ecoHQ

I have been researching the geopolitics of energy transition lately because I have heard a lot of ‘battery tech’ and ‘battery recycling’ everywhere in the past two years. I dug for a little bit on the vast internet and found that battery tech is connected to the renewable energy transition because solar and wind are used to charge batteries. Batteries are made using Critical Minerals (CMs) and Rare Earth Elements (REEs).

Resources that are crucial for us to decarbonise

Then, I realised that there is increasing global tension on CM and REE supply chain control. CMs and REEs, especially Lithium, nickel, cobalt, manganese, silicon, copper, and graphite, are concentrated in these countries mainly: China, Vietnam, Brazil, Russia, India, Australia, United States, Indonesia, Chile, Peru, Mexico, Argentina, Kazakhstan, Greenland, and the African continent. These are critical (all pun intended) to decarbonise various sectors.

These are needed for wind turbines, automotives (think EVs), telecommunications, gadgets, appliances, and equipment that power our buildings, batteries and electricity transmission networks to power your electricity grid, and more strategic sectors like infrastructure, nuclear, and aerospace (SATELLITES). REEs are specifically required for producing semiconductors and other parts used in the defense sector. 

These critical minerals and REE go into your batteries, which help with renewable energy storage, optimisation, and efficiency. Oil and gas (which can be liquified) can be transported over long distances cheaply and easily. However, with the wind and the sun, you need expensive battery storage options to transport them over long distances.

One exciting fact here is that countries like Kenya have localised and decentralised Photovoltaic microgrids powering the cities, whereas in the US (a much-developed nation), removing those transmission lines and alternatively fitting solar-powered microgrids is a hassle. While the US and other developed economies are grappling with the fact that their over-industrialised towns and cities find it hard to retrofit anything under the sun, China is creating a market monopoly on anything and everything related to futuristic tech. Also, it is ironic that the US is pointing hands at China, accusing the monopoly while it has had a monopoly over Big Oil for several decades. 

Supply chains and trade relations issues

China is the leader in owning the majority of the CMs and REEs, with a staggering 60% control over global production, and it also has substantial investment stakes over the ones in other countries. It also accounts for 85% of the processing capacity to process and refine these resources to prepare them for manufacturing plants. So China makes 75% of the world’s batteries and is the leading manufacturer of EVs. By 2025, China is estimated to have one-third of the global mining capacity for Lithium (touted as the new Oil). What’s more? 

China and other major producers of CMs and REEs realised that shipping out these raw resources would not help them retain money. Instead, putting export bans on CMs and REEs will help desperate foreign companies to invest in the native, producing countries to develop processing and refining capacities of those resources, which will bring hard cash to the producers. 

Following China’s suit, more countries are trying to retain supply chain control by issuing export bans and forcing foreign investors to maintain refining and further manufacturing capacities in-house. Free trade agreements are taking a hit because, though a country can issue export bans, the mines are controlled by China.  

In our previous articles, we had explored the environmental and social challenges of critical mineral mining and how India is trying to strategically position itself as a rising power in the renewable energy industry through global mining partnerships amid all the geopolitical tension.

Why are Battery tech and Battery storage hyped now?

Since several countries are still finding ways to control the mines of the world, there is a big rush for extracting these CMs and REEs from wasted batteries. That’s when I realised where all the hue and cry about battery tech and storage is coming from. Why? CMs and REEs are finite and ridiculously costly resources (because we have been plundering like crazy to the point where our planet is losing its regenerative capacity). Resource efficiency is again the key to a sustainable clean energy transition. 

So, how about recycling and reusing these batteries, CMs, and REEs? Who owns the most power in such recycling tech? No brownie points for guesses there.

Building resilient global supply chains will need more grudging handshakes and less of WW3 memes on social media. 

Credits

This article is authored by Deepa Sai, the Director of ecoHQ.

References

https://investingnews.com/daily/resource-investing/critical-metals-investing/rare-earth-investing/rare-earth-reserves-country

https://miningdigital.com/supply-chain-management/the-battle-for-control-of-rare-earth-minerals-supply-chain

https://www.energymonitor.ai/industry/weekly-data-china-seeks-to-extend-its-critical-minerals-dominance-with-overseas-investment-surge/?cf-view

https://www.latitudemedia.com/news/catalyst-the-big-switch-are-batteries-the-new-oil

https://www.energymonitor.ai/sectors/power/energy-monitors-critical-minerals-tracker/?cf-view

https://www.usip.org/publications/2023/06/challenging-chinas-grip-critical-minerals-can-be-boon-africas-future

Click to access Renu-Jangra.pdf

https://www.goldmansachs.com/intelligence/pages/resource-realism-the-geopolitics-of-critical-mineral-supply-chains.html

https://www.afcea.org/signal-media/technology/trash-treasure-critical-minerals-recycling#:~:text=The%20case%20of%20rare%20earth,most%20of%20these%20supply%20chains.