By 2040, more people will be buying electric cars than traditional petrol and diesel engine vehicles, according to BloombergNEF data.
That is good news for the environment, but the shift towards lithium-ion battery-powered cars has huge implications for a complex global supply chain that is currently dominated by China.
Lithium-ion batteries heralded a consumer tech revolution, given they’re used to power smartphones and laptops, but demand for lithium and other battery metals will spiral given the amounts needed for electric cars.
“Large lithium-ion batteries are a hell of a lot bigger, and have more of these metals than cellphone batteries,” says Brian Menell, a South African mining tycoon who has spotted an opportunity.
“[When] demand goes from the present three or four million electric vehicles to 100 million, 200 million over the next 10 or 15 years… the scale of inputs required is way beyond anything before in industrial history.”
Menell has set up TechMet, a company which is building up stakes in companies and mining projects related to the key ingredients for lithium-ion batteries, magnets, and circuit boards, such as lithium, cobalt, nickel, tin, tungsten, and rare earth metals. Collectively, these are known as technology metals.
He says the timing is particularly important because China has historically dominated the production of the metals now needed for electric cars. That is awkward given there is a US-China trade war raging right now. “It’s a competitive issue, and a massive national security issue in the US,” Menell says.
According to BloombergNEF, China will control 73% of the global lithium-ion battery manufacturing capacity by 2021. And Chinese companies are striking huge deals with US firms, like Ganfeng Lithium’s agreement last year with Tesla, under which it will supply a fifth of its production to Elon Musk’s carmaker.
Menell said TechMet alone can’t counter Chinese dominance, given the nation’s wealth and long-term vision. “We can play a role in balancing the sources of supply for European and Japanese industry. We can play a role in educating government agencies with respect to the landscape, and how to engage in the pipeline to better protect their interests,” he said.
The firm has interests so far in a range of tin and tungsten mines in Rwanda, a nickel project in Brazil, a Canadian lithium recycling plant, and a rare earth concentrates partnership in Bundi. Menell is in the process of raising an $80 million round, and says his conservative estimate is that TechMet will be worth $1 billion in five years time, when he plans an IPO.
Menell says recycling battery metals alone is big business, estimating that 35% of battery metals could come from recycling. “It’s a $10, $15 billion dollar business,” he said. “We believe we can secure first-mover advantage.”
Investors in TechMet to date include high-net-worth individuals. Menell is hoping to attract government agencies in a future round, and is in talks with OPIC, the US government’s development finance organisation, and Japan’s Bank for International Cooperation (JBIC).