On Monday 22 February 2021, Simon Moores, Managing Director, Benchmark Mineral Intelligence, spoke to the Standing Committee on Natural Resources, House of Commons, Canada. This is the transcript of his opening statement:
We are in the middle of a global battery arms race where the world’s major economies are building a base to the energy storage revolution.
The lithium ion battery is the platform technology to unlocking the vast potential that energy storage holds for our world through electric vehicles and stationary storage systems.
This race to build global battery capacity has seen the number of megafactories or gigafactories in the pipeline go from 3 in 2015 to 192 today.
China and Europe have led this charge but North America is just beginning its journey.
The importance of these battery megafactories cannot be underestimated.
They not only provided the necessary lithium ion battery cells at the scale and low cost to tap into this megatrend, but these super-sized battery plants are becoming physical embodiments of a country’s industrial and technological ambition.
Due to significant investments made today, by 2030 China and Europe will hold the sway of this industrial power accounting for 67% and 18% of the world’s battery capacity, respectively.
North America will presently hold just 12%, a fraction of what it will need and a number that is at odds with its global energy and automotive position today.
Access to low cost, high quality lithium ion batteries will be one of the factors in determining which economies come out on top in the race to decarbonise the world.
However, this is not just a battery game but one of supply chain dominance.
As is known to all of our Canadian customers and friends, this begins in the ground at mine level.
While 25% of the cost of an electric vehicle is the lithium ion battery, 80% of the cost of a battery is the minerals, metals and chemicals that go into it.
So in the end the fundamental limiting factor is the access to the quality raw materials and chemicals at a stable long term price.
While the world’s governments and auto majors focus on building EVs and battery plants, a true leader is yet to emerge in building the supply chains that feed them.
At Benchmark, we call this The Great Raw Material Disconnect between those making EVs and the miners and chemists building the speciality materials that go into them.
Canada is a country built on understanding the importance of these supply chains.
Your country has some of the world’s richest resources of EV minerals and metals of lithium, nickel, cobalt, graphite, manganese, copper and rare earths.
And just as importantly, you have the people, the knowhow and the technology to be able to access these resources in a responsible, economic way.
As a result, Canada holds the potential to create the upstream blueprint for this global energy storage revolution.
While the world looks one way to build EVs and battery cells, Canada should look the other way, upstream, to not only ensure the basic supply of raw materials for this revolution, but add the value and make the chemicals, anodes, cathodes and even, maybe, your own 100% Canadian lithium ion batteries, from mine to cell.
This has been China’s approach.
China has built dominance in this supply chain through more than a decade of investments.
Despite the common misnomer, only 23% of all battery raw materials are mined in China but 80% of battery chemicals are refined there.
Having huge midstream capacity ensures these key raw materials flow into China to be value added. It also translates to creating trillions of dollars of value in downstream industries.
This is a game of raw material musical chairs and with no country willing to yet take a leadership position, the music will stop and with it the electric cars and energy storage systems needed to decarbonise the world will grind to a halt.
Canada holds all the ingredients to solve this problem.
To make this happen, Canada needs to align policy, legislation and funding at both a federal and provincial level.
The European Union recently invested 3 billion euros into the battery supply chain which will spark three times the amount of private investment. The United States investing 20 billion dollars into the semiconductor supply chain last year is also an apt example.
The world’s major economies are rapidly realising that economic security is national security, and the lithium ion battery supply chain is the battleground.
I would like to thank Chairman James Maloney and Vice Chair Greg Mclean for inviting me to speak and for their leadership on this subject.