Methods to Improve Stability
The stability of production and processing of minerals is an important factor in driving renewable technology adoption. Reducing potential price volatility will improve the affordability of products and drive additional adoption as people and companies transition to renewables.
Lithium-ion batteries are an absolute necessity for EVs and consumer, commercial, and utility energy storage. As technology continues to advance and improve, recycling end-of-life lithium-ion batteries to recover valuable materials will reduce the strain on the supply chain and improve its stability.
Recycling batteries can yield quantities of nickel, copper, cobalt, and lithium. This is an especially valuable service in areas that have heavy adoption of EVs and battery energy systems. After recovering these valuable minerals, they can be sold on the secondary market in order to reduce the stress placed on the primary supply chain.
Recycling technology may reduce supply requirements by up to 10% in the future. This serves as a complement to investment in the primary supply chain and improves the stability of total supply.
Committing to and incentivizing the renewable energy transition is a major factor in securing the supply chain. Governments and policymakers that fully commit to reaching sustainability goals can provide increased certainty for mining companies to confidently invest in developing mineral and REE mines.
The United States Department of Energy recently launched a $140M program to develop America’s first-of-a-kind REE and critical mineral refinery. This initiative is designed to build the domestic supply chain for renewable energy technology and illustrates how governments play a key role in incentivizing companies and the diversification of the REE and mineral supply chain.
Given the current geopolitical risks from a concentrated supply chain, these types of programs create powerful signals for companies. It signals the commitment to a renewable future and provides a large incentive for companies to heavily invest in developing mines, improving recycling technology, and securing a more stable supply chain.
While there is no shortage of minerals and REE available, there are growing concerns about the quality of these resources that present potential economic viability questions. As demand increases, high-quality deposits are depleted earlier leaving low-grade deposits to play a larger role in the supply chain.
In Chile, the average copper ore grade decreased by 30% over the last 15 years which creates economic viability concerns. Lower-grade deposits require more energy raising the extraction and processing costs along with increasing emissions. These factors drive additional upward pressure on production costs leading to an increase in price for minerals and REE.
Research and development are important for improving mining technology and methods to increase the viability of lower-grade deposits. This can reduce the stress placed on the supply chain and also maintain production and processing costs.
Improving Supply Chain Stability
The European energy crisis and global oil shortage illustrate the risk of supplier concentration. The global pandemic, extreme weather events, and geopolitical events drove spiking natural energy and oil prices that affected millions across the world. These crises highlight the importance of transitioning to renewable energy and building a secure supply chain for renewable technologies in order to reduce the risk of price volatility for vital materials necessary for EVs, solar panels, and other renewable products.
Renewable energy technology is reliant on a core set of minerals and REE. This supply chain is dominated by China, the Democratic Republic of Congo, and Chile where most of these materials are produced and processed. The production and processing concentration creates a potential risk that nations must address to reduce their exposure to supply chain disruptions due to geopolitical, extreme weather, and other unplanned global events.
In order to accomplish this, nations must invest in technological improvements across the supply chain. Developing robust recycling technologies for lithium-ion batteries reduces the stress the supply chain faces in the event of a shortage. Building policies that incentivize mining operations to invest in the exploration and development of new mines may add diversification along the supply chain and increase the overall supply of minerals and REE necessary for renewable technologies. Finally, mining technology must improve to make lower-grade deposits more efficient and economically viable.