Increased investment in Australia supports the country’s rapid development in the battery materials supply chain

It was a busy week for the lithium value chain in Australia last week as some big industry players announced investment plans in lithium mining in this key country, set to play an increasingly crucial role in battery supply chains.

This includes the Tianqi-IGO Australian joint venture’s acquisition of Essential Metals, and SQM’s plan to invest in Azure Minerals.

Both Essential Metals and Azure hold lithium resources in Australia.

These extensive investments will further support Australia in rapidly developing its lithium supply chain and will reinforce the crucial role the country plays in the battery supply chain.

Australian lithium mine output is estimated to hit 526,000 tonnes of lithium carbonate equivalent in 2023, up over 40% from 372,000 tonnes last year.

These investments will also add further strength to both Tianqi Lithium and SQM, which have already established a solid presence in Australia.

The Tianqi-IGO joint venture holds a 51% share in the Greenbushes lithium project in Western Australia, the largest lithium mine in the world.

It also owns the Kwinana lithium refinery in Western Australia, which produced its first lithium hydroxide chemical product in August 2021.

The battery-grade product from Kwinana for accreditation by customers will be produced in the first quarter of this year.

Train 1 is expected to then ramp up to the design production rate of 24,000 tpa pf lithium hydroxide by the end of 2023.

Although SQM’s major production hub is in Chile, it also has strong exposure to the Australian mining industry.

The miner/producer owns a 50% share of the Mt Holland lithium asset in Western Australia, which is estimated to start production in 2024 and reach a production capacity of about 50,000 tpa of lithium carbonate equivalent.

It is also noteworthy that the Andover Project, in which Azure holds a 60% share, has rich nickel resources.

The investment may also enable SQM to have a degree of exposure to the nickel supply chain in addition to its traditional lithium territory.

Last year’s Inflation Reduction Act in the US requires that the proportion of value for battery minerals that are mined and processed in the country or in countries that have free-trade agreements need to reach 40% for an EV in 2023 in order to receive EV credits and this threshold will increase in the upcoming years and hit 80% in 2027 and onwards.

At this current stage, the mining and processing of nickel that is used in batteries is heavily reliant on Indonesia and mainland China, respectively.

Although it is likely that the US Treasury and the Internal Revenue Service (IRS) may identify additional free trade agreements for the purposes of the battery critical mineral requirements going forward, Australia, as one of the countries with a free trade agreement with the US, is critical for the nickel that is used in the production of batteries installed on EVs sold in the US.

It is estimated that nickel mine output will grow to 230,000 tonnes of nickel metal weight in Australia, and the compound annual growth rate (CAGR) in five years will hit 10%.

Volkswagen Group delivers record BEVs in 2022

Despite supply chain struggles throughout Europe, German automaker Volkswagen Group delivered the highest number of EVs in a year in the region, with 572,100 BEVs sold in 2022, a 26% growth year-on-year.

The share of BEV in the company deliveries also grew from 5.1% in 2021, to 6.9% in 2022.

Zooming into the quarters, Q4 was also a record quarter for the company with 205,700 BEVs sold.

The ID.4 and ID.5 were the best-selling models for the group selling 193,000 units in 2022.

Luxury models also performed well for the company with the Audi Q4 and e-tron selling around 100,000 units in total.

Around 62% of the group’s EV deliveries were in Europe, accounting for 12.6% of total deliveries in the region, making it the top EV brand in the region.

In China, where the company operates in partnership with SAIC Motors and FAW, BEV sales increased 68% year-on-year.

The group is expected to ramp up EV deliveries mainly in Europe and the US.

The group has been an active player post the IRA in the US, scouting sites for battery manufacturing with PowerCo, while also ramping up the ID.3 production facility in the US.

Order backlogs in Europe are also at an all-time high, and the group will no doubt deliver more EVs in 2023.

Tesla files for $700 million expansion at Austin Gigafactory

Tesla Motors has filed for a $717 million expansion plan for the Austin Gigafactory with the Texas government.

The funds will expand the plant by an additional 1.4 million square feet, and construction will begin by the end of the month.

Four projects have been listed by the company:

  1. Cell 1 with an investment of $368 million is expected to be a cell manufacturing facility with completion in February 2024
  2. Drive Unit with an estimated cost of $85 million will most likely be a facility to develop electric motor drives with completion in January 2024.
  3. A Cathode processing facility with an investment of $260 million with completion in December 2023
  4. A testing facility with an investment of $3.7 million with completion in August 2023

Given the size of the investments, it is most likely that these are all not greenfield developments, but rather expansion or upgrading of existing facilities.

The cathode plant for example is already under construction at the facility.

As such, the company is also now opening orders for deliveries of Model Ys equipped with 4680 cells from this factory, and soon customers will have the option of choosing the cell form factor in their vehicles. However, this expansion may also not be related to upscaling existing production but for other ventures of the company.