Battery Metals Market Outlook

China looks West as its domestic

market matures
• The growth in electric vehicle sales will see a clear softening in 2023, especially in China.
China’s export of cost-competitive EVs is a significant challenge to western OEMs.
• Strong rise in share of cost-competitive cathodes as OEMs seek to lower costs.
• Record raw material costs have encouraged this trend. While battery metal prices are
already falling, high prices are set to remain for the next few years.

JANUARY 2023
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Battery Metals Market Outlook, January 2023 2

Executive Summary
Electric Vehicle Market
● Electric vehicle sales continue to resist a weak global
vehicle market outlook. Globally, 11 M BEVs & PHEVs
were sold in 2022, representing 13% of total light vehicle
(LDV) sales. This will jump to 15 M units in 2023.
● China continues to drive the substantial growth in the
electric vehicle market, although further growth has been
hampered by poor economic growth and significant
disruptions in China. BEV exports from China are
growing, especially in Europe.
Battery Demand and Capacity
● Battery demand jumped to 652 GWh in 2022, up 42%
y/y, again mostly driven by the Chinese market.
● The battery cell gigafactory pipeline by 2030 has reached
5 TWh. Most of this will be in China, but nameplate
capacity far outstrips projected demand. Not all projects
are guaranteed to be built or reach the claimed capacity.
Battery Metals Market Outlook, January 2023
Battery Cathodes:
● Material thrifting will continue to be a theme as new
cathode technologies emerge. The main targets are cobalt
and, to a lesser extent, nickel.
● 2022 marked a sharp rise in use of LFP batteries, led by
China. Technical advances have unlocked LFP’s suitability
for larger vehicle segments, but nickel-based cathodes will
retain the majority share in med-term as most OEMs stay
hesitant to use LFP in more than entry level models.
Battery Raw Materials
● Battery metal prices are expected to adjust downwards
this year, but will remain very high in the short to medium
term due to supply tightness.
● Investment in capacity continues to respond strongly to
pricing, especially from Indonesia, Africa and Canada.
● Greater use of marginal resources is raising costs of
production as well as increasing carbon emissions in the
supply chain.
3
Definitions and Classifications
Vehicle powertrains and classification Cathode chemistries
ICE Internal combustion engine vehicles only NMC Lithium Nickel Manganese Oxide LiNixMnyCozO₂
HEV Mild hybrid electric vehicle, full hybrid electric vehicle & flexi- NCA Lithium Cobalt Aluminium Oxide LiNixCoyAlO₂
fuel hybrid electric vehicle
NMCA Lithium Nickel Manganese Cobalt Aluminium Oxide LiNixCoyMnzAlO₂
PHEV Plug-in hybrid electric vehicle, including extended range EV
LFP Lithium Iron Phosphate LiFePO₂O₄
(EREV)
LMFP Lithium Manganese Iron Phosphate LiMnxFeyPO₄
BEV Battery electric vehicle
LNMO Lithium Nickel Manganese Oxide LiNixMnyO₂
NEV New energy vehicles – a group term for plug-in vehicles, mainly
BEV & PHEV but alternative fuel cell electric vehicles (FCEV) LCO Lithium Cobalt Oxide LiCoO₂
LDV Light vehicles weighing up to 3.5 t, & up to 6 t in N. America
HDV Heavy-duty vehicles weighing over 3.5 t, & over 6 t in N. America

Battery raw materials

LCE Lithium carbonate equivalent - All lithium ore, concentrate and
chemical volumes are in LCE terms unless otherwise stated.
pCAM/CAM Precursor cathode active material & cathode active material
NPI Nickel pig iron
HPAL High-pressure acid leach processing from laterite nickel ore
MHP Mixed hydroxide precipitate

4
Auto sector turns to material thrifting as battery costs rise
Electric vehicle sales continue to resist weak global outlook
Annual NEV sales by major market, million units ● Global light vehicle (LDV) sales underwhelmed in 2022,
8 2019 remaining broadly flat y/y due to a challenging macro
97% y/y 2020
environment and supply chain issues.
6.9 2021
6
2022 ● While world LDV internal combustion engine (ICE) sales
4
contracted by 9% y/y in 2022, new energy vehicles (NEV)
3.5
sales grew by almost 60% y/y. Still, this was hampered by
3% y/y
2
poor economic growth and significant disruptions in China.
2.2 2.3
51% y/y
● China continues to drive the substantial growth in the NEV
0.6 0.9
0 market. Chinese 2022 NEV sales grew 96% y/y and
China W. Europe N. America
accounted for 63% of sales globally.
NEV sales by major region, 2021 Q1 = 100
● The W. European market saw supply constraints and
500
rampant energy costs dampening consumer confidence.
China
420 NEV sales saw ~30% y/y growth in ‘22 Q4, but the
previous two quarters were largely flat.
340
● Prospects for the auto sector will improve in 2023, with
260 global sales growing by 6% y/y as economic conditions
180 USA
recover, particularly in N. America and Europe.
W Europe ● Globally, 11 M NEVs were sold in 2022, representing 13%
100
21 Q1 21 Q2 21 Q3 21 Q4 22 Q1 22 Q2 22 Q3 22 Q4 of total LDV sales, expected to jump to 15 M units in 2023.
DATA: CRU. NOTE: Find CRU’s Economics Team’s top 10 calls for 2023 as well as their view on recent US dollar deflation online.

Battery Metals Market Outlook, January 2023 6

Snapshot of latest NEV sales data
Chinese NEV sales, thousand units USA NEV sales, thousand units
900
100
750
80
600
60
450

300 40

150 20

0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022

W. Europe NEV Sales, thousand units NEV share in major markets, %

40%
750 300%
BEV China
600 PHEV Western Europe
y/y % (RHS) 30%
200% USA
450
20%
300
100%
150
10%
0 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
0%
2019 2020 2021 2022 19 Q2 19 Q4 20 Q2 20 Q4 21 Q2 21 Q4 22 Q2 22 Q4

DATA: CRU, CAAM, ANL, ACEA.

