US Senate Energy and Natural Resources Committee

Hearing on Energy Storage Technologies, October 3, 2017

Excerpt:

Sen. Murkowski: We’ve got to be able to have the critical minerals that allow us to lead in these spaces. You mentioned China and not only pointed out that China has significant quantities of critical minerals. Well we in this country also have some good supplies. I know in Alaska we are looking with great interest at some of the supplies that we have. But we also recognize that in addition to China having the materials, they have the factories, they are doing the processing. They really are in control of many of the parts of that supply chain.

I think it was you, Dr. Sprenkel, who mentioned the United States and the leading role that we have played with the development of the lithium-ion batteries, but Mr. Moores where do we go if we are in a situation that I have outlined where we are reliant on other nations – at least 50% of 30 different minerals, we’re 100% reliant on 20 different minerals, 9 of which China was the primary source. At least 50% of another 38 minerals. But in addition to not having the resources here but relying on China for the processing, how…how vulnerable does this make us? How concerned are you and others in our ability to continue to lead in this area as we try to develop these technologies if we don’t have these critical minerals?

Simon Moores: Yeah, thank you for the question. I wouldn’t necessarily be concerned about every rare mineral or mineral that you can’t pronounce or that sounds like a rare mineral because they’re used in very high-tech applications, they might be very niche, they might be part of a big growth industry.

I would be very concerned about technologies that are going to be core to the next big industry, energy storage. Because that’s going to fundamentally alter the car industry and auto sector and it’s going to fundamentally alter the energy space over the next hundred years. And so those core minerals, well let’s say the battery technology that will be central to that, for the next ten years…ten to fifteen…will be lithium-ion batteries. That’s because of the cost, because of the scale they’re being produced, they’re going to be produced for the next five years, with the rise of these battery megafactories around the world.

And so really I’d be looking at the four critical raw materials that go into a lithium-ion battery, which is lithium, graphite, cobalt and nickel. But again, these aren’t…nickel is a commodity, it’s a metal, but it’s actually the nickel chemical that goes into a battery, very specialized processing route. Not many people do this.

Of those four raw materials, the US, for batteries, the US imports 100% of each. So no mining of these speciality raw materials happens in the US.

Sen. Murkowski: Explain to me if you will, because you’ve used that term now several different times. We need to view these not as commodities, but specialities.

Simon Moores: Yeah. So these are niche…so essentially a commodity you would dig it out of the ground…iron ore for example, or coal…and you have a customer that can use that product pretty much straight away. It’s driven really by the supply side not the customer.

For these raw materials, they change per customer. So the lithium that one battery company might get might be slightly different to the lithium that another company gets. And these are very specific customers. So really there’s a tailoring that happens. And a couple of steps of processing, chemical processing that happens to the raw material. And it’s those steps that the industry…that countries actually, need to fully understand.

Sen. Murkowski: Because we’re not doing any of that processing here, are we?

Simon Moores: No. No.

Sen. Murkowski: Is most of that happening in China?

Simon Moores: Yes. But for lithium, you have two companies. You have Albemarle, which is a US company and FMC Lithium as well. And they do produce some battery grade lithium here, but they’re not sourcing from the US. For the others, no, it happens in China.

Graphite? One hundred percent of anode graphite that goes into a battery is from China.

Sen. Murkowski: A hundred percent of it. We’ve got some graphite up north that we’re looking to develop.

Simon Moores: Yeah, there’s two areas, there’s Alaska, there’s Alabama in the US that have been developing resources. And it’s quite interesting, it’s not just the resource, it’s the processing now to make these battery grade materials…that’s really where the gap is.

Sen. Murkowski: Is it an issue of investment in the supply chain here in the United States that’s holding us back or is it our regulations? I know that from a processing perspective, that’s a real challenge for us. But is it more on the investment side in your view?

Simon Moores: Yeah, investment would be number one and then regulation would be number two. But I think that investment…as this industry grows ten-fold, lithium-ion battery demand will grow tenfold over the next ten, fifteen years, then the investment should become obvious. The money should come from somewhere. At the moment, it isn’t, but that should sort itself out in a reasonable timeframe.

Sen. Murkowski: So you think just increased demand will bring that investment on. You think that will marry up here.

Simon Moores: I think so. But I think that the…at the moment it’s all coming from institutions, whether it’s New York or San Francisco or places like this. And they’re starting to understand the battery story and how big this is going to be, how disruptive. But it’s still…the problem is, all of these companies that are making…that are building the mines or that are doing the processing plants, the battery grade processing plants, are all very small companies. So institutions can’t invest in them, because they’d end up owning 100% and they can’t get in and out and do their investment thing.

And so, for now it’s a niche industry going into the mainstream and we’re kind of stuck in the middle at the moment. And so now these companies are looking for help from the industry, from investment and from government and they’re not quite getting it yet.