McKinsey consultancy company predicts that demand for certain battery minerals is set to outpace supply, leading to challenges such as shortages and price volatility.
Analysts outline four key battery minerals for net-zero energy transition - battery-grade lithium, Class 1 nickel, cobalt and high-purity manganese.
According to McKinsey’s estimate, battery producers use more than 80 percent of all lithium mined today, and this share may grow to 95% by 2030. With technological advancements shifting in favour of lithium-heavy batteries, lithium mining will need to increase substantially to meet 2030 demand.
Fears of a nickel shortage prompted by the shift to battery electric vehicles (BEVs) have already triggered significant investments in new mines, particularly in Southeast Asia, but even more supply will need to be brought online as demand for EV batteries continues to increase over time. Although some 65% of Class 1 nickel demand comes from stainless steel sector, the battery sector is expected to take a larger share, raising the possibility of a slight supply shortage in 2030.
Most cobalt supply originates in the Democratic Republic of Congo and Indonesian nickel mines and is expected to increase, while demand could rise by 7.5% a year between 2023 and 2030. Shortages of cobalt are unlikely, but supply is driven by the performance of nickel and copper.
The supply of high-purity manganese is projected to grow moderately through 2030. However, increasing demand for battery-grade manganese is likely to outpace supply, requiring the development of new refineries. The metal’s battery applications require ore conversion into high-purity manganese sulfate monohydrate.
However, analysts at McKinsey believe that meeting net-zero transition goals would require balancing the three dimensions of the “materials trilemma”: availability (supply and demand), affordability (pricing), and sustainability (ESG standards and requirements).
“For producers of battery cells and raw materials, ensuring a reliable and ample supply of sustainable and affordable materials will be crucial to their competitiveness, the ongoing rollout of BEVs, and the net-zero transition overall,” McKinsey said.
Theodor Lisovoy, Managing Editor, Rough&Polished
