Shifting currents in battery chemistry
Nickel-manganese-cobalt batteries are losing market share. Does that hurt the business case for seabed mining?
“Everything you need to build an EV battery cathode is in here.”
—Gerard Barron, CEO of The Metals Company, speaking about deep-sea nodules on CBC last year.
Proponents of deep-sea mining often note that polymetallic nodules contain not one, but all three principal metals that make up the positive terminal (cathode) of EV batteries. And it’s true that you could theoretically build a so-called nickel-manganese-cobalt (NMC) cathode primarily with seafloor nodules—rather than having to mine, ship and refine nickel from Indonesia, cobalt from the Democratic Republic of the Congo, and manganese from South Africa.
So seabed mining could be a win for efficient, sustainable supply chains. Unless, that is, we could make EV batteries without any of those metals in the first place. Which, it turns out, we can. And in some EV markets, we already are.
NMC batteries have dominated the global EV market for years thanks to their superior energy density. That means more miles per charge.
But a competing battery cathode chemistry, lithium-iron-phosphate (LFP), is growing more popular. LFP batteries are made of easier-to-source materials. So even though they’re less energy dense, they’re much cheaper than NMC batteries.
In 2018, just 7% of global EV sales contained LFP batteries. By 2022, it was 27%. And LFP share keeps climbing, driven by the world’s largest EV market—China—where LFP claimed a whopping 70% of EV battery capacity last year. Consumers there seem happy to sacrifice some range for a cheaper car.
Seabed nodules don’t contain much lithium or phosphate (they do contain iron, but iron is already abundant on land). We can’t make LFP batteries from nodules. So does the rise of LFP hurt the business case for seabed mining?
I figured the answer fell somewhere between somewhat and yes, definitely. But I spoke with an expert—Lukasz Bednarski, a Principal Research Analyst for Battery Metals at S&P Global Commodity Insights—and he painted a more complicated picture. Here are some takeaways from our conversation.
NMC lock-in
With big infrastructure projects, design decisions can reverberate for decades. That’s part of why we’re still saddled with inconveniences like coal-fired power plants, glacial train service, and lead pipes.
Infrastructure lock-in also applies to EV battery factories, which are springing up across America in the wake of the Inflation Reduction Act.
“A few years ago, there were no real supply chains for electric vehicles in Europe or in North America,” said Bednarski. “They’re being built as we speak.”
And for the most part, they’re being built for NMC batteries. It’s not completely clear why. Perhaps car makers assume only the top-performing batteries can assuage Americans’ range anxiety.
Once those NMC factory lines are up and running, said Bednarski, manufacturers will want to recoup their costs. “Considering how much the industry is investing in high-nickel batteries, I don’t see them going away anytime soon.”
Manufacturers will need nickel, manganese, and cobalt for those factory lines. Some may look to the seabed, while others have ruled it out—for now.
One bright spot to note for LFP batteries: Many of the most recent US battery manufacturing announcements, including by Ford and Tesla, are focused on LFP.
LFP batteries are improving
Chinese battery makers have invested a huge amount in R&D for LFP batteries. It’s paying off.
“Chinese companies have managed to get the technology to the level that, when you are on the consumer side—when you drive the car—you don’t see a real difference,” said Bednarski. “It’s a similar range.”
CATL, a Chinese battery maker, recently unveiled an LFP battery with more than 600 miles of range—unthinkable just a few years ago.
As the performance gap between LFP and NMC narrows, more companies and consumers outside China will likely feel comfortable switching to LFP.
But as long as some performance gap persists, Bednarski thinks there will still be plenty of demand for NMC batteries, thanks to…
The luxury market
“When we look at segments of the [auto] market, such as luxury cars, sports cars, upper-level cars for the middle class—there’s still a need for a battery that could provide at least incrementally better performance,” said Bednarski.
That’s why he doesn’t see NMC batteries disappearing. In fact, even as they lose market share, the overall growth of the EV sector (including those fancy segments he listed above) means absolute demand for MNC batteries could rise—along with the constituent nickel, manganese, and cobalt.
“We project a strong growth for all these metals,” said Bednarski.
So when deep-sea mining proponents say we need these metals for electric cars, they’re wrong. But that doesn’t mean the market won’t want them.