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Electric Vehicles: The challenge for rare earth miners

Sales of new petrol and diesel cars are to be illegal from 2035. But can we produce enough batteries for zeroemission vehicles to replace them asks mining expert Kim Moreton. 

Normal internal combustion engine vehicles are manufactured using widely available resources such as iron, copper, aluminium and nickel.

Their production has evolved based on stable markets, many established in the inter-war years, such as rubber and oil.

Electric vehicles (EVs) use the same raw materials in the body, drivetrain and interiors. What makes them different are the metals used in the power unit and energy store.

Most current EV production falls into two classes: hybrid electric vehicles (HEVs) such as the Toyota Prius, and battery electric vehicles (BEVs) such as the Nissan Leaf. In both cases, their electric motors fall into one of two types: induction motors (IMs) based on copper coils, and permanent magnet motors (PMMs) which use magnets made of a neodymium-boron compound and iron.

Processing problems

PMM producers rely heavily on rare earth elements (REEs) from China, which in 2017 produced some 85% of global output of rare earth oxides (estimated at 161,700 tonnes). Concerns about supply have spurred innovation, with Toyota reducing the terbium and dysprosium content of their magnets, and replacing neodymium with cheaper lanthanum and cerium.   

Despite their name, REEs are not scarce. For example, cerium is more abundant than copper. ‘Rare’ means they tend not to be concentrated in exploitable ore deposits, so they’re expensive to recover. Extracting REE ores is straightforward, commonly using open pit methods. The challenge begins in the processing (‘beneficiation’). Their similarity requires a complex process to separate elements from oxide ores: acid or alkali treatment, solvent washing, radiation and heat, depending on the chemical make-up of each deposit. Managing waste such as radioactive thorium presents further challenges.

Prices of lithium and cobalt, used in batteries for both PMMs and IMs, are currently depressed due to concerns about oversupply. However, 2017 global demand of 31,700 tonnes for neodymium outstripped supply by 3,300 tonnes, and growth in demand is forecast by some to reach 40,000 in 2020.

While REEs are mined in Australia, Brazil, India, Russia and Vietnam, the timescales and investment levels required to ramp up production and bring known REE deposits to production suggest there is no quick fix.

Recent cuts to electric vehicle subsidies in China stalled growth in domestic production, but don’t expect the industry there to stand still. The vehicle maker BYD claims its “manufacturing scale and an edge in technology” make the company resistant to risk, according to Bloomberg.

The EV market is a complex and fascinating bridge between the first and second industrial ages, presenting multiple challenges to policy makers, investors and the resource industries. The changes involved are profound and widereaching, but the benefits could also be huge.

The overall economic and social benefit of EVs, connected and autonomous vehicles could be in the region of £51bn per year by 2030, with the potential for 320,000 newly-created industry jobs,” said an April 2016 report by the UK’s Institute of the Motor Industry.

Brexit impact

The automotive industry is well supplied with infrastructure, expertise and human resources – volume producers in the UK are global corporations. However, prolonged uncertainty about trading relationships dating back three decades has led some producers to take stock. Developing and retaining domestic capacity and expertise is paramount. The UK Government acknowledged the importance of battery manufacture to the auto industry across all classes of EV by launching the Faraday Challenge, via the Faraday Institution, in 2017. The project is intended to drive battery research, making the UK a world leader.

Phase 1 is a £45 million competition to explore key technology challenges, creating a ‘virtual battery institute’. Phases 2 and 3 build on promising research and scale up technology at a new National Battery Manufacturing Development facility.

The Institution predicts employment growth in the EV battery supply chain and manufacturing offsetting a gradual reduction in traditional vehicle manufacturing. Complementary initiatives such as EV drivetrain research, motors and charging do not appear to be part of the scheme, though they would be welcome.

Lacking the capacity to process ‘technology metals’ in the quantities required by mass EV production, the UK will remain reliant on imported raw materials. Significant processing capacity such as smelting and refining is limited to pig iron, steel, zinc, aluminium and lead. Shortterm, this is unlikely to change due to the combined strictures of energy supply, workforce and national emission targets.

Big loss to Government revenues

The ability and inclination of the UK Governmentto intervene to support capacity in raw materials remains unclear, as does planning for the potential loss of revenue generated from fossil fuel duties (£27.9bn in 2018-19, according to Office for Budget Responsibility figures) thatwidespread EV adoption is expected to trigger. In addition, the revenue landscape and options will be an immense challenge to successive governments in the aftermath of the Covid-19 pandemic.

The OBR reports: “While fuel duty receipts have risen slowly in cash terms over the past seven years, they have fallen as a share of GDP. Thislargely reflects the effective tax rate falling in realterms.” Around two-thirds of this incomegoes directly to fund public services. Wemust wait to see whether EV production can fill the gap.

 

Kim Moreton is a chartered surveyor practising in land, environment and resources. He lectures at Camborne School of Mines, University of Exeter, the foremost UK centre of mining and minerals education.