{"id":78609,"date":"2023-03-28T14:30:35","date_gmt":"2023-03-28T03:30:35","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=78609"},"modified":"2023-03-28T14:05:55","modified_gmt":"2023-03-28T03:05:55","slug":"australia-should-hedge-its-bet-on-battery-manufacturing","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/australia-should-hedge-its-bet-on-battery-manufacturing\/","title":{"rendered":"Australia should hedge its bet on battery manufacturing"},"content":{"rendered":"
<\/figure>\n

Australia is assured of rapid growth in exports of the key minerals needed to make modern batteries, but the government\u2019s plan to move into battery manufacturing will require aspiring businesses to overcome the related hurdles of scale, finance and partnerships with end users.<\/p>\n

Global sales of lithium-ion batteries are already around US$50 billion a year, and continued growth is being driven by the rapid take-up of electric vehicles. The total capacity of batteries in vehicles sold in the second half of 2022 was 64% higher than a year earlier, according to a new report<\/a> by specialist critical minerals consultancy Adamas Intelligence.<\/p>\n

The leading manufacturers of lithium batteries are two Chinese manufacturers, CATL and BYD, along with South Korea\u2019s LG Industries, which together account for two-thirds of global sales. Of the top 10 manufacturers accounting for about 90% of sales, four are Chinese, three are South Korean and two are from the United States.<\/p>\n

The major manufacturers are establishing plants in several countries, including Malaysia, Mexico and Brazil. Australia is among a number of countries, including Canada and the United Kingdom, with government programs to develop their own battery manufacturing.<\/p>\n

Tesla and BYD, which also makes electric vehicles, are by far the biggest customers in the market, installing as much storage capacity in their vehicles last year as their 15 closest competitors combined.<\/p>\n

The Adamas report emphasises that the Asia\u2013Pacific region\u2014principally China\u2014is driving growth. It accounted for 60% of new battery capacity installed on the roads in the second half of 2022, while Europe\u2019s share was 24% and the US\u2019s 15%.<\/p>\n

Sales growth for electric vehicles in the Asia\u2013Pacific was 53%, despite the severe Covid-19 lockdowns in China, compared with 21% in the US and 19% in Europe. Storage capacity on the roads is growing faster than vehicle sales as pure electric vehicles overtake hybrids.<\/p>\n

Although the battery market is growing rapidly, the size it has achieved already and the concentration of the major suppliers represent barriers to entry.<\/p>\n

One of the most ambitious attempts to break into the market is being mounted by Northvolt, a Swedish start-up founded by former Tesla executives. It is supported by relationships with the key European automotive and industrial companies, from which it has raised US$8 billion in equity. It has been backed by the European Union, but not yet on the massive scale being offered by the US.<\/p>\n

Northvolt has completed one factory in northern Sweden at a cost of US$4.2 billion, exploiting cheap hydro and solar power, and is building another in a joint venture with Volvo, also in Sweden. A third factory was to have been built in Germany, but may now go to the US to take advantage of the subsidies offered by the US government in its new climate-change legislation. Northvolt says the US subsidies would be worth US$8 billion over the lifetime of the factory, with the US government covering up to a third of operating costs. The firm boasts advance orders for its batteries totalling US$50 billion.<\/p>\n

Another promising battery venture is being promoted by a privately owned Chinese firm, Tsingshan Industries, which controls almost 30% of the world\u2019s refined nickel production and is increasingly focused on the high-quality materials needed for batteries.<\/p>\n

It is an example of moving downstream from mining raw materials into manufacturing batteries, which is the Australian government\u2019s aspiration. Tsingshan has been an important innovator in nickel processing, developing a technology for combining nickel with iron that is being rolled out in Indonesia, satisfying that government\u2019s demand for further domestic processing.<\/p>\n

Tsingshan\u2019s battery subsidiary will be supplied with high-quality nickel materials by a US$2.3 billion plant being built in a joint venture with the leading Indonesian mining company, Nickel Industries (which is listed on the Australian stock exchange). The Financial Times<\/em><\/a> reports that the battery subsidiary, which already holds a 6% market share in China, will be floated in Hong Kong later this year. Tsingshan\u2019s battery venture is backed by the Chinese state-owned vehicle maker SAIC Motor, giving it a guaranteed base of sales.<\/p>\n

Australia is the world\u2019s largest supplier of lithium, accounting for almost half of global exports. The government expects<\/a> Australia\u2019s lithium export revenue to rise more than three-fold in 2022\u201323 to more than $16 billion. Australia also supplies around 5% of the world\u2019s nickel and has reserves of cobalt, vanadium, manganese and graphite, which are all used in batteries.<\/p>\n

