Ford continues its battery metals acquisition drive

While some analysts have suggested motor vehicle manufacturers and miners should never get into bed, leading automotive firms continue to line up to sign new deals with battery metal miners and producers.

Amongst the most aggressive of the car companies, Ford, has once again stepped up to the table to dine on critical metals, forging a new relationship with a battery metal developer.

The latest deal has seen Ford and leading US lithium product developer Albemarle form a partnership for the supply of battery-grade lithium hydroxide to support the automaker’s ability to up scale its electric vehicle (EV) production.

Under the new deal, Albemarle will provide Ford with more than 100,000 metric tons of battery-grade lithium hydroxide for approximately three million future Ford EV batteries, from 2026 through to 2030.

Expanding supply

“With the growing demand for EVs in the United States, our customers are seeking to regionalise their supply chain for greater security, sustainability and lower costs,” said Eric Norris, President, Albemarle Energy Storage.

“This agreement exemplifies the industry collaborations and investments required. We’re honoured to be entering into this strategic partnership with a legendary automotive manufacturer such as Ford.”

US DOE funding

Baton Rouge, Louisiana-headquartered Albemarle is a favourite with a US government that is desperate to accelerate lithium development in a nation which currently sits way down the list amongst global producers.

In October 2022, Albemarle was awarded nearly US$150 million (A$230 million) via a grant from the US Department of Energy (DOE) as part of the first set of projects funded by President Biden’s Bipartisan Infrastructure Law to expand domestic manufacturing of batteries for electric vehicles (EVs) and the electrical grid and for materials and components currently imported from other countries.

The grant funding is intended to support a portion of the anticipated cost to construct a new, commercial-scale US-based lithium concentrator facility at Albemarle’s Kings Mountain, North Carolina, location.

This is not Ford’s first dance

In late March 2023, Ford joined PT Vale Indonesia (INCO. JK) and China’s Zhejiang Huayou Cobalt’s as their new partner in a US$4.5 billion (A$6.9 billion) nickel processing plant in Indonesia.

The nickel deal is just one component of Ford’s aim to add battery chemistries and secured contracts providing 60 gigawatt hours (GWh) of annual battery capacity to deliver global 600,000 EV run rate by late 2023.

In July 2022, Ford revealed a series of initiatives for sourcing battery capacity and raw materials that light a clear path to reach its targeted annual run rate of 600,000 electric vehicles by late 2023 and more than two million by the end of 2026.

The company’s previous deals included agreements with Contemporary Amperex Technology Co. Limited (CATL), a global leader in lithium-ion battery development and manufacturing and direct-sourced battery raw materials offtake deals in US, Australia, Indonesia.

Ioneer deal

In July 2022 Australia’s ioneer (ASX: INR) signed a binding offtake supply agreement with Ford for the supply lithium carbonate from its Rhyolite Ridge Lithium-Boron Project in Nevada.

Under the agreement, ioneer will deliver 7,000 tonnes per annum (tpa) of lithium carbonate to Ford over a five-year term, starting in 2025.

Ford intends to utilise ioneer’s lithium carbonate to produce batteries for use in Ford EVs through BlueOval SK, the Ford-SK On battery manufacturing joint venture.

Ford and Tesla charging ahead

Ford also recently reached an agreement with Tesla Motors that will provide Ford electric vehicle customers access to more than 12,000 Tesla Superchargers across the US and Canada, doubling the number of fast-chargers available in 2024.

“Widespread access to fast-charging is absolutely vital to our growth as an EV brand, and this breakthrough agreement comes as we are ramping up production of our popular Mustang Mach-E and F-150 Lightning, and preparing to launch a series of next-generation EVs starting in 2025,” said Jim Farley, Ford president and chief executive officer.

EV demand boom

Ford has stated it expects the compound annual growth rate for EVs to top 90% through 2026; more than double forecasted global industry EV growth.

“Ford’s new electric vehicle line up has generated huge enthusiasm and demand, and now we are putting the industrial system in place to scale quickly,” said Jim Farley.

“Our Model e team has moved with speed, focus and creativity to secure the battery capacity and raw materials we need to deliver breakthrough EVs for millions of customers.”

Ford has previously revealed plans to invest over US$50 billion ($77 billion) in EVs through 2026, targeting total company adjusted EBIT margins of 10% and 8% EBIT margins for EVs by 2026.

Car manufacturers racing to sign up battery supplies

In late April 2023, the Volkswagen Group announced it was pushing ahead with its ambitious electric vehicle (EV) strategy in North America.

This includes plans for its battery company subsidiary PowerCo SE aims to build its largest gigafactory to date in St. Thomas, Ontario/Canada with an annual production capacity of up to 90 GWh in the final expansion phase.

Thomas Schmall, Volkswagen’s Group Board Member for Technology, says the company’s planned investment of up to CAD$7 billion (A$7.9 billion) until 2030 has the potential to create up to 3,000 highly skilled jobs at the factory and tens of thousands more indirect jobs in the region.

“North America plays a key role in our global battery strategy. The region will become PowerCo SE’s second pillar beside Europe, with battery cells made in North America for North America. Gigafactory St. Thomas opens the door to a key market for e-mobility and battery cell production. We aim to make PowerCo a global player in the battery business and to pave the way for clean, sustainable mobility. Gigafactory St. Thomas is an important milestone in our roadmap.”

The St. Thomas plant is VW’s first overseas gigafactory for cell manufacturing and will equip the Group brands’ BEVs in the North American region. Groundbreaking is planned for 2024 and production is projected to begin in 2027.

The Volkswagen Group has declared battery technology is a core element of a 10 Point Plan aimed at speeding up the company’s transformation.

Critical minerals race

Virtually every major global car manufacturer has joined the race to obtain batteries and battery materials to fuel their EV aspirations.

With a number of analysts forecasting dire shortages of critical battery metals in coming years, Ford has become the latest to try and ensure it has access to secure supplies by becoming hands-on with the mining sector.

While junior and even major miners, are racing to discover new reserves of battery metals such as lithium, cobalt, nickel and copper, industry insiders have forecast a major supply issue is rapidly approaching.

That roadblock comes in the shape of actual production ready projects – with some forecasts suggesting there needs to be another 400 lithium projects ready to roll by 2035.

While miners of all shapes and sizes have joined the hunt for new lithium resources, the issue is exasperated by the length of time between discovery and development.

Not a good mix

But some experts have suggested that car manufacturers acquiring mining companies to secure the raw materials needed for electric vehicle batteries will end badly.

Jeff Currie, a Global Head of Commodities Research in the Global Investment Research Division at Goldman Sachs, says history has shown that being involved in mining projects requires an expertise that is very different than producing cars.

He said that history has shown that these types of marriages often fail.

For his part, Tesla’s Elon Musk, has declared repeatedly that car companies need to focus on battery metal refining rather than the mining of the raw materials.

“I would like to, once again, urge entrepreneurs to enter the lithium refining business. The mining is relatively easy. The refining is much harder.”