What is the biggest uncertainty facing battery supply chains over the next decade?

Frith says the question that keeps coming up when he talks to cell manufacturers in Europe is how big demand is actually going to be. Over the next five or ten years, that may be the hardest thing about supply chains and raw materials generally. Demand could outstrip where the industry currently expects it to land, which is the version people plan for. The possibility nobody talks about is the other one, that demand comes in lower. He puts himself on the more bullish side of that argument, but says it remains a theory that has to be tested.

Will there be a second life battery industry?

Frith does not give a straight answer, and that is his point. He says the question came up in the discussion after the session and that people are pretty vocal about it at the moment. There are two camps and most people are firmly in one or the other. He describes himself as in the minority trying to sit on the fence, and says he will see how it develops. Bhavya Jha, who has spent two years working on second life, says she used to be in the minority too, and that being around one camp makes their reasoning much easier to follow.

Does Afghanistan's lithium matter for the battery industry?

Not in the near term, on Frith's reading. The potential of having lithium in Afghanistan is not a short-term thing, because developing those resources means looking years down the line. He also finds it odd that the resource question only came up once everyone was pulling out. What he thinks it does raise is a broader issue for the industry, around the ethics of procuring raw materials, whether that is lithium from Afghanistan or cobalt, which the industry has already been through. He frames it as part of a wider push not to take raw materials out of a country and add the value somewhere else.

How do you get into the battery industry?

Frith's answer is to start reading and to join conversations like the session itself. His reasoning is that increasingly everything is going to be part of the battery industry, so coming from outside it is less of a barrier than it looks. He tells Bhavya Jha that arriving in batteries from an international relations background is a good route, and connects it to how much of the current supply chain debate is geopolitical. He returns to the same idea at the end: the industry now touches international politics, sustainability and the ESG world, so it is no longer just battery scientists and miners.

Why does the battery industry keep producing new things to talk about?

Frith says he always feels lucky in the battery industry because there are roughly two-year development cycles for new technology, and that pace does not seem to be slowing yet. More and more interesting things keep coming out, which gives him, and the podcast, something to talk about. He also reads the fact that the Clubhouse series had already run 31 weeks as a sign of how much is going on. The other change he points to is scope: the industry is touching more and more aspects of society, so the conversation now takes in international politics and ESG as well.

Episode 44 · 27 August 2021 · 00:12:24

Where the value goes when the ore leaves

James Frith from BloombergNEF on Regional Supply Chains

BloombergNEF's head of energy storage on Indonesia's nickel export bans, Chile's failed attempt to tie lithium royalties to cathode plants, and why demand is the number he is least sure about.

James Frith

Head of Energy Storage, BloombergNEF

Frith leads energy storage research at BloombergNEF. This episode is a debrief recorded immediately after a Battery Revolution Clubhouse session on regional battery supply chains, with Bhavya Jha co-hosting alongside Simon Engelke.

What this episode covers

Frith's most concrete example of a country trying to keep more of the battery supply chain is Indonesia, which brought in export bans on nickel so that more value gets added inside the country rather than somewhere else. He pairs it with what he calls a failed attempt in Chile, where the government offered lower royalty fees to companies that bought lithium and converted it into cathode material within the country. A couple of companies put plans forward and nothing has come of them so far. His reading is that the lithium-ion industry could be a way of levelling up globally, rather than a matter of moving raw materials out and adding the value elsewhere.

On Afghanistan, which ran through the live session, Frith is careful about timescale. Developing lithium resources there is not a short-term proposition: you are looking years down the line before anything comes out. He also finds it odd that the resource question only surfaced once everyone was pulling out. What the moment does raise, he thinks, is the older question of how raw materials are procured ethically, whether that is lithium from Afghanistan or, as the industry has already seen, cobalt. He expects a range of approaches rather than one. Automotive companies will weigh ESG criteria as part of what they offer with an EV, while the most cost sensitive applications will not.

Asked what stuck with him from the session, Frith gives two things. The first is a question he says comes up constantly with cell manufacturers in Europe: over the next five or ten years, the hardest part of supply chains and raw materials may be working out how big demand actually gets. It could outstrip where the industry expects it to be. The side nobody discusses is that it could also come in lower. He puts himself on the more bullish side and says the theory still has to be tested. The second is second life, where he sees two vocal camps and describes himself as in the minority, sitting on the fence.

Simon Engelke picks up the Indonesia example and ties it to Battery Associates' own work on local capability: training through the Battery MBA, which he says has participants from over 25 to 30 countries, scholarships to support people locally, and a battery map in development intended to make the information more widely available. Bhavya Jha, whose background is in international relations and whose battery work has focused on second life, notes how suddenly Afghanistan's resources became a live topic across industries. Frith closes on why the subject keeps giving: two-year development cycles for new technology that show no sign of slowing, and a field now reaching into international politics and ESG rather than just scientists and miners.

