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I Perspectives through critical Raw Materials for Strategic Technologies - Advanced (Li-ion) battery technology

Jan 30, 2021

image credit: Raw materials used in batteries - current supply bottlenecks along the value chain 64 views Metals, minerals and natural materials are part of our daily lives. Those raw materials that are most important economically and have a high supply risk are called critical raw materials. Critical raw materials are essential to the functioning and integrity of a wide range of industrial ecosystems. Tungsten makes phones vibrate. Gallium and indium are part of lightemitting diode (LED) technology in lamps. Semiconductors need silicon metal. Hydrogen fuel cells and electrolysers need platinum group metals. Access to resources is a strategic security question for Europe’s ambition to deliver the Green Deal. The new industrial strategy for Europe proposes to reinforce Europe’s open strategic autonomy, warning that Europe’s transition to climate neutrality could replace today’s reliance on fossil fuels with one on raw materials, many of which we source from abroad and for which global competition is becoming more fierce. The EU’s open strategic autonomy in these sectors will therefore need to continue to be anchored in diversified and undistorted access to global markets for raw materials3 . At the same time, and in order to decrease external dependencies and environmental pressures, the underlying problem of rapidly increasing global resources demand needs to be addressed by reducing and reusing materials before recycling them. The enormous appetite for resources (energy, food and raw materials) is putting extreme pressure on the planet, accounting for half of greenhouse gas emissions and more than 90% of biodiversity loss and water stress. Scaling up the circular economy will be vital to achieve climate neutrality by 2050, while decoupling economic growth from resource use and keeping resource use within planetary boundaries. Access to resources and sustainability is key for the EU’s resilience in relation to raw materials. Achieving resource security requires action to diversify supply from both primary and secondary sources, reduce dependencies and improve resource efficiency and circularity, including sustainable product design. This is true for all raw materials, including base metals, industrial minerals, aggregates and biotic materials, but is even more necessary when it concerns those raw materials that are critical for the EU. As if this challenge was not enough, the COVID-19 crisis has revealed just how fast and how deeply global supply chains can be disrupted. The Commission has proposed an ambitious COVID-19 recovery plan to increase resilience and open strategic autonomy and to foster the transition towards a green and digital economy. With its aim of ensuring resilience through a secure and sustainable supply of critical raw materials, this Communication can make a major contribution to the recovery and the long-term transformation of the economy. The 2020 EU Critical Raw Materials List The Commission reviews the list of critical raw materials for the EU every three years. It published the first list in 2011, updating it in 2014 and 2017. The assessment is based on data from the recent past and shows how criticality has evolved since the first list was published. It does not forecast future trends. This is why the Commission is also presenting a foresight study (see below). The 2020 assessment follows the same methodology as in 20178 . It uses the average for the most recent complete 5-year period for the EU without the United Kingdom (EU-27). It screened 83 materials (5 more than in 2017) and, where possible, looked more closely than previous assessments at where criticality appears in the value chain: extraction and/or processing. Economic importance and supply risk are the two main parameters used to determine criticality for the EU. Economic importance looks in detail at the allocation of raw materials to end-uses based on industrial applications. Supply risk looks at the country-level concentration of global production of primary raw materials and sourcing to the EU, the governance of supplier countries9 , including environmental aspects, the contribution of recycling (i.e. secondary raw materials), substitution, EU import reliance and trade restrictions in third countries. Economic importance and supply risk are the two main parameters used to determine criticality for the EU. Economic importance looks in detail at the allocation of raw materials to end-uses based on industrial applications. Supply risk looks at the country-level concentration of global production of primary raw materials and sourcing to the EU, the governance of supplier countries, including environmental aspects, the contribution of recycling (i.e. secondary raw materials), substitution, EU import reliance and trade restrictions in third countries. The resulting list of critical raw materials provides a factual tool to support EU policy development. The Commission takes the list into consideration when negotiating trade agreements or seeking to eliminate trade distortions. The list helps to identify investment needs, and to guide research and innovation under the EU’s Horizon 2020, Horizon Europe and national programmes, especially on new mining technologies, substitution and recycling. It is also relevant for the circular economy, to promote sustainable and responsible sourcing, and for industrial policy. Member States and companies can also use it as an EU reference framework for developing their own specific criticality assessments. The 2020 EU list contains 30 materials as compared to 14 materials in 2011, 20 materials in 2014 and 27 materials in 2017. 