According to a new research report released by the United Nations Conference on Trade and Development (UNCTAD), Commodities at a glance: Special issue on strategic battery raw materials, the demand for raw mineral resources used to manufacture rechargeable batteries especially for electric vehicles will grow rapidly as the importance of oil as a source of energy recedes. This is highlighted recently by the collapse of prices due to oversupply and weak demand resulting from the coronavirus disease 2019 (COVID-19) pandemic.

The report states that rechargeable electric vehicle batteries will play a significant role in the global transition to a low-carbon energy system and help mitigate greenhouse gas emissions going forward. This is only if the raw materials used in their manufacturing are sourced and produced sustainably.

β€œAlternative sources of energy such as electric batteries will become even more important as investors grow more wary of the future of the oil industry. The rise in demand for the strategic raw materials used to manufacture electric car batteries will open more trade opportunities for the countries that supply these materials. It’s important for these countries to develop their capacity to move up the value chain," said Pamela Coke-Hamilton, Director of international trade at UNCTAD.

Commodities at a glance: Special issue on strategic battery raw materials report by UNCTAD.

Few countries have mineral resources for rechargeable electric batteries

Electric car sales have experienced somewhat of a boom in recent years. In 2018, sales rose by 65% as compared to 2017 to 5,1 million vehicles. They are expected to reach 23 million in 2030, according to the International Energy Agency.

However, the mineral resources required to manufacture the rechargeable batteries that run electric vehicles are finite and only available in abundance in a few developing countries. Approximately 50% of world cobalt reserves are in the Democratic Republic of the Congo (DRC), 58% of lithium reserves are in Chile, 80% of natural graphite reserves are in China, Brazil and Turkey, while 75% of manganese reserves are in Australia, Brazil, South Africa and Ukraine.

Source: USGS National Minerals Information Center (2018)

Take the example of cobalt. The DRC has the largest reserves of cobalt in the world (3,4 million tons). Australia and Cuba have the second and third-largest cobalt reserves, estimated at 1,2 million and 0,5 million tons respectively, followed by the Philippines, and Canada with approximately 0,3 million tons each. However, given how unstable the DRC has been and how exploitative its mining industry has been exposed to be, in its current state it is an unsustainable and mostly unethical source of cobalt.

Added to this, and as highlighted in the report as well, value added to cobalt ores by the DRC is limited to intermediate products or concentrates. Further processing and refining are mostly done in refineries in Belgium, China, Finland, Norway and Zambia to obtain the end products used in rechargeable batteries as well as for other applications. The DRC has not maximized the economic benefits of the mineral due to limited infrastructure, technology, logistical capacity, financing and lack of appropriate policies to encourage local value addition.

Social and environmental impact

The report by UNCTAD also shines a light on the social and environmental impacts of the extraction of raw mineral resources electric for car batteries. As an example, about 20% of cobalt supply from the DRC comes from artisanal mines where child labor and human rights abuses have been reported. Up to 40,000 children work in extremely dangerous conditions in the mines for meager income, according to UNICEF.

Also, in Chile, lithium mining uses nearly 65% of the water in the country’s Salar de Atamaca region, one of the driest desert areas in the world, to pump out brines from drilled wells. This has caused groundwater depletion and pollution, forcing local quinoa farmers and llama herders to migrate and abandon ancestral settlements. It has also contributed to environmental degradation, landscape damage, and soil contamination.

The adverse environmental impacts could be reduced by increasing investment in technologies used to recycle spent rechargeable batteries, according to the report.

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