By now, anyone who has been paying much attention to the whole discussion around the ‘energy transition’ likely knows that the battery technology that exists and must continue to advance to enable it to happen requires massive quantities of an array of minerals with names like lithium, cobalt, manganese and nickel. Most observers will also be aware that the current global supply chains for those minerals are dominated by China.
What many may not be aware of is the fact that China came to dominate these supply chains during the 1970s through early 1990s, a period time in which the United States and other western democracies were backing away from the mining and processing of minerals in response to the first-world’s ‘not-in-my-backyard’ conceit. In so doing, China adopted the technologies and processes prevalent at the time, and has maintained that highly complex and wasteful structure ever since. Other major producing nations of these minerals, like Australia and Brazil, have continued to rely on China for the processing of them due to China’s much lower cost structure.
But now, as the world attempts to embark on an enormously-costly ‘energy transition’ what would, if executed, see U.S. needs for lithium alone rise by as much as 800% by 2030, the question becomes whether it and other nations can continue to stake their energy futures on these same supply chains. As importantly, the question arises as to whether these nations can continue to pretend to retain their high moral posturing related to human rights and the environment while looking the other way from China’s ill behaviors in those realms, as they have done for convenience sake for decades.
It was largely in response to these competing priorities that the Biden administration recently released its “whole of government” approach to raising America’s supply stockpiles of these minerals and collaborating with ally nations in efforts to change the China-centric equation. That strategy has been well received by various interested communities, including miners, automakers and wind and solar companies. But at the end of the day, it is a strategy that focuses on securing additional supplies of these minerals while leaving the U.S. and other nations tied to the current supply chains for years, possibly decades to come.
Because the supply chain is not just about the mining of the minerals; it is also about the processing and refining of those raw materials into the cathode materials that enable the lithium-ion battery technology that currently prevails in the electric vehicle (EV) and renewable energy space. The process of converting these minerals into the cathode materials is extremely complex, very costly, wastes enormous volumes of water, creates high volumes of solid wastes that must be landfilled and carries with it a very large carbon footprint of its own.
I won’t try to explain this in detail – it is all summed up quite succinctly in the video below:
It is into this midstream, processing piece of the complex puzzle that a company based in Canada called Nano One stepped early this year with a technology designed to eliminate several steps in this chain. I was able to connect with the company’s CEO, Dan Blondal, recently to discuss the product and its potential to change the equation of the energy transition for adapting nations.
“Nano One is downstream of mining, essentially,” he told me. “We’ve developed a way to assemble raw materials like nickel, manganese, cobalt and lithium into a cathode material in a vastly simplified way. We cut out all those middle steps. This enables us to go directly from lithium carbonate, which is the first sellable material that a lithium mine has, and directly from metals like nickel, manganese and cobalt, without having to go through the sulphate intermediate.
“It results in a vast simplification in the supply chain, and we believe that it can wholly differentiate North America, and possibly Europe, from the way China does it today.”
The elimination of so much waste product and energy-intensive processing also obviously helps companies achieve their ESG-related objectives. And Blondal believes that elimination is essential, regardless of ESG considerations.
“If we look 20 years out, and we see heavy adoption of this energy transition and the volumes of cars and batteries goes way up, this sulphate waste is untenable. It’s 1-1/2 times as large as the product stream. So you either have to spend a bunch of money recycling it, or you have to dilute it with a whole bunch of water and pump it into landfills,” he said. “If we can create this differentiated midstream, we can avoid shipping all this weight around the world at great cost and footprint, and at great cost strategically to many of these nations since you are giving China such a tremendous amount of control currently.”
Which of course brings us to the big question: How to create this differentiated midstream? The U.S. has a long history of using government policy to incentivize this kind of adoption of new technologies, but the Biden whole-of-government strategy doesn’t really address this particular piece of the puzzle.
I asked Blondal what conversations and outreach were underway to speed up adoption of Nano One’s process. “They’re happening across the supply chain in North America. We’re certainly doing it in Canada,” he told me. “We have the ear of the Canadian government, had the Prime Minister visit our facility. We’ve had all kinds of ministerial support and financial support in Canada. And I think we’re building some momentum in the U.S. as well. The Canadian government can certainly open doors for us there, and we are putting some of the right pieces in place to get in front of the Biden officials.
“Part of it is building relationships with the auto companies because they are similarly incented,” he continued. “When reality sets in, they know they have to change that supply chain, so we are already in deep discussions with them. They’re looking very seriously at how we can change that supply chain and how they can start working to help make that happen.”
I also asked about the recent commitments by automakers like Ford, GM and others to completely transition their fleets within the next 10-15 years. Is that really an achievable goal given the facts on the ground? Won’t all of this take a lot of time?
“I think you’ve kind of hit the nail on the head,” Blondal said. “I think there’s a dichotomy here, too. We all want this energy transition to take place, but it comes at a cost, and some of that cost is a compromise on our values. It’s to improve our values in one area and maybe change how we think in another area. We either have to do that locally, or we have to learn to live with the supply chain that already exists out there. To regain control over that, we have to localize the mining and processing of the minerals, ultimately, or live with the consequences of not doing so.
“It’s one thing to stand up and say we’re going to change that, that we’re going to change the way we drive and how we generate energy, but it takes the whole village to do that. We can’t just change on our own; we have to do it in collaboration with chemical companies, automotive companies and mining companies. We all have to make the decision about where we are going to get our resources, how we’re going to process them, and what the supply chain looks like. It’s an eco-system we have to change, and we have to think about it from soup to nuts.”
In its recent report titled “Renewables 2021 Global Status Report,” REN21, an advocacy group consisting of actors from science, governments, NGOs and industry, published the following very telling chart:
The chart shows that, despite the trillions of dollars global governments and industry invested in promoting the growth of EVs, wind and solar power from 2009 through 2019, those energy sources’ share of final energy demand increased only by a modest amount, barely accounting for the growth in global population and energy use. With global governments and industries already planning to invest many more trillions of dollars into the same renewable sectors over the coming decade, the world runs the risk of seeing a similar-looking chart produced in 2031 if that money is not invested very wisely, targeting solutions that actually work instead of those that represent entrenched, influential interests.
Blondal and his team at Nano One believe they have a smart solution that could dramatically shift and streamline the equation where critical minerals supply chains are concerned. The big question now is whether they can convince the right people in the right positions of power, both in the business and policy realms, to work with them collaboratively to try to make it all happen.