26 materials stay on the list. Bauxite, lithium, titanium and strontium are added to the list for the first time. Helium remains a concern as far as supply concentration is concerned, but is removed from the 2020 critical list due to a decline in its economic importance. The Commission will continue to monitor helium closely, in view of its relevance for a range of emerging digital applications. It will also monitor nickel closely, in view of developments relating to growth in demand for battery raw materials. Critical and non-critical raw materials use in different technologies (selected top-25 materials) Materials in red are critical raw materials. Light rare earth elements (LREEs), heavy rare earth elements (HREEs) and platinum group metals (PGMs) are groups of multiple raw materials - more details on the materials are available in Annex 1, the report on the assessment and the factsheet accompanying each material, published on the EU Raw Materials Information System. The supply of many critical raw materials is highly concentrated. For example, China provides 98 % of the EU’s supply of rare earth elements (REE), Turkey provides 98% of the EU’s supply of borate, and South Africa provides 71% of the EU’s needs for platinum and an even higher share of the platinum group metals iridium, rhodium, and ruthenium. The EU relies on single EU companies for its supply of hafnium and strontium. Source: European Commission report on the 2020 criticality assessment   Enhancing the EU’s Resilience : the Supply and Sustainability Challenge Knowledge and intelligence are preconditions for informed decision-making. The Commission already developed the Raw Materials Information System and will reinforce it, but more is needed. To this end, the Commission will strengthen its work with Strategic Foresight Networks to develop robust evidence and scenario planning on raw materials supply, demand and use for strategic sectors. The criticality assessment methodology may be reviewed for the next list (2023) to integrate the latest knowledge. The EU will contribute to global efforts towards better resource management in co-operation with relevant international organisations. This knowledge base should enable strategic planning and foresight, reflecting the EU’s objective of a digital and climate-neutral economy by 2050 and enhance its leverage on the world stage. The geopolitical aspect should also play an integral part in foresight, enabling Europe to anticipate and address future needs. Based on the information that is currently available, the foresight report published with this Communication, complements the criticality assessment based on recent data, by providing the critical raw materials outlook to 2030 and 2050 for strategic technologies and sectors. It translates the EU’s (pre COVID-19) climate-neutrality scenarios for 2050 into the estimated demand for raw materials and addresses supply risks at different levels of the supply chains: For electric vehicle batteries and energy storage, the EU would need up to 18 times more lithium and 5 times more cobalt in 2030, and almost 60 times more lithium and 15 times more cobalt in 2050, compared to the current supply to the whole EU economy. If not addressed, this increase in demand may lead to supply issues. Demand for rare earths used in permanent magnets, e.g. for electric vehicles, digital technologies or wind generators, could increase tenfold by 2050. This should be seen in the global context of growing demand for raw materials due to population growth, industrialisation, decarbonisation of transport, energy systems and other industrial sectors, increasing demand from developing countries and new technological applications. The World Bank projects that demand for metals and minerals increases rapidly with climate ambition. The most significant example of this is electric storage batteries, where the rise in demand for relevant metals, aluminium, cobalt, iron, lead, lithium, manganese and nickel would grow by more than 1000 per cent by 2050 under a 2°C scenario compared to a business as usual scenario. The OECD forecasts that, despite improvements in materials intensity and resource efficiency and the growth in the share of services in the economy, global material use will more than double from 79 billion tons in 2011 to 167 billion tons in 2060 (+110%). This is an overall figure, which includes relatively abundant and geographically spread resources such as construction materials and wood. For criticality purposes, it is worth looking more closely at the OECD’s forecast for metals, projected to increase from 8 to 20 billion tonnes in 2060 (+150%). The EU is between 75% and 100% reliant on imports for most metals. The OECD concludes that the growth in materials use, coupled with the environmental consequences of material extraction, processing and waste, is likely to increase the pressure on the resource bases of the planet’s economies and jeopardize gains in well-being. Without addressing the resource implications of low-carbon technologies, there is a risk that shifting the burden of curbing emissions to other parts of the economic chain may simply cause new environmental and social problems, such as heavy metal pollution, habitat destruction, or resource depletion. The COVID-19 crisis is leading many parts of the world to look critically at how they organise their supply chains, especially where the sources of supply for raw materials and intermediate products are highly concentrated and, therefore, at higher risk of supply disruption. Improving the resilience of critical supply chains is also vital to ensure both the clean energy transition and energy security. In its proposal for the European recovery plan, the Commission sees critical raw materials as one of the areas where Europe needs to be more resilient in preparation for future shocks and to have more open strategic autonomy. This can be achieved by diversifying and strengthening global supply chains including by continuing to work with partners around the world, reducing excessive import dependence, enhancing circularity and resource efficiency, and, in strategic areas, by increasing supply capacity within the EU. Turning Challenges into opportunities China, the United States, Japan and others are already working fast to secure future supplies, diversify sources of supply through partnerships with resource-rich countries and develop their internal raw material-based value chains. The EU should act urgently to ensure a secure, sustainable supply of raw materials, pooling the efforts of companies, sub-national and national authorities as well as the EU institutions. The EU action plan for critical raw materials should: Develop resilient value chains for EU industrial ecosystems reduce dependency on primary critical raw materials through circular use of resources, sustainable products and innovation strengthen the sustainable and responsible domestic sourcing and processing of raw materials in the European Union, and diversify supply with sustainable and responsible sourcing from third countries, strengthening rules-based open trade in raw materials and removing distortions to international trade The Commission intends to develop and implement