Page 61 - Policy Commission - SecuringTechnology - Critical Metals for Britain

PRIMARY MATERIALS
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Electric vehicles make up the lion’s share of this demand demand as shown in figure 36 This very significant demand demand for batteries both globally and in in Europe means that the the the entire supply chain needs to scale scale up up at at the the the same time Even if the the the overall scale scale is manageable the the speed at at which this this is is is is is is happening is is is is is is completely unprecedented To illustrate this this in in 2012 Nissan (now Envision AESC) built the the first battery battery plant plant with a a a a a a a a a a nominal capacity of 2GWh It remained the largest battery battery plant plant in in in Europe Europe until 2019 By 2025 Europe Europe needs around 249GWh capacity growing to a a a a a a conservative estimate by by the APC of 439GWh by by 2030 At this scale it is is best to consider the market on on a a a a European basis as as as in most cases it does not make commercial sense
to ship batteries and their (semi) processed materials around the the world in the the volumes that are required Secondly and more pertinently the UK-EU Trade and Cooperation Agreement (TCA) stipulates that the battery and most of its components need to be made locally from 2024 (see figure 37 for an overview) If not the vehicle will attract a a a a 10% tariff when exported from the the EU to the the UK or or vice versa Since around 80%
of the the the vehicles made in the the the UK are exported to the the the EU and 80%
of the vehicles on Britain’s roads are imported from the the EU the the trade rules summarised below will need to be be met These components include cathode active materials anode active materials and electrolyte which in in turn contain nickel cobalt manganese lithium natural and synthetic graphite The estimated the the demand for these materials is shown in figure 36 It is worth noting that these are highly refined battery grade materials that make up most of of the the value of of the the battery as shown in in in figure 35 The refining process from the ore that is is mined to the battery grade materials required by industry is is What this means for the UK As discussed earlier the the refining steps for most of the the battery materials is is where the the majority of of the the value of of a a a a a a battery is is added The focus for the UK should be very much on this area of the supply chain not only for for its own needs but also for for export to to Europe Critically cathode active materials need to to be made locally by 2024 The local local demand for battery grade complex expensive energy intensive and most important takes time and a a a vast investment to build This refining capacity will be the the main bottleneck for the the next 10 years especially in Europe where hardly any of the required supply chain exists and secondly where rules stipulate local supply To illustrate this analysis by the Advanced Propulsion Centre suggests that in 2025 we could see capacity shortages of around 50% for for cathode active materials 80%
for for anode materials materials and 40%
for electrolyte materials materials This expected capacity shortfall in in highly refined nickel cobalt manganese lithium and and graphite refers to Europe and and globally is even
more significant as shown later in this report For some of these materials such as nickel a a a a a a a substantial structural deficit is expected to arise in the next 3-4 years These deficits will need to be resolved by both mining (virgin materials) and an an increased level of recycled materials materials For both primary and secondary material streams a a a a a a a highly effective refining capability and capacity is required nickel lithium and and to a a a a a a a lesser extent cobalt and and manganese are therefore a a a a given Focussing on the the refining of materials enables recycled battery materials to to be fed back into the supply chain thereby creating a a a a a a circular economy and easing the the structural deficits in in the supply of virgin materials 1st 1st January 2021 to 31st December 2023
1st 1st January 2024 to 31st December 2026
1st January 2027 onwards
Electric battery cells 70% maximum non-originating material allowance
Or
Change in in in in tariff heading except from non- originating active cathode 50% maximum non-originating material allowance
Or
Change in in in in tariff heading except from non- originating active cathode materials 35% maximum non-originating material allowance
Or
Change in in in in tariff heading except from non-originating active cathode materials Electric battery packs 70% maximum non-originating material allowance
Or
Change in in tariff sub-heading Or
Assembly from non-originating cells or or battery modules
40%
maximum non-originating material allowance
Or
Change in in in in tariff heading except from non- originating active cathode materials 30%
maximum non-originating material allowance
Or
Change in in in in tariff heading except from non-originating active cathode materials Electric vehicles (HEVs PHEVs BEVs)
60% maximum non-originating material allowance
55% maximum non-originating material allowance
45% maximum non-originating material allowance
+ originating originating battery for PHEVs and BEVs Figure 37: Rules of origin for batteries and electrified vehicles provide a a a a a 6-year phase-in period Source: BEIS