Report: Sustainability of EV industry depends on new mines By EPN Staff Growth in the electric vehicle market has boosted demand for battery materials, including lithium, nickel, cobalt and manganese, presenting long-term challenges for the industry, global consulting group McKinsey & Company said in a recent white paper. Raw materials will likely run low by 2030, McKinsey analysts predicted, largely because the electric vehicle market is expected to grow six-fold from 2021 to 2030, the group said. The report, which also lays out sustainability concerns for the industry, cautions that the sector is “highly dynamic” and heavily dependent on electric vehicle demand. Why it matters The potential supply chain issues represent another challenge confronting the nascent electric vehicle industry, which has been a focal point of policy discussions for much of the past five years. The auto industry remains heavily invested in promoting electric vehicles; adoption hit 18.7 percent of total new light-duty vehicle sales in the second quarter of 2024. Federal and state incentives have helped boost those sales in recent years; last summer, the federal government announced more than $1 billion had been spent to incentivize the purchase of new and used electric vehicles in less than six months. President Donald Trump’s opposition to electric vehicle subsidies also has put the future of those incentives in doubt. California and 12 other states adopted rules requiring all new passenger cars, trucks and SUVs to be zero-emissions vehicles by 2035. Deeper context McKinsey’s report lays out the basic chemistry of the main two modern families of batteries: lithium nickel manganese cobalt oxide (Li-NMC) batteries and lithium iron phosphate (LFP) batteries. The “clear trend” is toward LFP batteries, the report states. Battery producers use more than 80 percent of all lithium mined today, the report states, and lithium mining “will need to increase substantially” to meet expected 2030 demand. Fears of a nickel shortage have already triggered "significant investments in new mines, particularly in Southeast Asia,” the report states, but larger supplies will likely be needed. Cobalt likely won’t run low, the report states, though about 64% of cobalt originates in the Democratic Republic of Congo, so regional disruptions could have worldwide impact. Rising demand for battery-grade manganese, “is likely to outpace supply, requiring the development of new refineries,” the report states. Manganese ore itself is plentiful, but it must be converted to high-purity manganese sulfate monohydrate for use in batteries, which requires “very good process control,” the report states. Roughly 95% of this refined manganese comes from China. More details As more people transition to electric vehicles, and tailpipe emissions decrease, more attention may turn to emissions from the electric vehicle supply chain. McKinsey said roughly 40% of battery emissions come from raw material mining and refining, and that the industry’s best producers can reduce these emissions “by nearly 90% by 2030 via known, available technologies.” The McKinsey report echoes findings from the International Energy Agency, which reported in 2022 that nearly 400 new mines were needed by 2030 to meet required levels of minerals to satisfy global government EV mandates. The agency also reported last year that more countries would likely need to enact tax reform to sustain government revenue as EVs displace internal combustion vehicles and diminish motor fuel tax revenues.
