If there was anything investors learned from Volkswagen’s Power Day last month, it was just how critical supply chains for EV batteries are going to be. Major car makers have realised that the complexity and the cost of batteries are intrinsically linked to the affordability of the next generation of road vehicles.
Europe is heading into an unprecedented revision of the rules of vehicle manufacturing, and Volkswagen has planned six giga factories with a total capacity of 240 gigawatt hours, expected to be completed by the end of this decade.
“E-mobility has become our core business,” said Herbert Diess, CEO of Volkswagen Group. “Now we need to systematically integrate further stages in the value chain. In the long term, we want to secure a pole position in the race for the best battery and the best customer experience in the age of zero-emission mobility.”
High purity manganese demand is being driven by the rapidly increasing appetite from EV manufacturers like Volkswagen and Tesla for this valuable component of lithium-ion batteries.
Volkswagen said it would be using high manganese cathodes for the majority of the EV batteries it makes, mainly due to the lower cost and comparable range versus current vehicle ranges.
This is something that was also highlighted by Elon Musk, Tesla CEO, when he said Tesla would be using high purity manganese in its next generation vehicles. He foresees a simpler process of battery manufacturing that will employ high purity manganese and nickel metal as feedstock. Tesla’s new batteries will have no cobalt, but will rely on manganese as an important component.
Why is demand for high purity manganese scaling up?
Almost half of batteries currently use high purity manganese, but this is forecast to increase to 62% or more by 2023. The actual intensity of the manganese used in batteries is also believed to be growing. The higher the purity of manganese in the battery, the lower the quality of the nickel and cobalt that needs to be used, helping to reduce the reliance on these metals as well as driving down raw material costs.
Independent forecasts are also indicating a shift in demand for manganese in Europe, and, according to data from Cairn Energy Research Advisors and CPM Group, the global curve is steeping quickly. Their latest numbers show overall demand for high-purity manganese is projected to be thirteen times higher in 2030 than it is today.
There are some significant factors at play here: according to Statista, the Congo accounted for over two thirds of cobalt production in 2020, with Russia and Australia in very distant second and third places respectively. European manufacturers are keen to secure sources of battery materials much closer to home, and ideally at levels and prices they can be comfortable with. Sustainability of supply will be a key criterion.
China’s dominance of both the supply and processing of manganese is already a major factor in the entire European EV equation. Manufacturers are looking for alternatives closer to home. Euro Manganese, which we have profiled and tracked on this site since last year, remains the most easily accessible source of high purity manganese for batteries in Europe, located at Chvaletice in the Czech Republic and easily reachable by battery manufacturers.
The project has received the endorsement and support of EU-backed EIT InnoEnergy, the world’s largest sustainable innovation engine, which will be assisting Euro Manganese in securing financing for the full-scale commercial development of the Chvaletice Manganese Project and helping secure customers for its products.
Europe’s high purity manganese options are limited
Today, the vast majority of EVs in Europe already use manganese. As more cars are produced and the amount of manganese in each car increases, demand for high-purity manganese is projected to explode. Chvaletice is the only sizeable manganese resource in the European Union, with the potential to provide up to 50% of projected European demand for high-purity manganese for batteries in 2025, and 28% of anticipated 2030 requirements. As such, the project represents a milestone moment for the European automotive industry, which is looking to reduce the risk of potential critical raw material supply disruptions.
“Once operational, we expect the project to be one of the world’s largest producers of high purity manganese with an expected annual output of around 50,000 tonnes for 25 years,” said Marco Romero, CEO of Euro Manganese.
Access to raw materials is going to be key for the giga factories under construction – on 12 March the European Commission also recognised this when Vice President Maroš Šefčovič said the EC would be establishing a €900m partnership between the European Battery Alliance (EBA) and Horizon Europe to foster research and innovation in the battery sector.
According to Šefčovič, “The European Investment Bank’s involvement is decisive here to de-risk raw materials projects, leverage additional private money and effectively, to close the estimated financial gap of €15 billion by 2025.”
Šefčovič has tasked EIT InnoEnergy with creating the ‘EBA250 Academy’ to help bridge the emerging battery value chain skills gap by upskilling and reskilling citizens. With several large-scale industrial projects coming online over the next few years, Europe is expected to become the second largest battery cell manufacturer in the world, creating 800,000 direct jobs by 2025.
The Chvaletice project is unique in the world from an ESG and local supply chain point of view. With China currently producing over 90% of high-purity manganese today, Europe is intent on developing alternative battery metals supply chains. Chvaletice is ideally situated to meet some of that demand with made-in-Europe products – and, perhaps best of all, it will do this by reprocessing waste from a decommissioned mine while remediating a polluted site.