Battery Metals Market Outlook, January 2023

Chinese OEMs look to export market as EV uptake rates slow this year
China NEV sales, million units
● December NEV sales were up 4% m/m, despite a 8% y/y 25 Sep-22 Dec-22 23.5
decline in total sales due to poor consumer confidence. 21.6
20
● CRU has increased our Chinese EV sales forecast for 16.1
2023 to over 9 million units, a 32% increase y/y. BYD 15
alone expects to produce 4 M units in 2023. 9.1
10
6.9
● Growth will slow this year, as direct subsidies to EV buyers
5
expired at the end of 2022. However, exemptions from 5%
purchase tax will remain for NEVs until end-2023. 0
2022 2023 2027 2032 2035
● Top-selling NEV producer, BYD, raised prices on three
models by RMB2,000-6,000 due to rising raw material Chinese exports of NEVs, 000 units, vs. share of total car exports
costs. Raised costs will also limit uptake. 150
2021 2022 2022 share (RHS)
32%
● Chinese car exports were up 65% y/y in November 2022,
but NEV exports by comparison were higher by 157% y/y. 100
24%
Chinese OEMs are finding an increasing appetite for their
16%
competitive offerings, especially in Europe.
50
● With most “zero-Covid” controls relaxed, sentiment has 8%
improved but a wave of infections is currently straining
0 0%
health services. This remains a risk to the outlook. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

DATA: CRU, CAAM.

Battery Metals Market Outlook, January 2023 8

Chinese EVs pose a formidable challenge to the Western automotive industry
China exports of battery-electric vehicles (light and heavy duty)

Vehicle units, '000 Value, $ bn

1,000 20

500 10

0 0
2017 2018 2019 2020 2021 2022*
DATA: China customs. *2022 data complete up to November

● Chinese electric vehicle manufacturers, some of which have technical

and cost advantages, pose a challenge to Western automotive
manufacturers.
● There is potential for significant growth in market share in Europe,
potentially to the levels of Japanese and South Korean brands.
● Despite the increased competition, widespread protectionist trade
measures are unlikely, but western automakers face a downside risk
to volumes. Read more in our detailed insight at CRU Online.

Battery Metals Market Outlook, January 2023 9

European NEV sales languish as it sinks into recession
● The European Commission has indicated that the EU is NEV sales growth in major European countries, % y/y
Germany France United Kingdom Sweden Italy
likely already in recession that will persist until spring. 500%
GDP forecasts for 2023 have been slashed to 0.3% y/y. 400%

● While energy costs have not been as severe as expected 300%

due to high gas inventories, inflation exacerbated by the 200%
war in Ukraine continues to weigh on economic growth.
100%
● W. European NEV sales totalled 2.5 M units in 2022, up
0%
15% y/y – respectable considering sales were flat y/y in
2022 Q3 and Q4. -100%
2020 Q4 2021 Q2 2021 Q4 2022 Q2 2022 Q4
● PHEV sales contracted in 2022 as more fully electric
Western Europe light vehicle sales, y/y %
models became available. Firm uptake in previous years
250% 2020 2021 2022
acted as a stopgap before EU emissions standards
tightened. A stronger shift to BEV will also be seen ahead 200%

of 2025 when benchmarks will be revised again. 150%

● The EV sales forecast has been marginally downgraded 100%

but a strong economic return is an upside risk to adoption. 50%
16% 16%
● The EU announced policy support for critical minerals in
8%
0%
Sep, aimed at improving trade with key producing -11%
-22%
-50%
countries but also attracting investment in regional supply. BEV PHEV HEV NEV ICE

DATA: CRU, ACEA.

Battery Metals Market Outlook, January 2023 10

North America exceeds 1 million EV sales in 2022, expected to double this year
● Full electric vehicle sales continue to drive robust growth Comparison of USA NEV sales, ‘000 units
in the US market. In 2022, BEV sales were up 75% y/y 62% y/y
80 55% y/y
while PHEV sales increased by 14% y/y. By comparison, 34% y/y
total light vehicle sales were down 8% y/y. 75% y/y
60

2022
● Tesla comprised 52% of NEV sales for the year to October
at 371,000 units, down from a 63% share in 2021. Stiff 40

2021
competition has come from Ford’s Mustang Mach-E & F-
20
150, the Chevrolet Bolt, as well as Rivian this year.

2019

2020
● The N. American market reached 1.2 M NEV sales in 0
2022, up 51% y/y, slightly lower than expectations due to Feb May Aug Nov

macro headwinds. Sales are expected to almost double in N. American change in LDV sales by drivetrain between 2022 to 2027, million units
2023 to 1.8 M units as the auto market recovers. 21.0 Base Increase Decrease

● CRU expects BEV sales will grow by 3.5 M units by 2027, 20.5
19.5
a 42% CAGR, while ICE sales will drop by 1 M units.
3.5
● The cathode landscape in the US is changing rapidly, with 18.0
LFP increasingly offered for standard-range offerings, and
new super-high-nickel chemistries such as NCMA 90 and 16.5 1.1
NMC 90 on mainstream models. Cobalt-free solutions like 16.4 -1.0 0.6
LNMO are also expected to gain a significant share from 15.0
2022 ICE HEV PHEV BEV 2027
2025+, if successfully commercialised.
DATA: CRU, Argonne National Laboratory.