\u2018I want to make sure that we use the lithium and nickel and other products that we have to make batteries here. That\u2019s part of the vision of protecting our national economy going forward,\u2019 Prime Minister Anthony Albanese told the National Press Club<\/a> earlier this year.<\/p>\n

Industry Minister Ed Husic comments<\/a> that demand for batteries is expected to rise ten-fold over the next decade.<\/p>\n

\u2018That\u2019s why it is important that we harness the opportunity to become a key player in battery manufacturing and export on the world stage.<\/p>\n

\u2018Australia has globally significant deposits of essential battery materials and strong local innovation and research capabilities. By drawing on these strengths, Australia can take its place in the profitable global battery supply chain.\u2019<\/p>\n

The government\u2019s battery strategy consultation paper<\/a> cites BloombergNEF analysis showing that by 2035, mined materials will be an $11 billion market, refining raw materials to chemicals will be a $44 billion market, while active battery materials will be $271 billion and cell manufacturing $387 billion.<\/p>\n

The challenge for Australia is that battery manufacture will become a commodity business, with sales won on the basis of lowest cost for given parameters of energy density and storage capacity. In commodity manufacture, scale is all important to lowering the unit cost.<\/p>\n

The key to achieving scale while the industry is in its rapid growth phase is to underwrite investment with secure relationships with end customers, as both Northvolt and Tsingshan have demonstrated.<\/p>\n

It would be very difficult for Australia to achieve manufacturing on a scale that is competitive with China in the absence of established customer partnerships. There will undoubtedly be niche opportunities for enterprising start-ups, but there will be risks for small players in an industry dominated by thundering elephants.<\/p>\n

The more logical focus for Australia is beneficiating its raw materials, with government support aimed at investment in refining nickel, lithium and, if production rises, cobalt.<\/p>\n

On 12\u201314 April, ASPI, with the Northern Territory government\u2019s \u2018Investment Territory\u2019 program, will host the inaugural Darwin Dialogue<\/a>. The 1.5 track dialogue will bring together government, industry and academia representatives, including delegations from Japan and the United States, to discuss establishing secure supply and value chains for mining, processing and refining critical minerals outside China.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Australia is assured of rapid growth in exports of the key minerals needed to make modern batteries, but the government\u2019s plan to move into battery manufacturing will require aspiring businesses to overcome the related hurdles …<\/p>\n","protected":false},"author":955,"featured_media":78616,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[3479,3478,2513,2874,2619,2750],"class_list":["post-78609","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-critical-minerals","tag-electric-vehicles","tag-lithium-ion-battery","tag-manufacturing","tag-rare-earths","tag-supply-chain","dinkus-darwin-dialogue"],"acf":[],"yoast_head":"\nAustralia should hedge its bet on battery manufacturing | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/australia-should-hedge-its-bet-on-battery-manufacturing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Australia should hedge its bet on battery manufacturing | The Strategist\" \/>\n<meta property=\"og:description\" content=\"Australia is assured of rapid growth in exports of the key minerals needed to make modern batteries, but the government\u2019s plan to move into battery manufacturing will require aspiring businesses to overcome the related hurdles ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.aspistrategist.ru\/australia-should-hedge-its-bet-on-battery-manufacturing\/\" \/>\n<meta property=\"og:site_name\" content=\"The Strategist\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ASPI.org\" \/>\n<meta property=\"article:published_time\" content=\"2023-03-28T03:30:35+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-28T03:05:55+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2023\/03\/GettyImages-1307690818.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"633\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"David Uren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@ASPI_org\" \/>\n<meta name=\"twitter:site\" content=\"@ASPI_org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"David Uren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.aspistrategist.ru\/#website\",\"url\":\"https:\/\/www.aspistrategist.ru\/\",\"name\":\"The Strategist\",\"description\":\"ASPI's analysis and commentary site\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.aspistrategist.ru\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-AU\"},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-AU\",\"@id\":\"https:\/\/www.aspistrategist.ru\/australia-should-hedge-its-bet-on-battery-manufacturing\/#primaryimage\",\"url\":\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2023\/03\/GettyImages-1307690818.jpg\",\"contentUrl\":\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2023\/03\/GettyImages-1307690818.jpg\",\"width\":1024,\"height\":633,\"caption\":\"NANJING, CHINA - MARCH 12: An employee works on electric vehicle battery system at a workshop of Sunwoda Electric Vehicle Battery Co., Ltd. on March 12, 2021 in Nanjing, Jiangsu Province of China. 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