Critical Raw Materials for Electromobility – Lithium, Nickel and Cobalt are the New Oil

Electric vehicles and renewable energy storage depend entirely on batteries, which require lithium, nickel and cobalt extracted from just a handful of countries. This concentration creates geopolitical risks and supply chain vulnerabilities that threaten the entire energy transition. Understanding these dependencies and building resilient value chains from mining to recycling has become as strategic as securing oil supplies once was!

Why battery raw materials matter for energy independence

Lithium, nickel and cobalt form the foundation of modern battery technology that powers electric vehicles, grid storage systems and portable electronics. Unlike oil, battery minerals concentrate in just a few regions. Australia produces most of the world’s lithium from hard-rock mining, while Chile and Argentina extract it from salt flats. The Democratic Republic of Congo supplies over 70% of global cobalt, and Indonesia dominates nickel production.

This geographic concentration creates dependencies similar to oil markets but with even fewer alternative sources. While oil comes from dozens of countries, battery materials concentrate in just three or four regions. Nations that control these supplies hold significant leverage over the global energy transition. Supply disruptions from political instability or trade disputes can ripple through entire industries within weeks.

The complex journey from mine to battery

The battery value chain spans multiple continents and intermediaries. Since raw materials come from all over the world, every step adds cost and increases vulnerability to shipping interruptions.

Mining stage challenges

Mining faces a “tough decarbonization path” due to inherently carbon-intensive processes. Operators confront a “dual challenge”: reducing process emissions while decarbonizing the energy sources powering them. Advanced instrumentation provides real-time data essential for identifying inefficiencies, optimizing energy usage, and moving away from the “take-make-dispose” model.

Processing bottlenecks

Process industries, such as chemicals and refining, represent a significant portion of global greenhouse gas emissions. These sectors must optimize operations to minimize energy consumption and waste generation through advanced process control systems and data analytics. The challenge lies in fine-tuning existing operations while maintaining product quality and safety standards.

Recycling as strategic advantage

The industry must shift from a linear model toward the principles of a circular economy, which focus on reusing, repurposing, and keeping resources in circulation for as long as possible. Minimizing waste throughout the entire production process reduces both energy consumption and emissions. Waste streams can be repurposed into valuable products, contributing to long-term sustainability and reducing the environmental burden of byproducts.

Supply chain vulnerabilities threatening production

Several critical risks threaten battery material availability:

• Geopolitical tensions that could restrict exports or impose trade barriers on strategic materials
• Production concentration leaving no alternative sources when disruptions occur in dominant supplier countries
• Infrastructure limitations including inadequate port facilities, processing capacity and transportation networks
• Price volatility driven by speculation and rapid demand growth outpacing supply expansion

The automotive industry experienced these vulnerabilities when lithium prices tripled between 2021 and 2022 due to surging electric vehicle demand. Manufacturers with long-term supply contracts maintained production, while others faced material shortages and delays. Mining expansion cannot quickly respond because new mines require 5-10 years from discovery to production. Processing capacity faces similar constraints with new refineries taking 3-5 years to build. This lag creates persistent tightness in battery material markets.

See also: Bookkeeping Isn’t Just for Big Business

Building resilient integrated value chains

Creating stable battery supply chains requires vertical integration and geographic diversification across the entire value chain. Automotive manufacturers are increasingly investing directly in mining projects and processing facilities to secure dedicated supply, while regional supply chains emerge as countries reduce dependencies on dominant suppliers. Endress+Hauser provide measurement and automation solutions that optimize processing efficiency, helping manufacturers maintain consistent quality while reducing waste.