Battery Metals Market Outlook, January 2023 11

LFP takes almost a third of EV market as OEMs eye affordability
● 2022 marked a sharp rise in use of LFP batteries, led by
Global cathode market share of Li-ion in EV demand, %
China, after seeing a long decline in share until 2020.
100%
NMC955
● While LFP cathode energy density is 35% lower than
NMC811, studies have indicated that LFP batteries could
deliver up to five times as many charge cycles.
80%
NMC811
● CAM costs for NMC811 are currently around 50% higher
than LFP, also requiring more thermal management.
● OEMs like BYD have discarded battery modules stead
NMC622
60%
NMC532
using space-efficient ‘Cell-to-Pack’ or ‘Cell-to-Body’
NCMA
configurations in combination with long-format ‘Blade’
NCA
battery cells, lowering costs. More OEMs will follow.
40% ● In 2022, 50% of Chinese BEV sales carry LFP batteries,
LNMO
and western OEMs are increasingly designing it into their
LMFP
value offerings. The LMFP variety is also coming to the
20% market in 2023, offering ~20% more energy density.
● High-nickel cathodes (NMC, NCA, NCMA) will retain the
LFP
majority share in med-term as most OEMs stay hesitant to
0%
use LFP batteries in more than entry level models.
2020 2022 2025 2030
● High-voltage spinel LNMO cathodes will offer rapid
DATA: CRU. NOTE: N – Nickel, M – Manganese, C – Cobalt, A – Aluminium, L – Lithium charging while requiring 55% less nickel, 40% less lithium,
O – Oxide, F – Iron, P – Phosphate, Excludes LTO batteries and no cobalt, but success is still uncertain.
Battery Metals Market Outlook, January 2023 12
Use of lithium iron phosphate batteries not limited to entry-level EVs
LFP: Lithium Iron Phosphate LFP and LMFP cathode share of total battery demand, %
34%
Advantages Disadvantages
32%
• Lower capacity than

Forecast in 2021
• Safety, thermal stability
nickel-based
• Fast charging 30%

Current forecast
• Limited capability in cold
• High cycle life
weather 28%
• Allows full discharge
• Recycling is less
• Low cost
economically viable 26%

● Lower energy density vs. NCM and licensing restrictions has 24%
2022 2025 2027 2030
historically limited LFP uptake in EV markets outside of China
where vehicle range is the primary concern. Major OEMs considering / using LFP within their fleet
● LFP is widely used in stationary energy storage where energy
density is not as critical as in automotive applications. Stationary
storage is the fastest growing end use for batteries, and is
dominated by LFP.
LMFP – Lithium Manganese Iron Phosphate
● Auto demand is currently bifurcated with higher end BEVs
equipped with nickel-based cathodes and lower end vehicles ● LMFP cathodes inherit the durability and low cost advantages of LFP technology but with a
often based on more cost-effective LFP batteries. higher energy density.
● However, technical improvements have enabled state-of-the-art ● The addition of manganese increases the average operating voltage from 3.2 to 3.9 Volts,
LFP batteries to rival nickel-based batteries at the pack level. translating to a 22% increase in energy density, and therefore, higher capacity at the cell level.
'Cell-to-Pack' technology and long-format 'Blade' cells have
● Manganese is increasingly seen as an excellent stabilizer and today trades as a bulk industrial
unlocked LFP's suitability for larger vehicles.
commodity at low cost. Production of high purity manganese sulphate remains fairly limited.
● Given that LFP can be charged to 100% without significant
● CATL and BYD are likely to be first adopters, and theoretically LMFP batteries could rival
deterioration of capacity, versus typically 80% for NMC, the case
medium-nickel NMC in terms of range while maintaining LFP advantages
for LFP batteries is strengthening.

Battery Metals Market Outlook, January 2023 13

Nickel-Cobalt chemistries continue trend towards high nickel content
● Nickel and cobalt containing cathodes made up around Practical cathode energy density vs. year of first application in BEVs
240 NCMA
69% of battery demand in 2022, but this has fallen sharply
NMC 955
from a high of 83% in 2020. 220
NMC 811
● Higher nickel content delivers higher energy density and NCA 90
200
therefore longer driving range, while other elements, such NCA 84
as cobalt, ensure the stability and longevity of the cell. 180 NMC 721
NMC 532
● Nickel-manganese-cobalt (NMC) cathodes underwent 160
NMC 111
substantial development since their first use in 2011,
gradually increasing nickel content in each iteration 140
2010 2012 2014 2016 2018 2020 2022
● Nickel-cobalt-aluminium (NCA) is evolving in a similar
fashion to more popular NMC cathodes and has been Nickel intensity by battery cathode type, kg per kWh
1.2
popularized by Tesla/Panasonic
● Nickel-cobalt-manganese-aluminium (NCMA) is one 0.9 0.99 1.00
0.92 0.91
the newest types of high-nickel cathodes combining NCM 0.86
0.80
and NCA chemistries resulting in a very high energy 0.6 0.71
density of 850 Wh/kg 0.50
● This uses 90% nickel, similar to NMC955, but is more 0.3 0.36
nickel-efficient due to its higher cathode capacity. It also
reduces the use of cobalt by two thirds compared to NCA. 0.0
NCA NMC111 NMC532 NMC622 NMC721 NMC811 NMC955 NCMA LNMO
The trend of cobalt thrifting continues to gain momentum. DATA: CRU

Battery Metals Market Outlook, January 2023 14

LNMO offers the best of NMC and LFP in one package
LNMO (LiNi0.5Mn1.5O4)
● Lithium nickel manganese oxide is an
emerging high-manganese cathode
chemistry
● Also known as HVS (high voltage spinel)
due to its three-dimensional crystal
structure which allows fast charging
● LNMO has been known for a decade but
technical challenges have prevented wide
commercial rollout
● Theoretically the technology offers the
best of both NMC (high capacity) and LFP
(cheap raw materials)
Advantages
● High energy density (650 Wh/kg) Investors in technology (CAM producers)
● High operating voltage (25% higher than
commercial high-nickel cathodes like NMC811)
● Short charge & discharge time
● Lower material cost – cobalt-free and low nickel
Challenges
● Electrolyte degradation in a wide voltage window
● Short cycle life compared to other Li-ion batteries
Characteristics of LNMO, HN NMC and LFP
Safety Indicative plans for adoption (OEM & cell
producers):