these priority objectives and the action plan with the help of Member States and stakeholders, in particular the European Innovation Partnership on Raw Materials and the Raw Materials Supply Group. It will also draw on the support and expertise of the European Institute of Innovation and Technology (EIT) Raw Materials. Resilient value chains for EU industrial ecosystems Gaps in EU capacity for extraction, processing, recycling, refining and separation capacities (e.g. for lithium or rare earths) reflect a lack of resilience and a high dependency on supply from other parts of the world. Certain materials mined in Europe (like lithium) currently have to leave Europe for processing. The technologies, capabilities and skills in refining and metallurgy are a crucial link in the value chain. These gaps, and vulnerabilities in existing raw materials supply chains, affect all industrial ecosystems and therefore require a more strategic approach: adequate inventories to prevent unexpected disruption to manufacturing processes; alternative sources of supply in case of disruption, closer partnerships between critical raw material actors and downstream user sectors, attracting investment to strategic developments. Through the European Battery Alliance, public and private investment has been mobilised at scale and should, for example, lead to 80% of Europe’s lithium demand being supplied from European sources by 2025. The new industrial strategy proposes to develop new industrial alliances. The raw materials dimension should be an integral part of these alliances and of the corresponding industrial ecosystems (as preliminarily identified in the Staff Working Document accompanying the Recovery Plan21 - see Annex 2). However, there is also a need for a dedicated industrial alliance on raw materials, as announced in the industrial strategy, since there are a number of important challenges such as highly concentrated global markets, technical barriers to investment and to innovation, public acceptance and the need to raise level of sustainable sourcing. In a first phase, this European Raw Materials Alliance will focus on the most pressing needs, which is to increase EU resilience in the rare earths and magnets value chain, as this is vital to most EU industrial ecosystems (including renewable energy, defence and space). The alliance can expand to address other critical raw material and base metal needs over time. The work of the alliance will be complementary to external actions to secure access to these critical materials. The alliance will be open to all relevant stakeholders, including industrial actors along the value chain, Member States and regions, trade unions, civil society, research and technology organisations, investors and NGOs. The alliance will be built on the principles of openness, transparency, diversity and inclusiveness. It will respect EU competition rules and EU international trade commitments. The alliance will identify barriers, opportunities and investment cases and will have an agile governance framework involving all relevant stakeholders and allowing project-based work to be carried out. The European Investment Bank has recently adopted its new energy lending policy, in which it states that the bank will support projects relating to the supply of critical raw materials needed for low-carbon technologies in the EU. This is important to help de-risk projects and attract private investment in the EU and in those resource-rich third countries within its operating mandate. At the same time it must be ensured that such projects are free from distortions and contribute to the EU’s open strategic autonomy and resilience in a resourceefficient and sustainable manner. The EU sustainable finance taxonomy will guide public and private investments towards sustainable activities. It will address the enabling potential of the mining and extractive value chain and the need for the sector to minimise its impacts on the climate and environment, taking into account life cycle considerations. This should help to mobilise support for compliant exploration, mining and processing projects for critical raw materials in a sustainable and responsible way. Action 1 – Launch an industry-driven European Raw Materials Alliance in Q3 2020, initially to build resilience and open strategic autonomy for the rare earths and magnets value chain, before extending to other raw material areas (industry, Commission, investors, European Investment Bank, stakeholders, Member States, regions). Action 2 – Develop sustainable financing criteria for the mining, extractive and processing sectors in Delegated Acts on Taxonomy by end 2021 (Platform on Sustainable Finance, Commission). Circular use of resources, sustainable products and innovation The European Green Deal’s Circular Economy Action Plan aims to decouple growth from resource use through sustainable product design and mobilising the potential of secondary raw materials24. Moving towards a more circular economy could bring a net increase of 700 000 jobs in the EU, by 2030. Circularity and recycling of raw materials from low-carbon technologies is an integral part of the transition to a climate-neutral economy. Increasing product life-time, and the use of secondary raw materials, through a robust and integrated EU market and retention of value of high-grade materials, will help to cover a growing share of the EU’s raw materials demand. For example, to foster recovery of materials from rapidly increasing amounts of batteries placed on the European market , the Commission will propose by October 2020 a new comprehensive regulation addressing, among other aspects, the end-life-phase, i.e. second life (re-use and re-purposing), collection rates, recycling efficiency and recovery of materials, recycled content and extended producer responsibility. The EU is at the forefront of the circular economy and has already increased its use of secondary raw materials. For example, more than 50% of some metals such as iron, zinc, or platinum are recycled and they cover more than 25% of the EU’s consumption. For others, however, especially those needed in renewable energy technologies or high-tech applications such as rare earths, gallium, or indium, secondary production makes only a marginal contribution. This is a huge loss of potential value to the EU economy and a source of avoidable strain on the environment and climate. This perspective looks at the supply chains of the nine technologies below used in the three strategic