Extraction of raw materials will not meet soaring battery demand unless capital markets change course in the face of environmental, social and governance pressures and invest heavily in new mines, says business data and analytics company GlobalData in its 'Batteries – Thematic Research' report.

The battery industry is set to be one of the most significant over the next ten years and GlobalData forecasts that revenues will exceed $168-billion by 2030, up from $55-billion in 2020.

A 14% compound annual growth rate is expected to 2030, mostly driven by sales from lithium-ion batteries.

“Governments must play a greater role in incentivising mining, refining and battery cell production. An emerging challenge for the next decade will be whether extraction of natural resources and raw materials such as lithium, nickel, cobalt and graphite can meet the soaring demand for batteries.

“More gigafactories may be announced, but where will all the raw materials come from? Despite being finite, these materials are not rare, and greater investment is needed,” GlobalData Thematic Intelligence analyst Daniel Clarke stresses.

Further, government incentivisation for mining and refining of raw materials is fundamental to the world meeting its climate goals, alongside battery recycling initiatives, GlobalData’s report notes.

“Battery recycling is imperative to minimise environmental impact and prevent the depletion of finite natural resources. Many companies are recognising the necessity and financial opportunity of battery recycling, with global leaders including Tesla founder JB Straubel’s Redwood and European battery maker Northvolt.

“Although hopes of a circular battery economy are a long way off, large battery makers may eventually look to vertically integrate recycling capabilities,” GlobalData Thematic Intelligence senior analyst Dr Lil Read notes.

“By 2030, creating a circular battery economy will be a central industry trend and will radically reduce geopolitical dependencies, help decarbonise the ecologically dirty mining sector and ensure the industry is sustainable in the long term,” she says.

Further, while much of the world focuses on today’s geopolitical tug of war over energy between Russia and the Western world, a new clean energy geopolitical battle is being fought throughout the lithium-ion battery supply chain. Western governments have woken up to their potential weakness versus China, and are heavily and actively incentivising companies to build out a regionalized lithium-ion battery supply chain, adds Clarke.

“Lithium is abundant, but significant investment is required in new hard rock mines to meet rampant growing demand,” he points out.

China has a very strong position in mining, refining and cell production, with a near monopoly in various stages of the supply chain.

“China-based battery manufacturer CATL is part of the ‘China Inc master plan’ to dominate the highly strategic global battery industry and, in the process, the global electric vehicle (EV) scene.

“This will be achieved on the back of lavish subsidies, a large and growing captive home market, soft regulations and the many benefits that China’s control of the battery materials global supply chain brings,” highlights GlobalData Thematic Intelligence consultant analyst Michael Orme.

“CATL has come from virtually nowhere five years ago to commanding more than 30% of the global market, which is twice the share of previous battery oligarch Panasonic. In 2018, CATL and Panasonic had around 16% of the market.

“Additionally, CATL’s power is increasing at the expense of the other main incumbents such LG Chem and Samsung SDI. Key foreign customers, notably Tesla, Volkswagen, BMW and General Motors, now accept that they have little option but to make CATL a strategic core of their global supply chains,” he says.