● A high-nickel variant in the LNMO

Driving Range Cost
category, also called ‘NMX’, is already
commercialised, although it has vastly
different characteristics. It has a layer NMC High Nickel
structure and an operating voltage similar LFP
to NMC
LMNO
Durability Charging Speed
DATA: CRU

Battery Metals Market Outlook, January 2023 15

Reductions of cobalt intensity in batteries slows down demand growth
● Application of the cobalt-free batteries gathered pace in 2022 Battery metal content by cathode chemistry, kg per 60 kWh vehicle

● LFP chemistry is favoured by Chinese producers due to lower cost Cobalt Lithium Nickel Phosphorus Manganese Aluminium Graphite

and less complicated supply chains LNMO

● LFP was previously considered an inferior chemistry, but Chinese

Cobalt-free
LMO
producers like BYD have pushed the technology to new levels
● BYD's Blade cell and Cell-to-Pack technology enabled 100 kWh LMFP
LFP battery pack, previously considered unfeasible in LDV
LFP
● Other cobalt-free chemistries under development are LMFP and
LNMO. We forecast these to become more commonplace from NCMA
2025+, particularly suitable in a raw material shortage scenario
NMC955
Cobalt demand per kwh of battery for various chemistries, kg/kwh
NMC811
-78%
NMC721
Focus on LFP is warranted, but changing chemistries within
NMC group of batteries could dampen cobalt demand too NCA

NMC622
-57%
-50% NMC532

NMC111
LCO NMC111 NMC532 NMC622 NCA NMC721 NMC811 NMC955 NCMA
LCO
Ni-free Medium Ni High Ni

DATA: CRU

Battery Metals Market Outlook, January 2023 16

Electric vehicle sales move beyond early adoption phase and into early majority
Global light vehicle sales by powertrain, million units, versus NEV share, % (RHS)

40%
100 While ICE sales will shrink by 9% y/y this year due to poor
macroeconomic conditions, NEV sales will grow by 59% y/y

33%

80 30%
25%

NEV sales will total 11 M units

60 in 2022, and 15 M in 2023
18% 20%

40 13%

8% 10%
20
4%

0 0%
2018 2020 2022 2024 2026

BEV PHEV Other xEV ICE Petrol ICE Diesel

DATA: CRU. NOTE: NEV refers to battery-electric (BEV) and plug-in hybrid vehicles (PHEV). LDV (light duty vehicles) data presented, not including HDV and buses.

Battery Metals Market Outlook, January 2023 17

Consumer electronics continues its slump after strong post-pandemic growth
Mobile phone shipments, million units, vs. average battery capacity, Wh (RHS) ● Market participants confirm that the electronics market
1,600
5G phones 4G phones Battery capacity
16
saw significant weakness in 2022. Lower consumer
confidence has resulted in a 10% y/y contraction in phone,
1,200 14 laptop and tablet shipments.
● This has been sightly offset by rising average battery sizes
800 12
for devices, with 5G battery capacities around 20% larger
400 10
than their 4G counterparts.
● Downstream buyers report that LCO production shrunk by
0 8 a third y/y in ‘22 Q4, indicating that destocking is taking
2018 2019 2020 2021 2022 2023
place while raw material prices remain high.
Battery demand from selected consumer electronics, MWh
● The portable electronics market will show limited growth
30 12%
% y/y change (RHS) through the forecast period compared to other battery
24 8% applications. Demand will only return to pre-pandemic
4% levels in 2025, rising by 5% CAGR to 2027.
18
0% ● Weak demand has been compounded by supply issues
12 experienced by Apple supplier Foxconn, which has seen
Mobile phones

Tablets
Portable PCs

-4%
6
disruptions due to lockdowns and protests.
-8%
● Apple shipments in ‘22 Q4 were expected to be 14%
0 -12%
2020 2021 2022 2023 2024 2025 2026 2027 lower y/y, in the strongest quarter of sales in 2022.
DATA: CRU

Battery Metals Market Outlook, January 2023 18

Material thrifting becomes a theme as new cathode technology emerges
● A significant upgrade to our 2026 EV sales forecast is the Changes to 2026 battery demand over June 2022 publication, GWh
largest change to battery demand projections, driven
1,900 Increase Decrease
largely by a higher forecast for China, adding 221 GWh.
● Volatility in EV sales remains a significant upside risk to 32
11
battery metals’ prices in CRU’s forecast. 1,830
5 3 1,854

● Our demand forecasts for nickel and cobalt has been

dampened by the rising share of less material intensive
cathode technology, such as LFP, LMFP, and LNMO. 1,760

● CRU now expects LFP to retain a majority share of the 221

Chinese market in the medium term, an upwards revision
from around 40% by 2027. 1,690

● Material thrifting will continue to be encouraged by prices

significantly higher than historical levels.
1,620
● Stationary storage for national power grids has also been 1,621
upgraded due to higher forecasts for renewable energy
generation capacity.
1,550
● Demand growth from consumer electronics is expected Jun-22 LDV Stationary Portable
storage electronics
Mobile
phones
Other Jan-23

to soften slightly as it approaches saturation.

