Following some of Tesla CEO Elon Musk’s comments regarding battery production during the quarterly Tesla conference call for shareholders last week, I decided to have two long conversations with Howard Klein and Rodney Hooper of RK Equity about the EV battery production and mining industries.
Rodney and Howard provided a wealth of insight into these industries, which I will unpack in a series of articles and podcasts*. If you would like to hear the full, unedited audio recording, become a CleanTechnica member, supporter, or ambassador — the hour-long audio recording will be shared in full this week with our most loyal supporters.
The decision to start ongoing discussions with Howard and Rodney was made for several reasons prior to the Tesla conference call, but the discussions I had with them on Friday and Saturday were especially charged by Elon Musk’s strong comments about the need for more nickel production and because of Tesla’s battery cell production plans in Europe. This article and the embedded podcast* actually just lead into additional articles and podcasts about those matters — articles and podcasts coming out of our Saturday conversation as well as inevitable coming conversations.
Topics such as “the OPEC of battery production” (China), mining policy & politics in the USA, the approach large traditional automakers have been taking and should take with regards to EV battery needs, the challenges and requirements of mining companies, and other topics are discussed in the hour-long audio recording just mentioned. CleanTechnica articles and podcast snippets will cover some of those topics, while others will remain confined to the uncut audio.
The discussion kicked off around a topic that was not on the agenda at all before the call was scheduled. However, if you follow Elon Musk on Twitter, you can probably guess what it is.
Lithium from Bolivia? Australia? Chile? China?
Before getting to nickel or European battery production matters, it seemed appropriate start our conversation with the hottest Tesla “news” on this topic, Elon Musk’s joking tweet on Friday night about a “coup” in Bolivia — “We will coup whoever we want! Deal with it.” — and the followup tweet that Tesla gets its lithium from Australia.
Rodney explained much more context around the statement above. Lithium doesn’t just get scooped up in Australia and put into Tesla batteries in Giga Nevada.
The precursor mineral used to create lithium carbonate or lithium hydroxide is spodumene concentrate. Tesla, in particular, uses a lot of lithium hydroxide (due to its preferred battery chemistry, NCA, using high nickel cathode).
Albemarle and Ganfeng turn spodumene concentrate from Australia into lithium hydroxide in China. This lithium hydroxide then gets shipped to Sumitomo in Japan, where the cathode material for Tesla’s battery cells is produced before getting shipped across the world again to Panasonic in Gigafactory 1 in Nevada.
Two other key suppliers of this inorganic compound in North Carolina, Livent and Albemarle, reprocess carbonate coming from the US, Argentina, and Chile into lithium hydroxide and send that to Japan for use in the cathodes for Tesla’s battery cells.
Lost yet? If you want another run at that worded a different way, here’s how Rodney put it on email:
“Australia mines spodumene concentrate and ships that to China for processing. Albemarle and Ganfeng convert the spodumene concentrate into hydroxide and ship that to Japan (for Tesla cells). Tesla cells contain hydroxide made from spodumene concentrate from Albemarle and Ganfeng who have chemical conversion plants in China. So Tesla cells definitely have hydroxide from these China based converters. … Tesla cells do not contain hydroxide made from Chinese producers whose material is not yet qualified by the supply chain. This qualification process can take up to 2 years. Hydroxide exports from Chinese conversion plants (mostly Albemarle, Ganfeng and Livent) are responsible for more than 80% of the hydroxide used in high nickel cathodes in South Korea and Japan.
“In addition, Albemarle and Livent reprocess material (carbonate) made in the US, Chile and Argentina in the US into hydroxide and ship that to Japan.”
The suppliers noted above also supply LG Chem, which provides Tesla with NMC811 cells for the “Made in China” long-range Model 3.
As you may have noticed, Bolivia is nowhere to be seen in that process (except that it is next to the northern part of Chile and north of Argentina). Rodney explained on email more about the story there (not the “coup” but the lithium):
“Bolivia has enormous lithium reserves in the Salar de Uyuni. However, these brine resources are very difficult to convert into battery quality material as they contain high levels of magnesium. Separating the magnesium from the lithium is a chemical/energy intensive process. It’s still to be determined whether Bolivia can produce acceptable quality lithium chemicals economically or even at all. Bolivia’s enormous resource feeds well into the misguided ‘lithium is abundant’ narrative. Elon Musk himself tweeted that the issue was not about abundance but around the difficulty in producing high purity hydroxide (LiOH). LFP cathodes can use lithium carbonate, hence why Tesla is looking into that alternative where appropriate to reduce the reliance on hydroxide.”
Rodney also discussed nickel briefly. Nickel accounts for approximately 85% of the cathode used for the NCA batteries Tesla produces in Giga Nevada. This is another matter, and as Elon noted this week, there is a clear concern that not enough nickel mining is planned at the moment.
This matter is more complicated than it sounds, and the supply and demand issue is not a simple “I want XYZ, so please start producing XYZ” story. If it was, Elon wouldn’t have been emphasizing it on the conference call. I will discuss this further in a coming article or two and will also publish another podcast of my discussion with Rodney and Howard about this topic, but it does appear to be a potential problem for Tesla, it’s possible Tesla is not yet approaching the problem adequately, and there’s a whole other level of concern when it comes to legacy automakers at this depth of the supply chain. Stay tuned for much more on this.