Tesla warns of upcoming global shortages in battery minerals

Tesla global shortage battery minerals metals nickel copper lithium cobalt
Tesla has forecast a global shortage in key metal components used to make electric vehicle batteries due to underinvestment in the mining sector.

Leading electric vehicle (EV) manufacturer Tesla has warned a global shortage of battery minerals could be on the horizon due to underinvestment in the mining sector, according to sources at a closed-door mining conference in Washington, United States.

Two unnamed sources at the event told Reuters that Tesla global supply manager for battery metals Sarah Maryssael forecasted looming supply challenges for the metal components used to make EV batteries, which include nickel, copper, lithium and cobalt.

Ms Maryssael also reportedly said prices for these key metals could increase exponentially as a consequence of the supply constraints.

A Tesla spokesperson later said Ms Maryssael’s comments were industry-specific and referred to a long-term expectation rather than an immediate consequence.

Tesla’s views have aligned with previous projections made by manufacturers including Ford, Toyota and BMW, which have called for the automotive industry to invest directly in battery metals mines to ensure supply over the next three to five years.

The copper industry

The copper sector has suffered from a lack of investment, although producers are now working hard to develop mines and bring new supply online as the EV trend escalates the rate of its demand.

Electric cars use twice as much copper as internal combustion engines.

In addition, data from consultancy BSRIA has shown devices like Amazon’s Alexa personal assistant and Alphabet Inc’s Nest thermostat will consume about 1.5 million tonnes of copper by 2030, compared to 38,000t today.

This fast-growing demand could present problems in the future if the mining sector can’t keep up.

Cobalt mining

Many companies, including Tesla, are aiming to cut down on their use of cobalt due to the ethical issues surrounding the mineral.

Cobalt mining mostly occurs in the Democratic Republic of Congo, which is notorious for its widespread abusive child labour practices.

According to the sources attending the conference, Ms Maryssael said Tesla will continue to focus more on nickel as part of a plan by chief executive officer Elon Musk to use less cobalt in battery cathodes.

“Some extraction techniques – especially those using child labour – have made its use deeply unpopular across the battery industry, especially with Musk,” Reuters reported.

Tesla’s preferred battery technology is nickel-cobalt-aluminium, which already uses less than 3% cobalt.

Ford has also been reducing the proportion of cobalt it uses in order to lower its dependency on the metal and does not have any direct cobalt offtake agreements in place.

In addition, Samsung SDI recently announced plans to recycle cobalt from used mobile phones and develop lithium-ion batteries containing minimal or no cobalt at all. However, the South Korean battery maker’s reasoning for this was to offset the soaring prices for the commodity.

Mining partnerships

Ms Marysseal also told the conference that there is “huge potential” to partner with mines in Australia or the US.

In December, Australia signed a preliminary deal with the US to support joint research and development of minerals deemed “critical” to the US economy.

The list of 35 minerals includes lithium used in batteries, along with rare earths such as neodymium and gallium, and bauxite and alumina which make aluminium.

Australian resources minister Matt Canavan said at the time of the signing that Australia hoped to supply more minerals to the US in the wake of the agreement.

“For 14 of those 35 critical minerals, we are in the top five of world reserves, so they are the ones we’d like to focus on,” he told media.

Last month, the Australian Government released its Critical Minerals Strategy, aimed at positioning the country as a “world powerhouse” for critical minerals in the energy, renewable and aerospace industries.