Fifty Japanese companies join forces to compete for battery raw materials

Recently, Toyota Motor Group, Sumitomo Metal and more than 50 other Japanese companies reached a new cooperation agreement in the field of electric vehicle drive battery supply chain, and held a new group called "Battery Supply Chain Association" (BASC) in Tokyo. For Japanese automakers, as the electrification transformation enters the deep water, a series of processes in the battery field from raw materials to manufacturing and recycling will be hot and key topics in the next few years.

Isao Abe, the head of the battery materials business of Sumitomo Metal Mining, is appointed as the chairman of the supply chain association. In addition, battery companies jointly funded by Panasonic and Toyota, Honda, Nissan, Mitsubishi Corporation, and Asahi Kasei have also joined. The purpose of establishing the new association is to call on upstream and downstream manufacturers of Japanese origin to gather together and make preparations for the supply chain in the rapid popularization of electric vehicles.

After this summer, the new association will gradually formulate plans to increase production of Japanese electric vehicle drive batteries and related components, as well as new plans for stable procurement of raw materials such as lithium ore, and plans to make cooperation proposals to the government.

According to the industrial goals proposed by the Japanese government, by 2035, all new cars in the country will be electrified models. According to BASC's preliminary estimates, if about half of domestic new car sales (calculated based on an annual volume of 2.5 million vehicles) are converted into a corresponding number of electric vehicles, in order to improve the production system of batteries and battery components in the country, the total amount of preliminary preparation funds required by the relevant industry will be approximately 4 trillion yen.

If this estimated funding is only shared by social groups and enterprises, there will be a certain amount of pressure, so BASC members hope to seek financial assistance at the government level through policy recommendations.

However, even with sufficient funds, the stable procurement of battery raw materials is still a difficult issue. According to the current industry situation, most of the rare metals used as raw materials for lithium-ion batteries are produced overseas. For example, Australia accounts for about 60% of the world's production of lithium, and the Democratic Republic of Congo accounts for nearly 70% of the production of cobalt.

It is worth mentioning that the production of automotive batteries is currently heavily dependent on China. In terms of the world's lithium-ion battery production capacity, Chinese giants such as CATL currently account for nearly 70% of the total. This has also made Japan, Europe and the United States and other countries aware of the potential risks of relying on China's supply chain.

The supply of batteries and battery raw materials is also in a state of continued tightness, with cobalt futures prices on the London Metal Exchange reaching a two-year high.

In terms of raw material procurement, Toyota Tsusho, a subsidiary of the Toyota Group, has obtained the right to purchase about 25% of Argentina's lithium production. They also cooperate with Australian resource development companies to provide corresponding lithium mineral resources for the manufacture of lithium batteries. Currently, Sumitomo Corporation has also invested in corresponding mineral development companies in Madagascar, and continues to increase its nickel ore development business from mining to smelting.

In order to achieve maximum efficiency in the use of raw materials, BASC also plans to recycle rare metals from the field of battery recycling. According to the association's preliminary plan, they not only hope to reorganize the connection of the battery recycling network, but also plan to conduct in-depth discussions on the formulation of international battery standards. The ultimate goal is to avoid adding additional burdens to Japan's battery supply chain.

In fact, the United States across the ocean has also realized the importance of a stable battery supply chain to the healthy development of the automotive industry. As early as February this year, President Biden, who entered the White House, revised the supply chain laws on important components such as batteries and semiconductor chips, hoping to gradually get rid of dependence on China's supply chain. Later in March, the Biden administration proposed a $2 trillion infrastructure plan for the next eight years, and electric vehicles are also one of the main targets of the plan.

Countries around the world continue to increase their investment in the battery industry, with the background that the global popularity of electric vehicles will increase rapidly in the next few years. According to the forecast of British research company IHS Markit, the global production of pure electric vehicles will reach more than 11.84 million in 2025, which will be 5.3 times that of 2020. If hybrid models are included, it is expected to reach 40.78 million, which will be 4.1 times that of 2020.