: tin, tantalum, tungsten, gold. Child labor, support for guerrilla groups, dangerous working conditions – the list of monitored “human rights risks” is long.
Anyone who violates corporate rules should be urged to change their behavior or, if necessary, be rejected as a supplier. The analyzes are still ongoing, but in one case the industry seems to have given up hope. “The opacity of the cobalt supply chain in itself represents a serious risk,” says the VW Raw Materials Report 2020.
Large reserves in the Congo
By far the largest reserves are in the troubled Democratic Republic of the Congo. From Tesla to Daimler to VW, all car manufacturers want to drastically reduce the cobalt content in their batteries. “But lithium as a basic building block cannot simply be reduced,” says VW Purchasing Manager Aksel.
In any case, scientist Seifert does not consider the development of new deposits to be the ideal solution. He would like to see a “huge recycling institute in Europe” that would promote the recycling of material from batteries, solar cells, magnets, computers and wind turbines. “In the long term, a circular economy must be the goal of EU policy,” writes the Öko-Institut in a raw materials study.
Here, too, the car manufacturers are looking for solutions and promise almost closed material cycles for the future. Specialists such as the recycling group Umicore have mastered the technology, while VW has already started a pilot project for battery recycling in Salzgitter.
In order to replace mining raw materials on a large scale, however, the essentials are missing: old batteries. The small batteries from cell phones and laptops mostly end up in the trash. And it will be a decade before car batteries are scrapped en masse, says VW boss Diess.
But Seifert is convinced that there is no getting around it: “If we don’t recycle seriously immediately, the whole thing will be a disaster for future generations.”
Source: Kölner Stadt-Anzeiger – Kölner Stadt-Anzeiger by www.ksta.de.
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