DATA: CRU

Battery Metals Market Outlook, January 2023 19

Battery, cathode, and precursor developments
Planned battery capacity in 2030 will exceed booming demand
Battery production capacity share of total, per region, %
● Total battery production capacity in 2022 exceeded 1 TWh
China Europe North America Asia ex China Oceania
after years of substantial growth. In 2017 it was only 142 100%
MWh, a seven-fold increase in only five years.
75%
● CRU’s database shows the battery industry can potentially
grow to ~5 TWh by 2030, a 17% CAGR increase.
50%
● The largest contribution to battery cell industry growth will
come from existing operations, highlighting that established 25%
manufacturers will continue to dominate the industry.
● Over 1 TWh will be added by brownfield expansions over the 0%
2022 2024 2026 2028 2030
next decade.
● Many projects included beyond five years in the forecast Global battery manufacturing capacity by status, GWh
6.0
remain under planning without any substantial financial Operating
5-fold increase by 2030 @ 21% CAGR
commitments. These are more speculative in nature and will In construction
4.5
be dependent on local demand and future pricing conditions. Planned

● CRU’s current estimate of battery manufacturing capacity 3.0

utilisation in 2030 is at 62%, indicating significant over
investment. A large proportion of planned projects may never 1.5
be built, see delays in commissioning, or may not reach the
claimed capacity. Those that are commissioned are not
0.0
guaranteed to be financially sustainable. 2022 2024 2026 2028 2030
DATA: CRU

Battery Metals Market Outlook, January 2023 21

Chinese battery makers continue robust overseas and domestic investment
● Chinese foreign investment in battery capacity is rapidly Chinese foreign investment in battery gigafactories by region, GWh/y

gathering pace – Chinese companies could account for 300

14% of world ex. China manufacturing capacity in 2030.

Europe
250

● CATL announced an investment worth $7.6 bn in Hungary 200

with 100 GWh capacity in August 2022. Another

Rest of World
150
partnership valued at $6 bn was signed earlier in 2022,

N America
100
with PT Industri Baterai & PT Aneka Tambang.
50
● CALB announced in November ‘22 that its first European
0
plant is to be built in Portugal with an initial capacity of 15 2023 2030
GWh by the end of 2025, tripling capacity by 2028.
Global battery manufacturing capacity pipeline by Chinese producer, GWh/y
● SVOLT confirmed in September ‘22 that it is planning a 16 750
GWh battery cell plant in Lauchhammer, Germany, 2022 2030
600
expected to be commissioned in 2025. Stellantis will be
sourcing its vehicle batteries from the Chinese firm. 450

● BYD is reportedly evaluating a battery plant in the US 300

after the Inflation Reduction Act signed into law last 150
August seeks to encourage domestic investment.
0
● Chinese manufacturers, especially CATL, have faced
strong resistance in establishing a presence in N America.
DATA: CRU

Battery Metals Market Outlook, January 2023 22

Precursor and cathode producers continue their vertical integration
Precursor and cathode active material production, '000 tonnes
● Cathode active material manufacturing capacity is
expected to double by 2027 from China alone, rising to 500
2022 2024 2027
over four million tonnes.
● Dynanonic continues to expand rapidly into iron-
phosphate pCAM, announcing a new 330 kt/y plant in 400
Qujing bringing their total capacity to almost half a million
tonnes within the next five years.
● Xiamen Tungsten expects to commission its Ya’an LFP 300
CAM plant by the end of 2023, with total design capacity
now expected to be 40 kt/y. It will also build a 40 kt/y
precursor plant in Tongling in collaboration with CNMC. 200
● GEM announced a $1.6 bn investment in Wenzhou that
will produce NMC and ultra-high nickel precursor,
electrolyte, as well as lithium carbonate. An on-site 100
battery recycling plant is in development.
● Chinese battery raw material producers continue their
vertical integration of the supply chain, but investment in 0
pCAM and CAM remains largely restricted to China. Dynanonic Huayou Umicore GEM Ronbay CATL & Xiamen
Cobalt BRUNP Tungsten

DATA: CRU

Battery Metals Market Outlook, January 2023 23

Better late than never – West moves towards self-sufficiency in battery production

● To localise battery production, European and N. American

Europe & North American battery manufacturing capacity by status, GWh production capacity is poised to grow 7-fold by the end of
this decade. Although this is from a low base, growth will
3,000 European battery plant pipeline has
higher than average contribution of
average 30% to 2030 if all projects go as planned.
Planning projects at planning stage
● N. American battery production plans are dominated by
2,500 Construction Tesla. The three largest plants in the pipeline are Tesla
Operating operated and already supplying American automakers.
2,000 +30% ● A large proportion of the project pipeline involves a
CAGR
cooperation with major South Korean suppliers, such as the
1,500
GM-LG Chem joint venture to build Ultium cells, with three
7x
factories planned in USA.
● The future European pipeline is more fragmented than N.
1,000
America, with a higher number of supplier-operated projects,
such as CATL and Northvolt.
500
● However, at present, European output follows a similar
pattern to N. American with most production emanating from
0 South Korean suppliers. The largest plant currently in
2022 2023 2024 2025 2026 2027 2028 2029 2030
operation is LG Chem’s facility in Poland, closely followed by
Samsung SDI in Hungary.
DATA: CRU

Battery Metals Market Outlook, January 2023 24

South Korea cements itself as a battery active materials production hub
Precursor and cathode active material production, '000 tonnes ● Although several high profile investments have been
announced in N. America and Europe in 2022, activity in
1000 South Korea Europe Japan USA Canada South Korea continues to dwarf these moves.
● EcoPro BM, Korea’s largest producer, commissioned its
54,000 t/y CAM7 line in Pohang in October 2022, bringing
800 the total capacity at its two domestic operations to 212,000
t/y.
● POSCO completed its 60,000 t/y expansion at Gwangyang in
600 Nov. 2022, which is to specialise in high-nickel NMC and
NCMA cathode materials. Another 60,000 t/y is being
constructed in Pohang, due to go into production in 2024.
400 ● L&F started production from its 2nd Guji plant comprising
70,000 t/y of high-nickel NMC and NCMA cathode in 2022
Q1. The firm is constructing a third 90,000 t/y plant, and
200 supplies both LG Energy and SK On.
● Several Korean firms are also investing abroad:
• EcoPro BM - 108,000 t/y CAM in Debrecen, Hungary
0
2020 2022 2025 2027 - 110,000 t/y CAM within the US
• LG Chem - 120,000 t/y CAM in Clarksville, US

DATA: CRU
• POSCO/GM - 150,000 t/y CAM in Bécancour, Canada

Battery Metals Market Outlook, January 2023 25

Insights into key battery metals
Li: New mining jurisdictions are on the rise
Mined pegmatite supply of lithium by country/region, ’000 t LCE¹ ● Goulamina is evaluating early DSO shipments in late
200 2023 ahead of its 2024 start to improve financials, which
will be trucked to the port of Abidjan in Cote d’Ivoire.