Questions from this episode

What is the biggest uncertainty facing battery supply chains over the next decade?: Frith says the question that keeps coming up when he talks to cell manufacturers in Europe is how big demand is actually going to be. Over the next five or ten years, that may be the hardest thing about supply chains and raw materials generally. Demand could outstrip where the industry currently expects it to land, which is the version people plan for. The possibility nobody talks about is the other one, that demand comes in lower. He puts himself on the more bullish side of that argument, but says it remains a theory that has to be tested.
Will there be a second life battery industry?: Frith does not give a straight answer, and that is his point. He says the question came up in the discussion after the session and that people are pretty vocal about it at the moment. There are two camps and most people are firmly in one or the other. He describes himself as in the minority trying to sit on the fence, and says he will see how it develops. Bhavya Jha, who has spent two years working on second life, says she used to be in the minority too, and that being around one camp makes their reasoning much easier to follow.
Does Afghanistan's lithium matter for the battery industry?: Not in the near term, on Frith's reading. The potential of having lithium in Afghanistan is not a short-term thing, because developing those resources means looking years down the line. He also finds it odd that the resource question only came up once everyone was pulling out. What he thinks it does raise is a broader issue for the industry, around the ethics of procuring raw materials, whether that is lithium from Afghanistan or cobalt, which the industry has already been through. He frames it as part of a wider push not to take raw materials out of a country and add the value somewhere else.
How are resource-rich countries trying to capture more of the battery value chain?: Frith gives two examples. Indonesia brought in export bans on nickel so that more value could be added inside the country, keeping more of what those nickel supply chains generate in Indonesia. Chile tried something comparable with lithium and it did not work: the government offered lower royalty fees to companies that bought lithium and converted it into cathode material within the country. A couple of companies put forward plans, and so far nothing has come of them. His wider point is that the lithium-ion industry could be a route to levelling up globally, building a more sustainable and more ethical value chain rather than shipping the ore out.
How do you get into the battery industry?: Frith's answer is to start reading and to join conversations like the session itself. His reasoning is that increasingly everything is going to be part of the battery industry, so coming from outside it is less of a barrier than it looks. He tells Bhavya Jha that arriving in batteries from an international relations background is a good route, and connects it to how much of the current supply chain debate is geopolitical. He returns to the same idea at the end: the industry now touches international politics, sustainability and the ESG world, so it is no longer just battery scientists and miners.
Why does the battery industry keep producing new things to talk about?: Frith says he always feels lucky in the battery industry because there are roughly two-year development cycles for new technology, and that pace does not seem to be slowing yet. More and more interesting things keep coming out, which gives him, and the podcast, something to talk about. He also reads the fact that the Clubhouse series had already run 31 weeks as a sign of how much is going on. The other change he points to is scope: the industry is touching more and more aspects of society, so the conversation now takes in international politics and ESG as well.

Listen to this episode Watch on YouTube

Part of Raw materials and mining

Transcript

About this transcript. Generated automatically from the recording, then corrected against a glossary of company and guest names. It has not been checked line by line. Machine transcription mis-hears technical terms, numbers and names, so treat any figure here as a prompt to check the recording rather than a quotation of record. Spotted something wrong? Tell us.

0:00Introduction

0:00Welcome to Battery Insiders, your podcast providing you insights in the fascinating world of batteries. Hosted by Bhavya Jha and Simon Engelke. And we're back. Welcome, Simon, and welcome, James. It is so wonderful to have you here to reflect with us on our conversation that we just had earlier today with a wonderful group of people. So, Simon, I'm going to start with you. James gave us a lot of food for thought. What did you think? Yeah, I loved it. I think it was really one of these sessions, which, at least for me personally, gave me lots of food for thought and I think new concepts. And also, I mean, it was, you know, for people who have been following us for a while, it was one of these requested sessions, like James Smith from Bloomberg Energy Finance, BloombergNEF has been requested multiple times before. So we knew we were in for a treat. And, you know, I mean, I've been following you for some time, so it's always fantastic to see your work. And yeah, for me, really, what really stuck with me was your kind of anecdote in a way how we started off the session with lithium really being the new oil and kind of talking about the geopolitical situation.

