Explained: The connection between Tesla Powerwall batteries, earth metals like Cobalt and Lithium, China quest for technological supremacy and Trump' Greenland real-estate deal approach.
Renewable Energy Industry is part of the global trend of electrification just as transportation industry is. Solar Panels, Wind Turbines, and High Capacity Batteries are making that doable.
These days we talk about a four-corner intersection between mainstream tech, geopolitical leverage, trade, and trade wars, IP (Intellectual Property) protecting R&D Innovations.
How all this concepts are mixing together and what is the outcome in renewable industry?
Batteries and Solar Panels are one of the most important components in the process of electrification and (electric) power generation. Batteries have a static function as in electric power conservation and a mobile function as in car and trucks power train electrification. The storage capacity of the battery makes the difference between economical viable and a non-economical solution. In general, we look for high-density energy type of batteries; those offer a significant technical advantage through high capacity and reduced physical footprint,smaller volume.
To reach a performant specification, batteries have started to incorporate more and more rare metals like indium, gallium, and selenide, respective cobalt. Additional they use nickel, aluminum, and copper. Tesla Batteries banks are using nickel, cobalt, and aluminum; respective in some of the models they use nickel, manganese and cobalt.
Solar panels have a better efficiency and lighter footprint using some of the rare metals like Gallium and Indium which are most commonly in thin PV films. Others rare elements are Ruthenium and Platinum Selenium respective Tellurium Germanium Gallium as components of the PV cells and PV films.
From where earth rare elements used in Renewable Energy are coming from?
China accounts for over 95 percent of the world's production of rare earth. Therefore, having control of these elements puts China in a powerful position. China's reserves are estimated to be 36 million tons or roughly 30 percent of the world's total reserves. It is estimated the world has 99 million tons of rare earth reserve deposits. Other major reserves in the world exist in California, India, Brazil, Australia, South Africa, and Malaysia.
Cobalt conundrum is another important issue for the world of renewable!
Cobalt remains the bedrock of electric vehicle batteries and massive battery packs, albeit with varying composition ratios. The Tesla’ Powerwall has a cathode makeup of cobalt, nickel, and manganese in equal portions, the new Powerwall 2 has slightly less cobalt. Tesla’s Model S electric vehicle battery had a cathode compilation of 80% nickel, 15% cobalt and 5% aluminum (according to Small Caps).
According to the latest US Geological Survey numbers, global cobalt supply increased in 2018, up slightly to 140,000 metric tons (MT) from 120,000 MT the previous year. The Democratic Republic of Congo (DRC) is by far the world’s largest producer of cobalt, accounting for roughly 60 percent of global production. The country has been the top producer of the metal for some time, and its output increased to 90,000 MT (metric tons) in 2018.
Other important cobalt producers are: Russia. Mine production of 5,900 MT (metric tons); Cuba. Mine production: 4,900 MT (metric tons); Australia. Mine production: 4,700 MT (metric tons); Philippines. Mine production: 4,600 MT (metric tons); Canada. Mine production: 3,800 MT (metric tons); Madagascar. Mine production: 3,500 MT; Papua New Guinea. Mine production: 3,200 MT (metric tons); China. Mine production: 3,100 MT (metric tons); Morocco. Mine production: 2,300 MT (metric tons.
The Democratic Republic of Congo has the upper hand and controls the market production and influences the metric tons price for now. The Congolese government has increased its tax on Cobalt exports by 50% and is considering labeling the metal a strategic resource. This would increase the royalty for Cobalt from 2% to 10%, making it more expensive for companies like Tesla to use in its products.
Renewable supply chain, importance of R&D and IP protection, trade wars and the search for new supply partners.
The supply chain of rare elements much used in the renewable energy industry projects a dependency of the third party supply sources for US-based production and for US-based consumers. That makes the US vulnerable to geopolitical trends and hostile changes impend the US free world doctrine.
Let’s have a look at two of the most important components of Renewable Energy Industry: Solar Panels and Lithium Batteries.
In 1980 lithium cell battery was invented. That was when breakthroughs at the University of Oxford and Stanford University led to the development of the lithium-ion battery. Sony commercialized first the lithium-ion battery in 1991.
Both, solar panels and Lithium batteries are projecting the IP (Intellectual Property) importance for any US-based R&D developments. Albeit the US has the signature on the most technologies implicated into renewable energy from the get-go, US companies must adapt and get involved in other economic markets like China, where the demand and the supply chain facilitates production.
Companies like Tesla have built their own production facilities for electric power trains and Gigafactories for Lithium batteries in China where the Cobalt and rare metals are plenty in order to circumvent the geopolitical implications.
Being exposed to significant pressure from other markets where they operate, protecting the IP for their R&Ds is very important for the future of those companies and offers existential security for a whole industry. Thus trade wars running afoul between different economic blocks are making a bold statement for a new economic world. The new rules coming out will not kill the globalization, it only protects the economy as a whole.
China is at the top of Renewable Energy food chain
According to BloombergNEF, in early 2019 there were 316 gigawatt-hours (GWh) of global lithium cell manufacturing capacity. China is home to 73% of this capacity, followed by the U.S., far behind in second place with 12% of global capacity.
In 2018, Chinese lithium production was 8,000 metric tons, third among all countries and nearly ten times U.S. lithium production. Chinese lithium reserves in 2018 were one million metric tons, nearly 30 times U.S. levels.
China is following the same path for solar panels. While solar cells were invented by American engineer Russell Ohl, today China dominates the global solar panel market both as installed power and production capacity. China is the largest solar market in the world and has installed capacity of around 130 GW, far greater than the U.S. at around 60 GW, and Japan's roughly 46 GW. In order to cool down and control the market, China has halted all subsidies for utility-scale solar projects in favor of competitive bidding, and greatly reducing feed-in-tariffs. This move is likely to effectively slash demand in the world’s largest solar market by about 40% and to reduce the overcapacity production, making the price of solar panels and wafers competitive in the near future.
How Greenland is playing in the US rare earth metal supply chain strategy
Besides the trade wars and new trade agreements US is forging, in order to mitigate dependency of rare metal elements, the US is looking forward to places where it can have direct impact like Greenland. The USA has a history of big real estate deals with Denmark, they bought the US Virgin Islands from Denmark at the end of First World War (Treaty of the Danish West Indies of 1917) in order to deflect and prevent German submarines getting a foothold close to mainland US.
Greenland with a population of 56000 and almost 900,000 square kilometers bordering Antarctic Ocean, now an open waterway, it said to have important reserve of rare earth elements. The rare-earth elements—including neodymium, praseodymium, dysprosium, and terbium—have become a focus of the brewing U.S.-China trade war dispute and are found in abundance in the area around Narsaq. Narsaq is a town in the Kujalleq municipality in southern Greenland with cca 1500 residents.
The Kvanefjeld Plateau is about 5 miles outside Narsaq, holds about a billion tons of mineral resources, according to Australia-listed developer Greenland Minerals Ltd. That more likely justifies the US bid to incorporate Greenland as a territory, or to push for Greenland independence from Denmark in 2021, the celebration of 300 years of colonization. Greenland as now, receives 500 million dollars a year from Denmark. Independence will open the door to investors to compensate what they loose from Denmark’s’ stipends and bring more development to the region. That in turn, will incite the mining companies to open shop on the island. The US it will benefit through a new chain of suppliers, thus reducing own dependency of countries like China and DR Congo. All this resources are very close to homeland, in a place where US has decades-long presence on the island at Tule military base.