Canada
160
● Zimbabwe placed an export ban on lithium ores in
120
December ‘22, but not on concentrates, as interest in the

Mali
Brazil
Zimbabwe
80 country’s pegmatite deposits have soared:

Other Africa
Europe
• Sinomine recently spent $200 M on doubling Bikita’s

USA
40
capacity after spending $180 M to purchase it.
0
2023 2025 2027 • Huayou Cobalt’s first deliveries from Arcadia’s 400,000
t/y conc. capacity will begin in ‘23 after paying $422 M.
● Mining at Sayona’s North American Lithium restarted in
November, with procurement and permitting now • Chengxin Lithium will invest $130 M in the Sabi Star
completed. Commercial output remains on track for early project to ship around 300,000 t/y of conc from ‘23 Q2.
2023. Authier is also expected to start extraction later in • Premier African Minerals aims to deliver its first
2023, supplementing NAL’s ore throughput. concentrate in 2023 Q1 from the Zulu project
● Shipments from Sigma’s Grota do Cirilo in Brazil will start according to its offtake with Suzhou TA&A.
in 2023 Q2 with progress on the plant and pit progressing ● AVZ Mineral’s legal woes have worsened after a investor
well. The company also announced an upgrade to its class action alleges the firm failed to correctly disclose its
stated reserves by 63% in Dec 2022 and an advancement ownership of the Manono project. AVZ has in turn taken a
of plans to commission a further 67,000 t/y LCE in 2024. case to the ICC International Court of Arbitration.
DATA: CRU. NOTE: 1) Production unadjusted for expected chemical recovery or project probabilities.

Battery Metals Market Outlook, January 2023 27

Li: Difficulties in ex. China refining ramp ups is reducing material availability
Refining capacity by equity ownership, '000 t LCE ● While Kwinana’s battery-grade hydroxide has finally been
independently certified and is ramping up operations, no
2022 2023 2024 2025 2026 2027
300 19% confirmation has come from Kemerton. The plant was due
to start commercial deliveries by the end of 2022.
10% ● Allkem confirmed that Naraha’s 10,000 t/y of hydroxide
240 output started in October ’22, taking a year to ramp up.
● A significant volume of off-spec material has been
CAGR ‘22-’27
produced in the commissioning of these three plants. This
180
has been sold onto reprocessors in China, but this will
6%
increasingly affect material availability as more greenfield
battery-grade capacity is commissioned outside China.
120 37% 44%
22% • POSCO and Pilbara Minerals’ Gwangyang will finish
17%
construction of its 43,000 t/y hydroxide plant in 2023.

60
• Shenzhen Chengxin Lithium aims to commission its
45,000 t LCE/y Morowali plant by the end of 2023.
• AMG will be the first hydroxide producer in the EU with
0 20,000 t/y of hydroxide capacity starting from 2023 Q3
Albemarle SQM Ganfeng
Lithium
Suzhou
Tianhua
Jiangxi
Zhicun
Livent Tianqi
Lithium
at its Bitterfeld-Wolfen site in Germany.
● Around 6 to 9 months of output for each new installation is
DATA: CRU not expected to meet battery-grade criteria.
Battery Metals Market Outlook, January 2023 28
Li: Exponential supply growth as more players enter the stage
Top producers in 2022 by equity share, % Top producers in 2027 by equity share, %
● In the last two years, mine and brine supply of lithium has
SQM
Albemarle
15%
doubled to 655,000 t LCE to 2022. Another doubling will
Other
23% be seen by 2025, growing to 1,381,000 tonnes.
34%
SQM
13%
● This year, just five companies are responsible for two-
Other thirds of supply, with two of those controlling almost half.
55%
Ganfeng
Albemarle 7% ● Record levels of investment in exploration and
IGO 23%
6%
Allkem
6% development will see supply grow by 23% CAGR in the
Tianqi Pibara Min. Res.
7% Min.
7%
4% next five years to 1.8 M tonnes LCE:
• Over half of this growth will come from outside of
Lithium supply by resource type, '000 tonnes LCE Australia, Chile and China. Pegmatite mines in Africa,
2,000 Brine 2x 1.8 Mt Canada and Brazil account for most of this.
1,600
Pegmatite • Existing operations will contribute 30% of additional
Sedimentary
2x
supply, another 40% is forecast to come from
1,200 committed projects. The rest, around 350,000 t or 30%,
800
2x will come from uncommitted projects.
● Direct extraction from brines remains a strong source of
400 63%
61% potential supply, but its share in global production will only
63% 64%
58%
0 rise from 8% in 2022 to 12% in 2027.
2016 2020 2022 2025 2027

DATA: CRU NOTE: Mined supply of lithium after adjustments for expected chemical recovery and project probability.

Battery Metals Market Outlook, January 2023 29

Co: Mine supply is experiencing unprecedented growth
Mined supply growth by major country, tonnes Co, unconstrained production
● Cobalt is a relatively small by-product market with primary
400
% of total potential growth
production passing 200,000 t for the first time in 2022. 2% 1% 6%
27% 4%
● CRU expects supply to keep up with rising demand and 300 60%
grow by 73% vs 2022 levels until 2027 at a CAGR of 12%.