1:08Also, of course, very, you know, time sensitive right now is Afghanistan, but also all around the world, how this kind of, you know, also kind of changes maybe the perspective on the raw materials to lithium and how lithium-ion batteries and how crucial they are. So, James, you know, good to have you here. Also, the reviewer and the reflection, any thoughts from your side on the session? Yeah, perfect. And great to be here. And thanks for kind of inviting me to, you know, the session itself. It was, it was, it was really kind of fun to take part. And I think, you know, my first note is actually from my side of things, first time for using Clubhouse. So I feel like I've

1:42How big will demand get, and will second life happen

1:42kind of been brought into the future again. I feel like maybe I was getting left behind slightly. So, yeah, good to kind of take part in that. Yeah, I mean, like kind of lots of things to take away. I suppose the two things that probably stick out is this question that actually comes up a lot at the moment when you're talking to some of the cell manufacturers in Europe is, you know, actually one of the biggest difficulties we're probably going to face over the next kind of five or 10 years when it comes to kind of supply chains, full stop and raw materials is actually how big is demand going to be? Are we going to kind of outstrip, you know, where we expect it to be? Or, you know, perhaps actually on this is what people don't talk about. Perhaps on the other side, perhaps demand is going to be lower. You know, I think I'm probably on the more bullish side, but we'll wait and test that theory. And then actually one of the kind of points that came up in the discussion afterwards on second life batteries. And I think it's, you know, it's just as we're getting to the end of it.

2:46And just this question on even, you know, will there be a second life industry? And people are pretty vocal on that at the moment. I think you have two camps and you're either one or the other. I feel like I'm in the minority trying to sit on the fence. So we'll see how that develops as well. Yeah, the past two years, my work in batteries has actually been focused on second life. So you can have a causing a bit of a giggle here. No, it's so funny. Yeah, the dilemma is definitely real. I used to sit in the minority as well. But when you're around a group of people who fall in a

3:23International relations meets the battery supply chain

3:24particular camp, you end up kind of understanding their point of views a lot more. But no, that's, that's interesting for sure. I have to, I'm going to come clean. Like I love that you were talking about everything right now going on geopolitically. I, my background is actually international relations before it was batteries. So funny that batteries, I can even consider that part of my background now. And yeah, so international relations is really important. Obviously it plays a huge role in batteries, in supply chain, in security of supply chain. And there's just a lot coming out right now about what the resources available in Afghanistan are beyond lithium as well. And it just seems like all of a sudden, everybody's talking about this country from so many different dynamics, perspectives. It's all of a sudden become very critical for like so many industries. And maybe it's been the case all along, but I will say like, that has not come up in the past two to three years for me, whether it's been for batteries or other industries such as pharmaceuticals. What are your thoughts and what do you think, what do you have any thoughts on like the current situation and like what we in the battery industry need to be looking out for as the situation like pans out? I mean, you know, so much of this will happen in like business meetings now and I imagine that, you know, it's going to be an extensive conversation, but I don't know any like current, very much in the moment thoughts on that. Well, I mean, my, my, my, my first thought that there is like actually coming from an international relations perspective and then coming into the battery industry is pretty cool. Um, you know, I think that's definitely relevant and goes back to, you know, one of the other discussion points,

5:08Afghanistan, cobalt and the ethics of procurement

5:09um, just around, you know, if you want to get into the battery industry, what should you do? And it's that thing of like, increasingly everything's going to be part of the battery. Just start reading, just start reading, join conversations like this. Um, no, definitely. And, and I mean, actually, yeah, to your point, it is kind of odd that this resource question in, in, in Afghanistan hasn't come up until suddenly everyone's pulling out and they're like, well, what about the resources? Um, but, you know, I, I think for the battery industry, you know, the potential of having lithium in, in, in Afghanistan, you know, is not a kind of short-term thing anyway, to develop those resources you're looking at for years down the line, but I think it touches on the broader context really in the battery industry around, um, you know, the ethics of procuring raw materials, whether it's, um, you know, if it was lithium that was coming from, from Afghanistan or, you know, as we've seen in the past, um, with cobalt. And I think more broadly as well, that there's a push nowadays to try and, you know, and I'm sure this goes beyond just the battery industry that I'm less aware of, but to try and, um, not just kind of pillage raw materials from a country and take it somewhere, add, somewhere else to add value. You know, we, we, we've seen in Indonesia where they've brought in export bands on nickel so that they can add more value in country and bring more of the kind of, you know, value from those supply chains that nickel serves to their, you know, yeah, to Indonesia.