sectors renewable energy, e-mobility, defence and aerospace. It also attempts to provide a first answer, based on available knowledge and models, to where future challenges lie and how competition for resources may evolve. Li-ion battery technology is rapidly being deployed for both e-mobility and energy storage for intermittent electricity generation. The technology is increasingly relevant for defence applications Fuel cells (FCs) are an important energy conversion technology, which together with hydrogen as fuel, will offer a high potential for decarbonisation of the energy system and e-mobility in the future, although large-scale deployment has not yet taken place Wind energy is already one of the most cost-effective renewable energy technologies for climate-change mitigation and will remain a growing sector in the EU industrial base Electric traction motors are central components in e-vehicles. Permanent magnet motors containing rare earth elements are particularly efficient and attractive for current and future e-mobility applications. Photovoltaic (PV) technology together with wind energy will lead in the transformation of the global electricity sector; PV panels are also relevant for space applications Robotics is an emerging technology with an increasing role in future manufacturing, including defence and aerospace, as well as energy technologies and automotive applications Drones (Unmanned aerial vehicles or UAV) are increasingly deployed for both civil and various defence applications; 3D Printing (3DP, Additive manufacturing or AM) will rapidly reshape traditional supply chains and replace conventional manufacturing, in particular in defence and aerospace. It will lead to a significant shift in the amount and types of raw materials and processed materials consumed Digital technologies sustain the enormous digital sector enabling all technologies evaluated in this study. Using the mid-century models and scenarios of the EU’s “Clean Planet for all” analysis, this perspectives translates the shift to a climate-neutral economy through the deployment of renewable energy generation and e-mobility solutions into raw materials demand. The scenarios portray different levels of ambition from high to low deployment of these technologies to increased or lowered material efficiency, and as such are to be seen rather as a range than actual values. The analysis in this perspective predates the Covid-19 crisis. Its impact on supply and demand, as well as on deployment of climate-neutral solutions are likely long-term. The current models do not take this development into account, but future analysis will have to account for these effects. The realisation of a climate-neutral, digital economy, and ‘a stronger Europe’ depends on available, affordable and responsibly sourced raw materials. Many factors influence the supply of raw materials, and a high growth rate, as seen in Figure 1 does not directly convert to a future raw materials supply bottleneck. This depends on the overall supply–demand balance. High demand may raise prices, in turn making exploration, mining and refining projects as well as substitution and recycling commercially more attractive and viable. On the flip side, currently low prices for some materials may make investment in future capacity less attractive, considering that those investments require a high capital investment over a long period. The technical possibilities for upscaling extraction and refining capacities also play a role, as does the legal framework for mining activities. All factors combined determine supply ‘flexibility’ for the future. Combined critical raw materials use in different technologies in the EU in 2030 and 2050   Batteries not only power electric vehicles but also store energy generated from variable sources such as sun and wind. They use the raw materials cobalt, lithium, graphite and nickel. Dysprosium, Neodymium and Praseodymium are rare earth elements (REEs) that are vital in building motors for electric vehicles and wind generators. (most relevant materials, see Annex 1 – Methodological notes and Annex 2 – Data tables for more information) The perspective above addresses the renewables and e-mobility sectors only, additional demand can be expected from other sectors, including defence and aerospace and digitalisation. For example, handheld devices use batteries, sensors and motors; data is stored on drives containing permanent magnets. For the individual raw materials, perspective aboce raises the followingconcerns for future supply:   The multiplication factor for nickel in perspective above is in comparison to the total EU consumption of all nickel of any quality. However, in order to meet the rising demand for batteries, all of the additional demand and thus the newly commissioned capacity must shift to high purity nickel. This structural change in the nickel market faces severe technological challenges, geological resource availability issues and trade barriers. For rare earths (REEs), China’s dominance in the market renders the value chains extremely vulnerable. For the individual rare earths, dysprosium is at a higher supply risk due to the higher rate of demand growth and lower proportion in rare earth ores. For lithium, despite the highest growth factor, the shortterm prospects are less of a concern compared to nickel and rare earths. However, in the medium-term, large investments are needed to avoid a significant market deficit beyond 2025. For cobalt, the concentration of supply in the Democratic Republic of the Congo will continuously remain a concern due to the country’s large share in global extraction. For natural graphite, China is dominant in spherical graphite production. However, when prices become high, synthetic graphite can become a substitute. Semi-quantitative representation of flows of raw materials and their current supply risks to the nine selected technologies and three sectors (based on 25 selected raw materials, see Annex 1 – Methodological notes)     To arrive at any estimation on future demand and competition, raw materials, technologies and sectors have to be considered together, as several technologies and sectors are in competition for the same materials (see Figure 2):   Wind energy and traction motors compete both for various REEs, as well as for borates; robotics and drones also use motors Fuel cells and digital technologies require a large amount of platinum group metals (PGMs) The demand for battery raw materials cobalt, lithium, natural