Cathodes 2019: Key talking points

In this blog, we outline just some of the key talking points of Cathodes 2019, the second event of Benchmark Minerals Week.

Cathodes 2019 brought together development stage companies, leading producers and manufacturers from across the supply chain, with companies such as SQM, Galaxy Resources, Pilbara Minerals, Umicore, Farasis, and Pulead Technology amongst many more giving us their thoughts on the state of the industry.

We’d like to thank all of our sponsors, speakers and delegates for making Benchmark Minerals Week so engaging.

Nickel’s battery battery opportunity

Of all cathode raw materials we heard that nickel is coming from the lowest battery demand base, with approximately 1% of global supply currently going into the lithium ion market. However, cathode producers noted that demand growth trends for higher nickel cathodes will make this the fastest growing battery raw material as electric vehicle manufacturers pursue greater energy density.

Benchmark Minerals’and industry analysts pointed towards two largely unexpected events which have significantly influenced the nickel price this year: the Indonesian ore ban and the LME stock draw down. The combination of these factors has seen nickel prices soar in the second half of 2019.

We also heard that OEMs are concerned about the supply of nickel sulphate in the medium term, particularly following the latest supply developments.

Is the cobalt party about to start again?

Cobalt’s future role in lithium ion batteries remained a talking point as speakers explored the context of price falls which had seen Benchmark Minerals Cobalt Pricesmore than halve between Q1 2018 and July 2019.

However, delegates heard that with Glencore’s announcement that it would cease production at its Mutanda mine in the Democratic Republic of the Congo (DRC), there was a rebound in prices. There was debate on the trajectory of future prices as there were warnings that the rebound in cobalt prices could be short-lived however as prices in November had begun to soften once again.

As with other battery minerals, cobalt stakeholders bemoaned the lack of investment in the sector, particularly due to cobalt’s current low price environment.

With the increased focus on supply chain security, cobalt developers pointed towards fears of bottle necks in supply, with the majority of mined supply coming from the DRC, and refined supply from China.

Delegates were given a stark example of this as we heard that Glencore’s Mutanda mine accounted for 20% of global supply of cobalt in 2018, enough cobalt for 2.5 million electric vehicles according to Benchmark Minerals’estimates.

We also heard about cobalt developers’ plans to bring mined and refined cobalt supply to North America and how the US government is increasingly concerned with the security of supply of battery raw materials.

Despite a difficult year, lithium demand has increased

Lithium has had a tough year in terms of sentiment with the average chemicals prices down 12% at the time of the Cathode 2019 conference, with supply pressures weighing heavily.

With excess spodumene production capacity prices have which have led to lithium majors pulling back on their expansion plans. During this period tier 2 and 3 lithium converters in China have also slowed their investments.

We heard that while there had been downward pressures on prices from oversupply, the slower than expected adoption of NCM 811 has also put lithium hydroxide prices under pressure to a certain extent, tightening the premium over carbonate.

The combination of price falls and negative news has led to negative sentiment among producers. However, suppliers emphasised there is a disconnect between market sentiment and overall demand for lithium chemicals, which is up 18% in 2019.

NCM 811 cathodes appear but slow uptake

There was discussion of how NCM 811 (nickel, cobalt, manganese) batteries have started entering the battery scene in 2019 but the consensus was that the uptake has been slower than many anticipated.

According to new data presented from the Benchmark Minerals Cathode Market Assessment, NCM 811 now accounts for 8% of total cathode capacity. Much of this is new capacity has only come online fairly recently. However, this figure only reflects capacity and it unlikely that this capacity is being fully utilised. For instance, only 5% of battery megafactory capacity globally is targeting NCM 811 production.

The conference heard also heard rumours of LG Chem will be supplying Tesla with NCM 811 cylindrical cells for Model 3 production in China. However, with talk of NCM 811 appearing in electric vehicles there have also been high profile safety concerns, which are associated with higher nickel batteries.

LFP resurgence in post-subsidy China

LFP was a discussion point as speakers from across the supply chain noted that there had been a resurgence of LFP cathodes in China since the change in the electric vehicle subsidy regime.

As Chinese subsidies on low-range electric vehicles have been cut there have been suggestions that automakers producing for the Chinese market have moved back to LFP production.

We heard that in China LFP remains the preferred cathode choice for the early stages of the electric vehicle market, and is widely used in the electric bus market. However, across the broader electric vehicle market the proportion of batteries using NCM materials has increased and is expected to continue to do so while LFP’s share falls.

2TWh megafactory capacity, 103 in the pipeline for 2028  

During the course of the conference Elon Musk announced that Tesla would be building a European gigafactory near Berlin. We heard that this brings the number of megafactories in the Benchmark Minerals Lithium Ion Battery Megafactory Assessment to 103, with 2,028 GWh of capacity in the pipeline for 2028.

The rate at which battery megafactories have been announced has dramatically increased over the past twelve months, with the number of factories and capacity almost doubling during that period. Delegates were told that at the Cathodes 2018 conference, Benchmark Minerals was tracking 52 megafactories with 1,147 GWh of capacity in the pipeline for 2028.

To receive a free copy of our new Cathode Market Assessment – which we unveiled at the conference – contact [email protected].

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