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March. 2023
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New Ford Plant to Manufacture EV Batteries with No Nickel, Cobalt

Ford has announced plans to develop a new electric vehicle (EV) battery plant in Michigan. Unlike the company's other battery plants under construction in the U.S., this one will manufacture lithium-iron-phosphate (LFP) batteries, which contain no cobalt or nickel.

The reasons for minimizing cobalt and nickel in rechargeable batteries are many, including price, sourcing and supply-chain issues. Nickel prices exploded last year, for example. In the first half of 2022, nickel prices averaged $27,858 per tonne, up 59.3% compared with the same period of the prior year. The price rise was due in large part to Russia's invasion of Ukraine. Russia accounted for roughly 8.3% of global nickel output in 2021, according to GlobalData. On March 8, 2022, the price of the metal soared 70% on the London Metal Exchange (LME), briefly breaking the $100,000-per-tonne barrier. The LME suspended nickel trading for several days following the price balloon.

Cobalt has its own issues. Most of the world's cobalt is mined and refined by companies based in China, which produced 75% of the world's refined cobalt in its final form in 2021. The Democratic Republic of Congo (DRC) in Central Africa holds more cobalt reserves than the rest of the planet combined, according to Siddharth Kara's book Red Cobalt, a scathing exposť of the artisanal (versus industrial) cobalt mining sector in the DRC. Kara writes that in 2021, 111,750 tons of cobalt, representing 72% of the world's supply, was mined in the DRC, mostly by Chinese companies. This is expected to increase, especially as EVs become increasingly prominent throughout the world.

Outside of industrial cobalt mining in the DRC is a strong artisanal mining community, which uses shovels, picks and pieces of rebar to mine sites often located at or near industrial mines in the country. The companies that industrially mine cobalt have mixed attitudes toward artisanal miners, who often work in parts of company concessions that aren't being actively mined with machinery. The reason is this: Industrial mining indiscriminately gathers hundreds of tons of dirt, stone and ore, which is then crushed and refined. Kara describes this as "a blunt-force, low-yield, high-volume business." Artisanal miners, on the other hand, use more precise tools to extract the ore only, leaving valueless dirt and stones behind. "Artisanal mining techniques can yield up to ten or fifteen times a higher grade of cobalt per ton than industrial mining can," writes Kara. Many industrial copper-cobalt miners supplement their production by purchasing this high-grade artisanally mined ore.

Artisanal mining in the country is a problem that has led to child labor, debt bondage and all sorts of devastating accidents. In his book, Kara notes that the largest players in tech and automotive, such as Apple Incorporated (NASDAQ:AAPL) (Cupertino, California) and Tesla Incorporated (NASDAQ:TSLA) (Austin, Texas) try to distance themselves from this way sourcing of cobalt.

Artisanal mining certainly occurs around the Tenke Fungurume (TFM) copper-cobalt mine--at more than 1,500 square kilometers, the largest mining concession in the DRC. The mine has been majority owned by China's CMOC Group Limited (Luoyang) since 2016, when Freeport-McMoRan Incorporated (NYSE:FCX) (Phoenix, Arizona) sold its 56% stake in the concession. Freeport's exit from the mine just as the cobalt market was set to explode was necessitated to reduce debt incurred during the company's ill-timed and ultimately ill-fated venture into the petroleum sector, according to an unnamed executive quoted in Kara's book. The move meant no more U.S.-headquartered miners are left in the DRC. CMOC currently controls 80% of the mine. While the company attempts to thwart their activities, artisanal miners work the mines in unguarded areas and under cover of darkness.

To boost its industrial production, CMOC is establishing three new production lines at the TFM mine. Construction kicked off last summer and is expected to be completed in 2025. The new lines will increase the mine's annual copper production from 182,600 tonnes to 228,900 tonnes and increase cobalt production from 15,436 tonnes to 20,100 tonnes. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for the full report.

So for reasons involving costs, supply-chain issues, and environmental, social and governance (ESG) initiatives, companies have reason to turn away from using nickel and cobalt in their EV batteries. The lithium-iron-phosphate (LFP) batteries to be manufactured at Ford's planned plant are an alternative to the nickel-cobalt-manganese batteries most commonly in use in U.S. EVs today. LFP batteries contain no nickel or cobalt, and Tesla has been using them in many of its standard-range models for some time now.

Tesla began using LFP batteries to avoid supply concerns about nickel and cobalt. The iron used in the cathode of LFP batteries is much cheaper and more plentiful than nickel and cobalt, providing a cost advantage to automakers and consumers. However, LFP batteries have some disadvantages, and Ford is counting on the pros of this type of battery outweighing the cons.

Ford is betting that consumers will opt for LFP batteries with their lower distance range because of their lower cost, as opposed to the more expensive nickel-cobalt-manganese (NCM) chemistry in use in most U.S. EVs today, which provide a longer-range drive in a single charge. However, LFP batteries generally can be charged more times than NCM batteries, increasing their service life, and can be regularly charged to 100%, something which diminishes life in other types of rechargeable batteries.

According to an Associated Press article, a standard range Mustang Mach-E electric vehicle using an LFP battery would be able to travel 247 miles per charge, versus the long-range version of the vehicle using nickel-cobalt-manganese batteries that would be able to travel 310 miles per charge.

The technology for Ford's LFP batteries will come from Contemporary Amperex Technology Company (CATL) (Ningde, China), one of China's leading LFP producers. The plant will be operated by a 100% Ford-owned subsidiary, although some workers and equipment will be supplied by CATL. Ford expects to begin offering LFP batteries in its Mustang Mach-E crossover this year, followed by the F-150 Lightning pickup next year. These batteries initially will be supplied by CATL until Ford's new plant begins rolling them out in 2026. Ford has given no indication of the price difference between the vehicles offering the different types of batteries.

China already has embraced LFP batteries in a fairly big way, with about 44% of its EVs sold today using the technology, according to Benchmark Mineral Intelligence.

Ford's new plant will be built near Marshall, Michigan, about 100 miles west of Detroit. Construction is expected to kick off early next year. The plant will produce 35 gigawatt-hours (GWh) of batteries annually, enough to supply about 400,000 vehicles per year. Subscribers to Industrial Info's Industrial Manufacturing Project Database can click here for the full report.

The plant joins other Ford EV battery projects in Tennessee and Kentucky, both of which are joint ventures with South Korea's SK Innovation Company (Seoul) and each of which will be able to produce 43 GWh of batteries annually. Those plants are expected to be completed in 2025. Subscribers can click here for the report on the plant in Stanton, Tennessee, and click here for the report on the plant in Glendale, Kentucky.

If Ford's foray into LFP batteries proves a success, other U.S. companies may jump on the bandwagon in developing this type of battery. However, this may prove to be a very big if, and ultimately the sentiment of U.S. consumers regarding the pros and cons of LFP batteries will determine if this type of battery technology is worth advancing further in the U.S.

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