graphite and nickel originates both from e-mobility and from intermittent power generation from PV and wind generators and charging stations for electric vehicles Digital technologies and PV are in competition for some materials like germanium, indium, gallium and silicon metal Digital technologies and PV are in competition for some materials like germanium, indium, gallium and silicon metal Multiple sectors are competing for base metals like copper, aluminium, magnesium, nickel, iron ore and their alloying elements like tungsten, vanadium, manganese and chromium Multiple sectors are competing for base metals like copper, aluminium, magnesium, nickel, iron ore and their alloying elements like tungsten, vanadium, manganese and chromium All sectors are increasingly in need of more mature and stable markets for high-tech specific alloying elements. These materials used in e.g. super-alloys include niobium, scandium, hafnium and zirconium all with a very limited and, or a highly concentrated supply base. Bottleneck Analysis This perspective also identifies current supply risks in the subsequent stages of processed materials, components and assemblies. The results are displayed in a perspective below for each technology, except for ICT, which was not analysed in the same level of detail. Bottlenecks for the EU are in the raw materials stages and the Li-ion cells production: China, together with Africa and Latin America, provides 74% of all battery raw materials. By itself China supplies 66% of finished Li-batteries. Currently, the EU provides less than 1% of Li-batteries. The fuel cell industry relies heavily on platinum-based catalysts, with platinum making up about half of the cost of a fuel cell stack. South Africa is by far the largest producer of platinum in the world, followed by Russia and Zimbabwe. Despite the high supply risk associated with all raw materials in fuel cells, the highest supply vulnerability regards the assembly step, where the USA plus Canada (48%) and Japan plus South Korea (51%) dominate production. Currently, the EU provides less than 1% of fuel cells. Within the supply chain for wind generators, the highest risks exist at the raw materials stage. The EU only provides 1% of the raw materials for wind energy. Major concerns exist about the supply of rare earths for the production of permanent magnets –– key components for the wind turbine generator –– for which China plays a quasi-monopolistic role. The EU plays a major role only in the assembly stage, where its share is above 50%. Rare earths and borates contained in permanent magnets are crucial raw materials. The supply risks related to extraction and processing of rare earths are the main concern: China increasingly dominates the supply of these raw materials. Japan is a key player for the manufacturing of traction motors (60% of the market). The EU provides only 8% of traction motors: The EU contribution is marginal in each step of the supply chain. However, a diversified set of technologies beside silicon-based panels results in a high number of suppliers for raw materials, with China representing half of the market. China’s role becomes quasi-monopolistic at the components stage, resulting in a high supply risk. The EU only provides 1% of silicon-based PV assemblies. 44 raw materials are relevant to robotics, of which the EU produces only 2%. China is the major supplier of raw materials for robotics with 52%, followed by South Africa (15%) and Russia (9%). Similar potential bottlenecks could also occur in the supply of robotics components. On the other side, the EU is a major player of processed materials and assemblies of robotics with respectively 21% and 41% of global supply. The EU is highly dependent on external suppliers for raw materials and components as well as for UAV assemblies. Overall, China delivers more than one third of the raw materials, followed by South Africa (7 %) and Russia (6 %). More than 50 % of the raw materials come from numerous smaller supplier countries, providing good opportunities for supply diversification. China dominates civil drones production, and increasingly the professional drones sector, while the USA and Israel dominate military drone production. The EU is highly dependent on external suppliers for raw materials and components as well as for UAV assemblies. Overall, China delivers more than one third of the raw materials, followed by South Africa (7 %) and Russia (6 %). More than 50 % of the raw materials come from numerous smaller supplier countries, providing good opportunities for supply diversification. China dominates civil drones production, and increasingly the professional drones sector, while the USA and Israel dominate military drone production. 3D Printing rapidly disrupts traditional supply chains and conventional manufacturing technologies. Besides the carrier materials aluminium, magnesium,nickel titanium, the most relevant critical raw materials for metal-based 3DP are cobalt, hafnium, niobium, scandium, silicon metal, tungsten and vanadium. The raw materials stage is the main bottleneck: China provides 35% of the raw materials, while the EU only provides 9%. In processed materials however, the EU covers over half of the supply. For metal-based 3DP systems, the EU provides 34% of the global supply Almost the entire periodic system of elements can be found in digital technologies, with a particular high share in consumption of elements like copper, gallium, germanium, gold, indium, PGMs, rare earths and tantalum. China (41%) and African countries (30%) are dominant suppliers. Europe is largely dependent on other countries (mainly from South-East Asia) for high-tech components and assemblies. The EU needs to develop manufacturing opportunities to maintain a minimum of capabilities: For batteries, increasing EU raw materials production and processing and assembly capacities will require investments to reduce the dependency on the Asian market Insufficient manufacturing capacity of solar cells appears to be the weakest link of the solar PV value chain in the EU. Therefore, domestic manufacturing opportunities need to be improved For UAV, the EU faces a serious risk of missing the opportunity to catch up with these global leaders on this key technology, which is decisive to integrate comprehensive real-time geo-referenced intelligence For digital technologies, technological sovereignty requires that the EU secures access to key raw materials and processed materials and redevelops manufacturing opportunities