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    By Ronald Stein  Pulitzer Prize nominated author, and Policy advisor for The Heartland Institute on Energy, CFACT,  6/29/22  

    The lithium supply chain for electric vehicle batteries may be in question as well as insurability of cargo ships to bring EV’s to America

    There are a couple of dark clouds hanging over the optimistic growth of electric vehicles (EV’s) that may decimate the supply chain of lithium to make the EV batteries, and how to safely transport EV’s across wide oceans

    .

    • The European Chemicals Agency (ECHA) is expected to classify lithium carbonate, chloride, and hydroxide as dangerous for human health. The decision is expected to be reached by early next year.
    • The recent (March 2022) sinking of a cargo ship with 4,000 vehicles, from a fire where electric-vehicle batteries were part of the reason, may be imposing an insurmountable insurance problem to bring those foreign made vehicles to America

    The first dark cloud is the supply chain for lithium to build EV batteries:

    Lithium’s pivotal role in electric vehicles makes it an important commodity in meeting global targets to cut carbon emissions, and it was added to the EU’s list of critical raw materials in 2020. However, the European Commission is currently assessing a proposal by the European Chemicals Agency (ECHA) to classify lithium carbonate, chloride, and hydroxide as dangerous for human health.

    The EU proposal doesn’t ban lithium imports, from developing countries where the same lithium carbonate, chloride and hydroxide are currently NOT categorized as dangerous for human health. But if legislated will add to costs for processors from more stringent rules controlling processing, packaging, and storage. The decision is expected to be reached by early next year

    Adding lithium salts to the list of materials hazardous for health may prompt the revision of a range of projects in the industry. Stricter rules mean higher costs, so any lithium ore processing plant project would need to be given a second look regarding its environmental impact and feasibility.

    If lithium carbonate, lithium chloride and lithium hydroxide are classified as dangerous, it would complicate the import procedure, production, and handling of the materials.

    The top lithium producer in Germany, Albemarle Corp (ALB.N), may have to shut its Langelsheim plant in Germany if the metal used in electric vehicle batteries is declared a hazardous material by the European Union..

    Like America’s Environmental Protection Agency (EPA), the European Union has been making its environmental and climate rules stricter for decades. The administration in Brussels wants to make the entire continent carbon neutral by mid-century. At the same time, it is striving to achieve the highest level of protection from pollution in the world.

    Initiatives to open mines and ore processing plants such as the ones in Serbia and Portugal have caused a public uproar as environmentalists and the local population are fearful about the impact on nature and people’s livelihoods. In other projects, engineers are trying to make the extraction of lithium from geothermal waters cost effective and harmless, without any mining. Currently, Portugal has called off a lithium project amid EU’s scramble for battery materials.

    The second dark cloud is the insurability of future cargo ships to bring EV’s to America:

    Amid tougher emissions regulations worldwide, established automakers are racing to add more EVs to their lineup. A Reuters analysis found that global automakers such as Audi, BMW, Hyundai, Fiat, Volkswagen, GM, Ford, Nissan, Toyota, Daimler, and Chrysler plan to spend a combined U.S. $300 billion on EVs over the next decade as car companies are betting big on EV’s.  Most of the EV’s will be manufactured in foreign countries far removed from American ports.

    China came from zero production in 1950, to 2019 where it now produces more cars than the USA, Japan, and India collectively. The 6-minute video of the automobile manufacturing “needle” shows how the foreign manufacturing dominance occurred over the that 69-year period.

    Automobiles manufactured per year.

                                                      1950                            2019

    China                                      None                           28 million

    United States                          8 million                      11 million

    Japan                                      31 thousand               9.8 million

    India                                       15 thousand               5 million

    Germany                                 300 thousand              5 million

    South Korea                            None                           4 million

    Bringing those foreign built cars to America may be an insurmountable insurance problem. The Felicity Ace, a 650-foot-long cargo ship carrying hundreds of millions of dollars’ worth of luxury cars sunk in March 2022. The salvage crew working on the burning ship said electric-vehicle batteries were part of the reason it was still aflame after several days. The estimated market value of the Felicity Ace was $24.5 million, while the total value of the 3965 vehicles could be over $500 million.

    With potential fires from EV batteries, who’s going to take the insurance responsibility for their safe passage from the foreign manufacturers to American ports, the cargo ships, or the manufacturers?

    On the positive side, there are sodium-ion batteries that are the main pretender to the throne for EV’s.

    Chinese giant CATL’s first generation of sodium-ion batteries are entering the market in 2023. If the company makes up for the lag in energy density, the new technology may become more competitive than lithium-based solutions.

    The sodium-ion technology has better integration efficiency, performance at low temperatures and charging speed. Experts noted that sodium-ion batteries can be charged only 1,500 times compared to between two and four times more in the case of lithium variants. Thus, longevity of the sodium-ion batteries still needs development work.

    Lithium-ion batteries are dominating the global energy storage market including electric vehicles. However, the sector’s rapid expansion is fueling price growth and drastic shortages are possible as soon as next year. Also, quality lithium ore is scarce and producers across the world are under fire for extensive water consumption in the process and other environmental impacts. Currently, sodium-ion batteries are the main pretender to the throne.

    Until something like an alternative sodium-ion battery comes along to replace the lithium-ion batteries, to meet the projected growth of the EV population, the industry will be monitoring the dark clouds hanging over the industry for a reliable lithium supply chain for electric vehicles, as well as methods to transport those EV’s safely and cost-effectively to America.


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