MHP/MSP
Hydroxide
● The Democratic Republic of Congo (DRC) is, and will, 200
continue to be the largest cobalt producer but Indonesia
supply is growing rapidly, along with nickel. 100

● Indonesian operations are producing intermediates,

known as mixed hydroxide precipitates (MHP) from
laterite nickel ore primarily using a high pressure acid- 2021-2027 mined supply additions by project type, %
leaching process (HPAL).
● These contain nickel, cobalt and manganese making the Operation
material a ‘one-stop-shop’ for battery production. Ramping Up

● Around 56% of additional supply to 2027 comes from

greenfield sites, carrying an increased risk of disruption. Greenfield

● As the industry grows, the relative contribution of artisanal

Brownfield
mining will shrink and the number of active operations will
rise, improving the strength of the supply chain.
DATA: CRU

Battery Metals Market Outlook, January 2023 30

Co: Average mine size will grow, reducing role of artisanal mining
Supply contribution by mine size, % of global Co production 4,180
Large Medium Small
100% Average mine size
t Co/y
75% 2,330 +80%
70%
50% 57%

25%

2021 2027
0%
Number of Producing
2021 2022 2023 2024 2025 2026 2027
Assets 68 84

● Cobalt is a relatively small market, with typical throughputs for large cobalt mines in the range of 0.3 - 6 million tonnes per
year, small by mining industry standards.
● Despite a varied group of small producers in the DRC, production continues to be dominated by a few large players.
● The relative importance of mines with production >5,000 t/y of cobalt contained in products will increase from 57% today
to 70% in 2027.
● Reliance on the swing capacity of artisanal mining in the DRC will gradually diminish but certainly not disappear. Some of
the >5,000 t/y mines are still known to purchase artisanal ore and process it within their circuits.

DATA: CRU

Battery Metals Market Outlook, January 2023 31

Co: Demand growth relies on batteries, but this is softening
● Historically, cobalt was an industrial metal used in very Cobalt end use category as percentage of total demand , %

high-value added specialist applications. Batteries Industrial Superalloys

100%

● Superalloys have been the backbone of cobalt demand,

75%
growing steadily over last two decades at 3.3% CAGR
since 1996, more than doubling in absolute terms.
50%
● The emergence of Li-ion battery demand transformed the
cobalt industry to its current scale. Since 1996, demand 25%
has grown at 17.4% CAGR, 64 fold in absolute terms.
0%
● Since 2015, it has grown at close to 20% CAGR. 1996 2001 2006 2011 2016 2021

Cobalt demand by end use, thousand tonnes

● Exposure to batteries enabled robust demand growth but
200 Industrial Superalloys Batteries
the cathode chemistry landscape is clearly moving to less
150
cobalt-intensive technologies, as seen on page 13.
● Despite lower cobalt-intensity, demand continues to grow
100 at 11% CAGR out to 2027.
● With a tightly balanced market over the next 5 years,
50
small changes in battery demand can shift the market
from under- to oversupply, increasing price volatility, and
0
1996 2001 2006 2011 2016 2021 creating a difficult investment environment.
DATA: CRU

Battery Metals Market Outlook, January 2023 32

Co: Battery demand no longer synonymous with cobalt consumption
Batteries are the biggest end use of
cobalt, despite reductions in intensity
2027 Cobalt by end use, % of total
DATA: CRU
Battery Metals Market Outlook, January 2023
Co demand will grow but the pace is uncertain in a fast-evolving battery world
Upside cobalt demand risks
● Higher than modelled growth in the
EV sector
● Recovery in portable electronics
sales
● Higher uptake of NMC in small-scale
grid storage
● Slower demand growth in short term
enables mine supply to meet
demand and reduces price volatility
● Stronger than expected economic
recovery in China after relaxation of
Zero-Covid policy
● Slow-down in adoption of no/low
cobalt battery chemistries
Downside cobalt demand risks
● Uptake of NMC pouch technology in
portable electronics displaces LCO
chemistry
● Advances of LFP/LMFP
technologies and higher uptake in
developed markets
● Future commercialisation of LNMO
● Significant export of Chinese LFP-
equipped cars into the West,
displacing domestic NMC-powered
cars
● Higher than anticipated uptake of
high-nickel chemistries, especially in
range-sensitive markets such as
North America
33
Ni: China precursor and nickel sulphate showing signs of weakness going into 2023
Monthly Chinese nickel sulphate output, kt, nickel metal Chinese nickel sulphate production feedstock share,%

Hunan Zhejiang Hubei Guangdong Others 80%

40
Intermediate

60%
30

20 40%

Scrap
10
20%

Dissolution

0
0%
Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22

DATA: CRU, XinzeDate

Battery Metals Market Outlook, January 2023 34

Ni: Indonesia remains focus of supply growth
LHS: change in nickel supply, kt RHS: Global percentage change, % Monthly Indonesian exports on a nickel equivalent basis kt

150 Indonesia NPI China NPI ex-NPI Global 25 120

MHP Matte FeNi/NPI

100
20
100
80

15

60
50

10
40

0
5 20

0
-50 0
1Q2020 3Q2020 1Q2021 3Q2021 1Q2022 3Q2022

DATA: CRU, CNFEOL NOTE: NPI – Nickel Pig Iron, MHP – Mixed Hydroxide Precipitate

Battery Metals Market Outlook, January 2023 35

Ni: HPAL key to meeting long term demand growth
● Nickel supply is experiencing rapid growth in order to meet Average carbon emissions per product, t CO2e/ t Ni equivalent metal
increased demand from battery markets. 80
● Currently, Class 1 nickel, which is used in batteries, is 40% of total
nickel production. 60

● The fastest growing source of primary nickel is in high pressure

acid leach operations (HPAL), mostly based in Indonesia. These 40
produce a mixed hydroxide precipitate (MHP), responsible for 10%
of the market in 2022, but also most of the future project capacity. 20
● With ESG increasingly a concern in supply chains, battery
manufacturers and OEMs trying to use low-carbon nickel. 0
Concentrate HPAL Ferronickel NPI
● The lowest emitting producers make Ni concentrate from sulphide
deposits. These operations are a minority of the overall production Full economic costs, $/t
Required supply
at 22% of the market and usually come from developed countries
20,000 by 2040
which use renewable energy in their processes.
HPAL Metal
● The supply gap in 2040 is substantial at 1.3 Mt and can only be
met with Indonesian HPAL production. 16,000