for key digital components and assemblies to the EU   Maintaining leadership in value chains where Europe is currently strong, requires significant investment in R & D to match the pace of other countries and regions. For fuel cells, the main course of action is to improve reliability and reducing the cost through R &D with the goal to reduce the use of platinum from the fuel cell catalysts; For wind, a more secure supply of rare earths, possibly via recycling, could also contribute to preserving EU capability in magnet manufacturing For robotics, securing access to raw materials and improving the capacity for components as well as providing a skilled work force will allow the EU to maintain a competitive position on the global market Mastering the quality of 3DP materials in relation to specific 3DP technologies is key to maintaining EU competitiveness. Therefore, diversifying materials supply as well as R&D investments are vital to keep the current strong position   Raw materials are key enablers for all sectors of the EU economy. Some of the raw materials, in particular those assessed as critical raw materials (CRMs) (European Commission, 2020), are essential prerequisites for the development of strategic sectors such as renewable energy, electric mobility, defence and aerospace, and digital technologies. Currently, EU industry is largely dependent on imports for many raw materials and in some cases is highly exposed to vulnerabilities along the supply chain. Following the global energy transition, the consumption of metallic raw materials necessary for the manufacture of wind turbines, PV panels, batteries and hydrogen production and storage, and other systems will drastically increase. The shift to e-mobility will require batteries, fuel cells and lightweight traction motors not only for cars but also for e-bikes, scooters and heavy duty transport. Defence and aerospace have always been strategically important, and remain at the forefront of technological developments; they deploy almost all of the technologies analysed in this report. The perspective aims to provide scientific background on the potential supply risk of material resources for a set of nine value chains. It estimates, where data and models are available, the future demand for raw materials needed in selected strategic technologies, based on the long-term decarbonisation scenarios. The same analysis is carried out for the strategic sectors relying on these technologies. A systematic analysis of supply chain dependencies was conducted for Li-ion bat- teries, fuel cells (FC), wind turbines, electric traction motors, photovoltaics (PV), robotics, drones (UAV), 3D Printing (3DP, additive manufacturing or AM) and digital technologies. An overview of the technologies and sectors addressed in this perspective is visualised below. This perpspective is conducted in collaboration with Market, Industry, Entrepreneurship and SMEs, taking stock of available information from existing perspectives. It integrates new analysis on (critical) raw materials for strategic technologies and sectors. This perspectives includes assessment of potential bottlenecks along the materials supply chain for both low-carbon energy, transport technologies and defence sector and CRMs and Circular Economy and the future materials demand for wind and solar PV technologies. For each technology, the current supply bottlenecks are assessed according to the approach used by the existing perspectives in its recent study ‘Materials dependencies for dual-use technologies relevant to Europe’s defence sector’. More specifically, four stages in the supply chain are analysed: raw materials, processed materials, components and assemblies. A set of parameters as described in Annex 1 are used to qualify the potential bottlenecks in the supply chains of the technologies, which can result in a very low supply risk and very high supply risk (Figure below). Supply Risk risk indication   This perspectives are based on available data for the selected nine strategic technologies and three sectors. It highlights knowledge gaps and provides recommendations on how to develop more in-depth and quantitative information for the future. The selection of technologies is non-exhaustive and takes into account anticipated growth rates leading to a notable increase in consumption of raw materials (e.g. wind and solar PV technologies), their relevance for strategic sectors such as defence or aerospace (e.g. 3D printing and drones) or importance across new emerging sectors (e.g. FC, robotics, digital technologies). The geographical and temporal scope of the study is on current and 2030 versus 2050 EU consumption. This perspective pinpoint some general limitations: The analysis of bottlenecks for each technology and determining of shares from countries is based on key market research reports and publicly available information. As far as possible, company headquarters are used instead of production locations. However, this distinction is not always clear since most market reports are not designed to reflect this. Some technologies like 3DP are undergoing substantial change in a short period, which may outdate the information relatively quickly. Although the work includes a considerable number of technologies (9) and sectors (3) , many relevant others (e.g. lasers, semi-conductors, satellites) have not been taken into account due to limited information available on the types of materials and their use especially in the space applications. Although the demand scenarios used for the material amount calculations cover a wide range of policy-relevant carbon mitigation futures, they inevitably show some misalignments in the modelling assumptions. Recent COVID-19 effects on supply and demand are not factored in. There are several options for the baseline for comparison with current demand for raw materials. In this report we chose to use 22% of global demand for each material, reflecting the EU share of global GDP as the most consistent approach for all materials. See Annex 1 – Methodological notes, for more elaborate limitations and assumptions. Critical and non-critical raw materials use in different technologies (selected top-25 materials) Materials in red are critical raw materials. Light rare earth elements (LREEs), heavy rare earth elements (HREEs) and platinum group metals (PGMs) are groups of multiple raw materials     Li-ion battery technology is becoming a mature technology employed a wide range of applications. It offers