Sign Up for Updates  

Cobalt 27 Q&A with Simon Moores, Managing Director, Benchmark Mineral Intelligence

  1. Battery megafactories have become a buzzword in recent years. What are these factories and why do they have the battery metals industry so excited?  

Battery Megafactories was a term Benchmark Mineral Intelligence created back in 2014 to describe any lithium ion battery plant over 1GWh in capacity.

Four years ago, the lithium ion battery industry was a completely different landscape. The industry was highly fragmented with very small battery plants geared to serving the mobile phone, laptop and power tool markets.

That was until Elon Musk and Tesla came along. In the early 2010’s, they introduced the Gigafactory plan to create the world’s biggest lithium ion battery cell manufacturing facility and EV manufacturing hub under one roof.

The plant, at 35GWh capacity, was equal to size of the entire industry.

Currently, the Tesla Gigafactory is at 20GWh of capacity and will produce at least 15GWh of cells in 2018. It will ramp to full capacity by Q1 2019 and produce at least 28GWh of cells in 2019 – an incredible achievement that is two years ahead of schedule.

The crazy thing is that all of these batteries are being consumed in the Model 3 – Tesla never foresaw this.

In fact, if Tesla hadn’t encountered its well-publicised engineering problems in early 2018, the company would have run out of lithium ion batteries.

What Tesla started with its Gigafactory is far more important than the company’s own achievements: it sparked a global race for electric vehicle battery cells that is still in full swing.

In Q1 2015, we had three battery megafactories in the pipeline according to Benchmark Mineral Intelligence’s Battery Megafactories Tracker – we were the only company at the time tracking these super battery plants.

Today we are at 50 megafactories worldwide and have surpassed 1TWh of capacity in the pipeline.

This is an incredible situation that is having a profound impact on the key battery raw materials of lithium, cobalt, graphite anode and nickel.

It has ushered in a new era for 21st century commodities.

  1. How many factories exist today and how many can we expect to see over the next decade?

Right now, as I mentioned, we are at 50 megafactories.

Over half of this new capacity is located in China, with Europe emerging as the second most popular jurisdiction in recent years as Germany’s Auto OEMs seek cell supply security.

The US has been Gigafactory dependent but we expect to see more serious moves from the Korean battery majors in North America. This is especially true of LG Chem, which operates a plant in Holland, Michigan and SK Innovation that has aspirations of building a plant there.

2018 has seen a record number of plants being announced with Benchmark Minerals’ latest data standing at 24 plants end-September. This could easily surpass 30 by the end of the year and we do not expect this battery arms race to slow down anytime soon.

If the world continues pushing towards an infrastructure for tens of millions of pure EVs, together with energy storage capacity, we will need far in excess of 100 of these plants operating around the world.

  1. Why are we seeing the emergence of the megafactories and which companies are building them?

The race to build the supply chain for electric vehicles is undoubtedly the reason behind the megafactory rush.

Battery companies have traditionally been very conservative. However, they now have enough confidence in the direction of the Auto industry that they are building battery plants in huge numbers and at scale.

Previously, anything the size of 3GWh of capacity was deemed as a significant investment.

Now we are orders of magnitudes bigger as Korean and Chinese majors push for battery plants and/or cumulative battery capacity in excess of 30GWh – close to Tesla Gigafactory size.

It’s important here to revisit my earlier point – in the early 2010s, the entire lithium ion battery industry in total was at the level of what is now a single megafactory plant’s capacity today.

And the industry thought Elon Musk was mad... now they are all following the blueprint he and Tesla have set.

The battery companies to watch are the Korea majors of LG Chem, Samsung SDI and SK Innovation, together with the Chinese battery champions of CATL and BYD.

  1. Where is the demand growth for batteries coming from?

Pure electric vehicles are driving this trend – these are 100% battery powered vehicles with packs in excess of 50kWh in size.

Previously commentators discussed hybrids and plug-ins taking market share and impacting the supply chain.

Personally, I have never believed that hybrids and plug-ins – which represent inferior halfway-house technology – were going to beat pure EVs once they really made it onto the market.

Sure enough, we are now seeing the dawn of pure EVs where consumers have a choice at more reasonable price points. 2018 has seen the rise of Tesla’s Model 3 together with Chevrolet’s Bolt and Nissan’s new LEAF.

As I say, this is just the dawn. In the next four years a whole host of new, pure EVs from leading brands like VW, BMW, Mercedes, and Audi will reshape landscape and we will see serious choice and serious competition at even more competitive prices.

This period, between 2021 and 2023, will be an intense time for the supply chain and raw material suppliers.

The second biggest area of demand, which is just kicking off, is energy storage or ESS.

Only two years ago this market was 1GWh in size for lithium ion. In 2018, this will be four times bigger at 4GWh in size.

The crazy thing about the ESS market, is that these stationary storage projects – which can store power off-grid and recall it at the time of need – can now be upwards of 1GWh in size per project.

The second most important thing is that the utilities industry now has confidence that lithium ion technology functions at scale – primarily thanks to the success of Aliso Canyon project in California and Tesla’s Hornsdale project in South Australia.

This means more and more companies are requesting lithium ion-based systems at scales of 500MWh, 1GWh and above.