● The recent development of NPI to matte conversion and further FeNi

12,000
CuNi Concentrate
upgrade to battery grade nickel sulphate blurred the line between Indonesia NPI
Class 1 and Class 2 Ni markets, enabling supply to keep up with
battery demand. 8,000
0 300 600 900 1,200 1,500
● However, this energy intensive conversion generates five times
Cumulative potential production, thousand t/y
more emissions than nickel derived from concentrate.
DATA: CRU NOTE: HPAL – High Pressure Acid Leach, NPI – Nickel Pig Iron

Battery Metals Market Outlook, January 2023 36

Battery metals: Prices to adjust downwards but remain high
Annual average price for key battery chemicals, 2022=100

140

120
Co Sulphate

100

80
Ni Sulphate

60

40 Li Carbonate

20

0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

DATA: CRU NOTE: Lithium carbonate spot pricing, not contract.

Battery Metals Market Outlook, January 2023 37

Battery metals: As costs surge, the value benefit of thrifting grows
● Costs of cathode materials increased 98% in 2022 to a
Cathode raw material costs, $/kWh
weighted average of $74.50 /kWh across Li-ion batteries.
140 2021 2022 2025 ● Although spot prices of nickel, cobalt and lithium are all
47% y/y
expected to be lower in 2023, the effect of indexed
120 lithium supply agreements will see costs of cathode
materials rise by another 4% this year.
100 ● While LFP has seen the largest y/y increase, costs per
89% y/y
kWh still come in at over 50% less than NMC532.
80
103% y/y 104% y/y ● For a 60kWh vehicle, using LFP provided a discount of
100% y/y $2,800 in 2022 compared to NMC532. This has more
than doubled from $1,300 in 2020, amplifying the cost
60
savings for auto OEMs, like BYD, at a time when most
119% y/y 120% y/y are being forced to raise vehicle sticker prices.
114% y/y
40
● By comparison, VW’s move from NMC622 to NMC811
will save $680 per vehicle. Tesla’s move from NMC811 to
20
LNMO would save $2,080 per vehicle in 2022 terms, if
the technology is ever successfully commercialised.
0
NCA LCO NMC532 NMC811 NCMA LFP LMFP LNMO
● Costs will adjust slowly downwards but set to remain high
for years to come.
DATA: CRU NOTE: Theoretical material costs based on battery-grade chemical prices and cathode material requirements.

Battery Metals Market Outlook, January 2023 38

Risks to the outlook for the battery metal markets
Upside
● Supply expectations to 2025 are heavily dependent on
new producers with greenfield projects. These ramp ups
may be significantly delayed due to unforeseen issues.
Li ● Chinese household savings have reached record highs
due to limited spending last year. While EV subsidies
have been reduced, EV sales may still surprise.
● Medium term supply growth is substantial but relies on
greenfield capacity that is prone to delays.
● Artisanal mining is very price sensitive and may reduce
Co output if prices continue to weaken.
● Rising tension between the DRC & Chinese
multinationals companies may impact supply volumes.
● Additional sanctions against Russia disrupt nickel
exports. This would be bullish for prices in the short run
until there is a reorganisation of trade flows.
Ni ● Delays to HPAL and NPI Matte capacity will re-focus
attention on supply challenges.
● Nickel supply from traditional producers is lower than
forecast.
Battery Metals Market Outlook, January 2023
Downside
● Sustained higher prices may accelerate adoption of less
Li-intensive batteries, or encourage smaller capacity EVs.
● Investor enthusiasm for strong mining margins brings
overcapacity of production beyond 2025.
● Extended economic downturn in Europe and N. America
could hurt consumer confidence for longer.
● Indonesian supply ramps up quicker than forecasted.
● LFP & LMFP penetration gathers pace and reduces
demand for cobalt containing batteries.
● Economic headwinds affect airline industry recovery and
further weaken portable electronics market.
● Expectations about the course of monetary policy in the
key economies will remain a key factor driving investor
sentiment.
● Covid-19 related disruptions slow plans to fully reopen
the Chinese economy
● Production of NPI Matte is higher than we are forecasting
leading to a more visible Class 1 surplus.
39
Key battery metals themes for 2023

Raw material prices to remain high Increased material thrifting in batteries

First examples of new cathode chemistries Chinese EV exports push harder into
emerge Europe

Consolidation and vertical integration of

Greater scrutiny in battery investments
supply chain

Critical mineral protectionism & localisation Renewed optimism in China

Flagship gigafactories struggle to ramp up

1 in every 7 light vehicle sales will be a BEV
in EU and N. America

Battery Metals Market Outlook, January 2023 40

Slowing NEV sales growth in China in 2023, but the
number of exported vehicles will surge

OEMs are seeking to lower production costs by

switching to more cost-competitive cathodes

Korean majors are rapidly globalising their supply chain

while Chinese firms continue their vertical integration

Material costs will ease this year, but prices will remain
high for years to come, encouraging material thrifting
Meet the team

Piotr Kulas Martin Jackson Sam Adham Alex Laugharne

Senior Analyst Senior Analyst Head of Battery Materials Principal Consultant
t +44 20 7903 2084 t +44 20 7903 2285 t +44 20 7903 2199 t +44 20 7903 2229
e piotr.kulas@crugroup.com e martin.jackson@crugroup.com e sam.adham@crugroup.com e alex.laugharne@crugroup.com

Arena Yang Nikhil Shah Arthur Wang Ellie Wang

Analyst & Price Assessor Principal Analyst End-use Economist Senior Analyst
t +86 21 6028 6822 t 44 20 7903 2212 t +44 20 7903 2143 t +86 21 6379 3355
e arena.yang@crugroup.com e nikhil.shah@crugroup.com e arthur.wang@crugroup.com e ellie.wang@crugroup.com