improved power and energy performance compared to the currently used lead–acid batteries. While Li-ion batteries are crucial for defence applications, their development and future uptake are primarily driven by the civilian demand for portable electronic devices, stationary energy storage and electric vehicles (EVs). Lithium metal oxide batteries use various different metals, such as nickel, cobalt, aluminium and manganese. There are tens of individual materials possibly present in the cell anodes, cathodes, electrolytes and separators. The perspective below about advanced (Li-ion) battery technology lists the most common raw materials used (and forecasted) in batteries and their functionality. Copper: as current collector foil at anode side, in wires and other conductive parts Aluminum cannot be used as an anode current collector because it reacts with lithium ions at low potential to form an aluminum–lithium alloy and eventually cause battery failure. Copper is the most commonly used anode current collector for lithium ion batteries due to its good stability at low potential. Graphite: natural or synthetic high-grade purity in anode electrode in all Li-ion battery types They are electrochemical storage devices. These are composed of negative (anode) and positive (cathode) electrodes, a porous separator (allowing Li ions to transport through), and an electrolyte (conducting Li ions during charging/discharging). The most commonly used anode material in advanced (Li-ion) battery technology is graphite. Silicon: in (future) anodes to enhance energy density Silicon anode batteries are an extension of widely used lithium ion (Li-Ion) batteries. Early generation Li-Ion batteries used lithium as the anode material. This was replaced with carbon/graphite following a number of widely reported overheating and explosion incidents. Titanium: in future anode materials and coatings, in LTO, for battery packaging   The lithium-titanate-oxide (LTO) battery is a type of rechargeable battery which has the advantage of being faster to charge than other lithium-ion batteries, but the disadvantage of having a much lower energy density. Aluminium: for battery packaging or as current collector foil (cathode), in NCA batteries A graphite anode can't release as many lithium ions as the metal foil can. It is the most abundant metal in the Earth's crust. When used as an anode in a battery, aluminum can release three electrons when discharging, compared to the single electron that lithium releases. Niobium: in future anode and cathode material (coatings) to improve stability and energy density Niobium helps increase the energy density of batteries, giving more power and increased range, and improves performance at low temperatures. Niobium materials can increase the rate with wich batteries charge and discharge. Niobium increases the stability of the battery so it can withstand more charging cycles. Niobium is readily availble and cost effective compared to other battery materials. Current supply bottlenecks along the value chain Of all materials currently used in battery manufacturing, cobalt, natural graphite, and lithium are critical in the 2020 list of CRMs. Research is looking at silicon metal, titanium and niobium to improve energy density, durability, and safety in future Li-ion battery types. Advanced (Li-ion) battery technology perspective above  shows the key players in the Li-ion cell supply chain. The EU produces only 1% of all battery raw materials overall. Individual materials also warrant a closer look: 54% of global cobalt mine production originated from the Democratic Republic of the Congo, followed by China (8%), Canada (6%), New Caledonia (5%) and Australia (4%). Refined cobalt production comes from China (46%), Finland (13%), Canada and Belgium (both 6%). Around 90% of global lithium mine output is produced in Chile (40%), Australia (29%) and Argentina (16%), mostly from brine and spodumene sources. China (45%) hosts the majority of the world’s lithium hard-rock minerals refining facilities. Chile (32%) and Argentina (20%) dominate refined lithium capacity from brine operations (EC, 2019). Despite the recent fears of shortages and price spikes, the supply of lithium is expected not to be a major issue for the battery supply chain in the short or medium term. Nevertheless, according to (Roskill, 2018) an increase from current low prices is deemed necessary to support the development of new production capacity for the long-term. Not all nickel in the global supply chain is suited for Li-ion battery production. High-grade nickel products are dependent on the production of nickel sulphate, which is a principal ingredient in NMC (Nickel Manganese Cobalt oxide) and NCA (Nickel Cobalt Aluminium oxide) batteries. Due to past price collapses, the investments in refining capacity for nickel have been low, threatening the requested supply of nickel class I (with a purity above 99.8%) in particular (EC, 2019). For natural graphite there are existing requirements related to flake size distributions and carbon content. These are typically achieved via additional refining steps, where China holds the majority of the capacity (Roskill, 2018) for the production of spherical graphite. How much of global supply is suitable for the production of spherical graphite requires further analysis. China is the major supplier of anode materials, as well as NMC (Nickel Manganese Cobalt oxide) and LCO (Lithium Cobaltoxide) processed materials, while Japan is the key supplier of NCA cathode material. The EU is fully dependent on anode materials and NCA cathode material supply, and delivers around 18% of NMC materials and 15% of LCO materials. A critical aspect for the EU is that these volumes are not enough to satisfy the European demand for Li-ion batteries. Asia, represented by China, Japan and South Korea, delivers 86% of the processed materials and components for Li-ion batteries globally. The EU27, with 8%, has a relatively small share of the supply. Other countries deliver only 8%, which gives very little margin for supply diversification. The EU is fully dependent on imports of battery cells, exposing the industry to supply uncertainties and potential high costs. China is the major player in manufacturing Li-ion cells – 66% of global cell production. The EU has very marginal production (0.2% of Li-ion cells). Other suppliers provide around 8% of the global supply, hence the current margin for supply diversification is limited. The EU however is significantly investing in the battery value chain. The EU capacity expected to be available in 2021-2023 will increase to 40 GWh, from 3 GWh currently in place. Several of these production facilities are Asian investments. These European capacities compare to a current global capacity of 150 GWh identified now. Simultaneously, a large step-up in production capacity of Li-ion cells will be realised by Chinese companies, which will guarantee the dominance of China in the battery market. Original equipment manufacturers, cell manufacturers and suppliers will likely compete globally with each other to secure their battery supply chains and to secure access to the five essential battery raw materials – lithium, cobalt, nickel, graphite and manganese. 