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Global Economy: The Geopolitics of Car Batteries
By: Stratfor   Monday, August 17, 2009 9:38 AM

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As global concerns about energy security and carbon emissions skyrocket, hybrid vehicles, which combine electric and gasoline power sources, are capturing greater market share and global attention. Incorporating a source of electricity into a car requires a battery — something for which several different raw materials can be used. Lithium is the most efficient raw material used in batteries, but the number of lithium deposits in the world is limited; most are found in South America. As the market for lithium grows, countries with large lithium deposits will become more important to the global economy. Countries with the technology to process lithium and manufacture batteries will also become more significant.

chart - lithium reserves

The current standard material for high-powered rechargeable batteries for hybrid vehicles is nickel metal hydride (NiMH). Australia has the world’s largest proven reserves of nickel, but Russia, Canada and Indonesia are the largest producers. With such wide distribution of easily accessed nickel deposits, an interruption in the supply or manufacturing of NiMH for batteries is relatively unlikely. NiMH batteries are quite expensive, but presently they are more cost-effective than the lithium-ion batteries being developed to replace them. For now, NiMH batteries will remain the standard (even the new 2010 Toyota Prius relies on NiMH batteries).

However, lithium-ion batteries will become the standard in the near future. Underpinning this shift is the simple fact that NiMH batteries are heavy and their energy per unit of mass is approximately half that of a lithium-ion battery. Though lithium batteries are effective, the industry has yet to develop a way to mass-produce them at the scale the automobile industry requires. As soon as the manufacturing technology becomes available, every car company in the world will be able to use lithium batteries. Carmakers are ready to shift to the lighter lithium batteries because they would boost vehicle performance.

The Making of a Lithium Battery

Lithium can be obtained in small quantities in the form of lithium chloride (LiCl) from just about anywhere in the world, but concentrated deposits — called salares — are found only in a few places. Salares result when pools of salt water, which contain LiCl, accumulate in basins that lack drainage outlets, allowing the water to gradually evaporate and leave dense layers of salt behind. Underneath the dried salt layer is a layer of brine — groundwater with a high concentration of LiCl in solution. It is this brine that is highly prized as a source of lithium.

For a lithium deposit to be commercially viable, it must have a large amount of lithium that is not contaminated with too much magnesium, and it must be in a location where natural evaporation will concentrate the watery solution where LiCl is normally found. Factors that contribute to increased evaporation include low air pressure found at high altitudes, low precipitation, frequent winds, high temperatures and exposure to solar radiation.


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The above story is the opinion of the author only and it does not reflect iStockAnalyst opinion. Further, the author is not personally advising you regarding the suitability of the story for your investment needs. In no event iStockAnalyst will be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from or arising out of, or in connection with the use of this information. Please consult your investment advisor before making any investment decision.
  
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