Rethinking links in the battery supply chain

Leveraging its mineral wealth and long automotive history, Canada is positioning itself to play a leading role in North America’s electric-vehicle battery supply chain.

But fierce competition and regulatory hang-ups mean that success is hardly assured.

China currently accounts for between 75 and 85 per cent of the world’s capacity for both battery-material refining and cell manufacturing, said James Frith, an analyst who heads the energy storage team at researchers BloombergNEF. But North America is poised to regain ground as it moves production back to the continent throughout the 2020s.

“If you have a supply chain stretching the length of the globe, it becomes harder to fit into [the auto industry’s] just-in-time business model,” Frith said.

Today, minerals mined in Canada or the United States may circle the globe before returning to the continent as finished products.

“Nickel can go from the U.S., to Canada, to Norway, to China and back to Canada in the form of a battery,” said Dan Blondal, CEO of Nano One Materials Corp., a Vancouver-based battery-technology company.

SIX STEPS TO BATTERY

The complexity of battery production itself is one of the biggest hurdles facing Canada’s supply chain aspirations, Blondal said, pointing to six distinct steps that must take place before finished battery packs reach vehicle assembly plants.

Mining, refining and converting materials to battery-grade are the three initial hurdles. They’re followed by cathode production, for which Nano One is developing a new process; cell manufacturing; and battery assembly.

“If you want to have the whole supply chain, you’ve got to bring all that all into place,” Blondal said.

Canada has a footprint in the key battery ingredients nickel and cobalt, as well as several lithium and graphite projects heading toward production, said Brendan Marshall, vice-president of economic and northern affairs at the Mining Association of Canada. But the country is currently missing the value-added steps to get the materials to battery-grade. “Canada has a lot of strengths, and there’s a number of very positive government policies in place to try and advance this, but what we need is a package deal,” Marshall said. The industry, he said, is working to balance strong demand with federal permitting processes and environmental goals.

Pointing to Canada’s nickel industry as an example of the competing priorities, Marshall said the supply chain has the second-lowest carbon footprint in the world. But while the smelting and refining steps run on clean power, Canadian mines, being off the power grid, rely on diesel fuel. For the industry to reach its potential, officials need to build this dichotomy into the regulatory approval process, Marshall said.

MORE MINES NEEDED

The opportunity for mining expansion is considerable as EVs supercharge demand. For Canada to maintain its place in the global nickel pecking order, it will need to double its production capabilities, Marshall said. This translates into bringing online seven more nickel mines, a pair of smelters and on refinery.

Expanding the country’s market share would require even more development.

“Whether we get there or not is really contingent on how attractive our investments and how functional our regulatory environment is,” Marshall said.

The Canadian opportunities in cobalt, lithium and graphite are similar, though the country’s mining industry has less history with each. Still, Frith said, Canada’s active mines give it a “little bit of a head start” on building a battery supply chain, trimming what would have been a 10-year process to four to six years.

“You have the part of the supply chain with the longest lead time already operating,” he said. “You just now need to focus on the refinery production, component supply and cell manufacturing.”

MAKING REFINEMENTS

One Canadian company aiming to step into the midstream is Electra Battery Materials Corp. Recently rebranded from First Cobalt Corp., the Toronto-based company is currently recommissioning a cobalt refinery in aptly named Cobalt, Ont., 500 kilometres north of Toronto.

Electra Battery’s longer-term plans include construction of an integrated battery materials park capable of processing nickel, cobalt and other key ingredients.

Ontario’s clean-power grid and the company’s proximity to the automotive heartlands of Canada and the United States give Electra an advantage, said company President Trent Mell.

“If you look at the carbon footprint of a domestic supply chain, you’re going to far exceed anything coming out of Korea [and] Japan, which is the preferred market right now for the big American [automakers],” Mell said.

One risk for Canada, Frith said, is stumbling along the same route as Australia and fulfilling only the resource part of the equation. “They’ve really been China’s mine over the last decade when it comes to lithium battery materials,” he said. Recent auto-supply-chain problems and government policies have refocused the United States on building domestic battery production. This means Canada will have a ready market for its raw materials. But to prevent all the higher value manufacturing from going south of the border, Canada must build out its own processing capabilities.

BRINGING IT ALL TOGETHER

Likewise, Canada needs to address the specifics of a homegrown battery industry, said Matthew Fortier, president of newly formed EV-supply-chain alliance Accelerate.

“That coherency and that purposefulness have not been there yet, whereas other jurisdictions have been purposeful — you know, you look at Europe, you look at Asia.”

Accelerate — whose members include Unifor, the Automotive Parts Manufacturers’ Association (APMA) and Quebec-based bus maker Lion Electric — plans to get the disparate mining and manufacturing industries on the same page and work with governments to create the right conditions for the supply chain to flourish, Fortier said.

Top government officials in Ontario have already been pushing hard to anchor the province’s battery supply chain with a battery plant. In November, Premier Doug Ford pulled back the curtain on the next phase of Ontario’s auto strategy, which included the goal of landing two or three such plants.

Vic Fedeli, Ontario minister of economic development, job creation and trade, told Automotive News Canada that discussions were ongoing between Ontario and a dozen battery makers in November. But no deals have been struck to date.

“I hope we have really positive results from all of the elbow grease the team has put into this,” Fedeli said.

The battery plants would supply Ontario vehicle assembly plants — four of which are already or are soon to be building EVs.

In Quebec, a pair of battery-cell manufacturing plants have been announced but remain in the early planning stages. The Lion Electric Co., meanwhile, broke ground on a battery assembly plant outside Montreal in June.

As EV uptake accelerates, Bloomberg’s Frith expects the battery supply chain in Canada and the United States to move quickly to keep up. He could not break out standalone Canadian figures but said North America’s share of commissioned global battery production is likely to reach 15 to 20 per cent by 2025.