2030/2050 perspectives of raw materials demand in Batteries for e-mobility Three scenarios for the fleet of EVs containing batteries in the EU are considered (see Figure 9). These fleet scenarios are derived on the LDS, MDS and HDS scenarios as defined. The LDS scenario considers a reasonably quick uptake of EVs in general, with plug-in hybrid vehicles (PHEV) keeping a significant share of the fleet. In the MDS scenario, there is quicker uptake of full EVs and PHEV are considered as transition technologies with a significant share of the fleet until 2030 and a rapid decrease afterwards. The HDS scenario is characterised by an extremely quick uptake of full EVs, with PHEV uptake starting its decline already from 2024. From the fleet figures, the number of batteries entering the EU market is derived and the subsequent EU annual demand of various raw materials is assessed. See Annex 1 of the methodological notes and assumptions. Forecasted EU annual consumption of materials in batteries of EVs in 2030 and 2050, along with the current demand, is presented in the perspective below EU fleet of electric vehicles containing batteries according to the three explored scenarios EU annual material demand for batteries in EVs in 2030 and 2050   Batteries for energy storage systems (ESS) Li-ion batteries are already widely deployed technologies for Energy Storage System (ESS) and they will continue to develop. The storage capacity is derived for the LDS, MDS and HDS scenarios as defined in the perspective above. More methodological notes are available in Annex 1. In the perspective below for the HDS and in the MDS scenarios important capacities of hydrogen storage will be deployed, differently from the LDS scenario. For this reason, in 2050, the Li-ion battery storage capacity in the MDS is assumed lower than the capacity in the LDS. Perspective above presents the forecast of EU annual consumption of materials in ESS batteries in 2030 and 2050. Lower quantities of battery raw materials are required for the MDS scenario compared to LDS due to the large share of FCs in energy storage, as described above. The perspective above discusses the combined results for raw materials for batteries for e-mobility and energy storage together. Key observations and recommendations Li-ion batteries offer improved power and energy performance compared to the currently used lead–acid batteries. They are emerging as an important technology across a wide range of civil and defence applications. As a result of the increasing introduction of EVs (EV), mobile electrical appliances (3C) and stationary decentralised energy storage systems (ESS), demand for lithium-ion batteries is expected to skyrocket yearly (> 30%) for the next 10 years. The last step of the supply chain, Li-ion cells production, is carrying a very high supply risk for the EU. A high risk is identified for the supply of raw and processed materials, while a medium level of risk is anticipated for the supply of components. Various estimates suggest that the civilian industry in the EU requires up to 30% of battery cells produced worldwide. This means that cell production capacity needs to be built up in the EU to reduce dependency on the Asian market. Analysis of the civil market shows that the necessary quantities in the EU cannot be serviced in the coming years even by combining the capacities of Asian and European cell manufacturers. The Strategic Action Plan on Batteries lies down a comprehensive strategy to enhance the EU battery value chain stages. Nevertheless, the EU position could be further strengthened by:   Diversifying the materials supply: Secure trade agreements with third countries and employ economic diplomacy for cobalt, lithium, natural graphite and nickel class-I to reduce supply risks. Improving manufacturing opportunities in the EU: Increase mining, extraction and refining in the EU for key raw materials and processed materials. It is important to create an attractive investment climate as well as specific eco-systems for batteries manufacturing where a range of companies with different expertise in the value chain align themselves. Simultaneously, attracting foreign investments of electronics, automobile and battery manufacturing companies can directly support higher environmental and social standards compared to activities elsewhere in the world Recycling and reuse, substitution: Boosting recycling activities in the EU is a no-regret solution that allows key materials such as cobalt, lithium, manganese and nickel to berecovered and reused in the production of new batteries. Promoting R & D investments, development skills and competences: Further analysis is recommended on the (economic) mechanisms enabling improved social and environmental standards, without causing competitive disadvantage for European companies involved compared to their non-European counterparts. Specific investments in R & D and in particular in battery-related materials sciences, geology and metallurgical studies are recommended. Fostering international collaboration and standardisation activities: Ecodesign requirements are essential for fostering higher levels of reuse, remanufacturing and recycling, including the increased use of recycled content in new products to lower both environmental and raw material footprints

Strategic Technologies Acquisitions

1 Acquisition

Strategic Technologies acquired 1 company. Their latest acquisition was Capstone Technologies on June 19, 2000.

Date

Investment Stage

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Total Funding

Note

Sources

6/19/2000

Other

$99M

Acquired

Date

6/19/2000

Investment Stage

Other

Companies

Valuation

$99M

Total Funding

Note

Acquired

Sources

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