To boot, they are being installed quicker than ever.

If we think EVs will have a big impact in the supply chain for battery raw materials, just wait until this market really gets going post-2021.

  1. Is this growth sustainable? Will it increase further in the next ten years?

Yes. This shift energy storage both in electric vehicles and in ESS is a megatrend that will define the next 100 years.

We cannot underestimate the power that high quality, abundant lithium ion batteries in these markets can hold outside of the immediate benefits of owning an EV or being able to store and sell power back to the grid.

The wider implications are game changing for the way we live out lives.

This could bring sustainable, renewable power to some of the poorest countries in the world and eventually bring about 100% pollution-free cities.

The technology is now proven and lithium ion batteries are getting better and cheaper. The innovation at the pack levels is making these cells even more effective.

Confidence in the final end product – whether it’s an EV or a energy storage system – is gaining serious momentum.

The only thing that remains is for the supply to be there and for the supply chain to scale. The demand side of the equation is no longer a debate.

  1. How much extra battery metal supply will be required to feed the megafactories?

We are building a supply chain an order of magnitude bigger than what has been seen before.  

Whereas a major battery producer used to purchase say 3,000 tonnes of lithium hydroxide a year, today they are seeking 30,000 tonnes a year all in the space of three years. A quite incredible shift.

Benchmark Minerals’ Battery Megafactory Tracker now stands at 1.1TWh of lithium ion cell capacity by 2028. This is for plants that are already being planned, there are still many more to be announced in due course.

However, based on the 1.1TWh of cell capacity, we will need:

These numbers include all cathode types and take into account our own assumptions of the move to 811 chemistry which we believe will be much slower than many are expecting primarily down to cost and safety issues.

  1. Which metals will see the most supply pressure as a result of megafactory production?

As we stand today, lithium hydroxide will see the most pressure together with battery grade nickel chemicals.

We expect a cobalt squeeze post-2023 as these megafactories ramp up, however, it is our opinion that cobalt will never be engineered out of a lithium ion battery.

When predicting where the supply squeezes will come from, you have to consider every step in the supply chain and not just mined supply.

To make it into a lithium ion battery, these minerals and metals have to go through an extensive physical and chemical process. They have to be physically and chemically engineered at a nano scale – and in a consistent manner – to be accepted by a battery producer.

This is why scaling battery grade material is always going to be a tougher ask than building new mine capacity and an oversupply of mined material does not equal an over supply of battery grade material.

  1. For an investor’s perspective, what are the most important points to bear in mind when considering the effect of megafactories on their battery metal portfolio?

The first is to work out what capacity is really being build and what is just announced.

The second step is to work out what cell chemistry the battery producer has chosen.

If its NCA, for example, the cobalt content will be much lower, yet if its an NCM chemistry you will need to ask what ratios of raw materials the producer is using. Is it 523 or 611? Has the battery producer invested in a low humid production facility to make 811? If so at what scale?

The third step is to really understand what partnerships and long term the cell producers have with auto OEMs – a strong supply chain based on strong relationships from mine to EV is the key to success in this market.

This analysis is something we offer in our Lithium ion Battery Megafactories Assessment subscription at Benchmark Minerals.

Anthony Milewski, Chairman of Nickel 28

About Mr. Anthony Milewski

Mr. Anthony Milewski has spent his career in various aspects of the mining industry, including as a company director, advisor, founder and investor.  In particular, he has been active in the commodities related to decarbonization and the energy transition, including nickel, cobalt, copper and carbon credits. Anthony has served on the London Metals Exchange Cobalt Committee, which includes representatives from the largest mining and commodities companies globally, to represent the interests of the industry to the board of directors the LME. Mr. Milewski holds a B.A. in Russian history from Brigham Young University, an M.A. in Russian and Central Asian Studies from the University of Washington, and a J.D. from the University of Washington. Anthony Milewski has been interviewed by numerous Media outlets, including BNN, The Financial Times, Bloomberg, The Northern Miner and many others. Most recently, Anthony Milewski has written op-ed articles for leading mining publications including The Northern Miner.

Forward-Looking Information: Some of the posted entries on the CEO Corner may contain forward-looking statements. Forward-looking statements address future events and conditions which involve inherent risks and uncertainties. Actual results could differ materially from those expressed or implied by them. Examples of forward looking information and assumptions include future estimates of the worldwide supply and demand for nickel and other metals and the effect that these changes could have on the short term and long term price of nickel and other metals on the world markets, statements regarding the future operating or financial performance of Nickel 28 including the net present value, metal recoveries, capital costs, operating costs, production, rates of return and payback. Forward looking statements involve known and unknown risks and uncertainties which may not prove to be accurate. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Among those factors which could cause actual results to differ materially are the following: market conditions and other risk factors listed from time to time in our reports filed with Canadian securities regulators on SEDAR at

In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operations and various components thereof affecting the economic performance of Nickel 28. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.

Links: Some of the posted entries on the CEO Corner may include links to 3rd party websites. Nickel 28 has not reviewed all websites linked to or from this Site and is not responsible for the contents of any such websites. The inclusion of any link does not imply endorsement by Nickel 28 of the linked website or its content. Use of any such linked website is at the user's own risk.

For further information we refer you to our legal notice.