6:44We saw a kind of failed attempt, I guess, with lithium in Chile, where, um, the Chilean government

6:49Chile's lithium royalties, levelling up and ESG

6:49offered, um, kind of lower, you know, lower royalty fees if companies were buying lithium and then, um, kind of converting it to cathode material within the country. Um, there were a couple of companies who put forward plans for that and actually kind of nothing's come so far, but, you know, I think from, from many angles, really kind of going to the lithium-ion battery industry could also be about leveling up, um, kind of globally, you know, and not necessarily just taking the raw materials and taking it somewhere else. You know, we could make this a much more sustainable value chain and a much more ethical value chain. And I think we'll probably see companies, some companies doing that. I think kind of when it comes to perhaps, um, making the lowest cost batteries for the, you know, the most cost sensitive applications, you won't focus on that, but, you know, hopefully we start to see a kind of a range of approaches there, um, and, and kind of companies, particularly the automotive companies considering the kind of ESG criteria, you know, more generally as part of the offering that they have for EVs. Um, but perhaps, uh, you know, I suspect maybe I'm overstepping my mark as a bachelor scientist here and you, you know, you can rebuke some of those comments. No, no, it's totally fine. I think all good food for thought.

8:07And, um, uh, like it's actually like literally good food for thought, right? Like rather than the way, I think the perspective you're bringing is how do we keep it sustainable? How do we not, um, and that just doesn't apply only to Afghanistan, but across the world, as we find and identify, um, areas with certain types of resource, how do you kind of pay it back within

8:30Building local capability and democratising the knowledge

8:31that community and support that effort? So, um, no, I appreciate it. Any thoughts on that, Simon or? Yeah, no, I think, I mean, uh, I just want to really appreciate this, you know, this, um, this, this example to also as Indonesia. And I think it's, it's something which, I mean, I think building up a localized supply chain and really, you know, creating like, you know, value locally, I think it's one of our, you know, which I think is really also deeply rooted in our work as battery associates, right? To kind of train people around the world, you know, on the BatteryMBA, I think so far we're over 25 to 30 countries. Um, you know, we have people participating and really the idea can be, you know, support people also through scholarships, et cetera, locally. And the same thing also, you know, knowledge, but also tools. I mean, you know, we have a couple of things to be announced also of like a battery map. We have been developing, like essentially trying to map all of these different things, really trying to democratize some of these information and knowledge. And we're trying to, you know, create also like, you know, like local resources, right. And I think in people, as we also discussed, and I think it's just so what always really humbles me is kind of all these, you know, amazing people joining these sessions and we are so, so excited to learn and so excited to be part of these, um, solution and it's part of this movement. And I think this is just something which I'm, which always gets me optimistic, you know, when you have these people jumping and saying, but how can we do this here in my country and how can we do this there? And I think, you know, as long as we ask these questions and we have these platforms, exchanges, and insights and, you know, and views, um, I think, you know, I see a lot of potential and I think we're going to have really exciting future all ahead.

9:56Thanks. Yeah, no, it's been such an honor to be a part of that effort. I can't believe we're coming up on a year, but, um, until then, I know we have a couple of more sessions lined up. Do you know what, where we're headed next?

10:13Who to hear from next, and why the pace holds up

10:14Actually, battery revolution. Actually, I don't. So that's a, that's a, that's one, uh, it's going to be exciting. Maybe, I mean, James, you don't have to answer, but if you have anyone you think, for example, you would think we should try, I mean, you know, it might take a bit longer than a week, but we always love to get recommendations from, from voices and from perspectives people like to hear from. I mean, I'm sure there's a few, a few people I could kind of, um, throw out there. I mean, off the top of my head, I don't know if they've done sessions, even, um, you know, Matt Lacey, um, at Scania, um, has lots of thoughts on the, on the, the battery industry. Um, all the Rico we'll see from, um, Nissan as well. Uh, then if we go over the pond to the U S, um, you know, Venkat, um, certainly is doing some interesting things on the, um, on the aerospace industry at the moment, uh, you know, and kind of plenty more, I think, um, we, we, we could jump into. I think the other thing to add is, I mean, it's impressive as well, kind of like doing this for 31 weeks, it shows kind of how much there is going on in the battery industry, how much exciting stuff there is to talk about. And I, I have a feeling that, um, you know, there's probably going to be many years of this to come. I think luckily I always, or I always feel lucky in the battery industry that, you know, there are kind of two year development cycles for new technology, and that doesn't seem to be slowing down yet. You know, we're seeing more and more kind of interesting things coming out of the industry, which, which gives me something to talk about, you know, you guys, something to talk about. Um, and then, as we said, kind of the battery industry is touching on kind of more and more aspects of society, no longer just kind of battery scientists and, and miners, you know, it's now kind of

11:56Closing thoughts

11:56international politics and, um, kind of going into the sustainability and the ESG worlds as well. Yes. Wonderful. And I think with this, you know, I think we're going to wrap it up for today because of time, even though I know we would love to talk much longer. And I, I know I feel like this conversation could continue. Okay. But yes, until next week. All right. Bye. Bye.