India exports most of its oil from the Middle East. With oil prices hitting $70 recently, the demand for electric cars has been shooting up. Currently only 1% of the 21 million cars sold in India are electric vehicles, but this is expected to change soon.
The Indian government has done everything possible to encourage Indian automobile companies to make a gradual switch from gasoline to electric vehicles. But this is not going to be easy, for the reasons discussed by me in this article.
One of the biggest challenges for automobile companies as the scramble to electrify their fleet is procuring raw materials for the production of batteries. Electric car batteries require a number of raw materials such as lithium, cobalt, nickel, graphite and many rare earth metals.
The problem with raw materials such as cobalt and lithium is that not only are they expensive, they are not easily available. Cobalt, for instance, is mostly mined in Africa, in the Democratic Republic of Congo (DRC).
The DRC is a desperately poor African country for which the mass production of electric vehicles by automobile companies in China, United States, Germany, India and others has been a massive, massive opportunity – the same as the mass production of gasoline automobiles in the 20th century was for Saudi Arabia.
It’s not just India that has been making policies to shift from combustion engines to lithium-ion battery-powered electric vehicles. China has been at the forefront of this change, as has been the United States, which subsidizes the EV industry there.
65 percent of cobalt comes from the DRC. Considering that the production of EV vehicles is all set to shoot up and the cobalt demand will go up by 200,000 tons a year by 2020, industry experts are worried about the DRC’s ability to mine enough cobalt to keep up with the global demand.
As Simon Moores, head of London-based Benchmark Mineral Intelligence says, “The sheer volume of new supply needed by the market means there will be no EV industry without DRC cobalt.”
Lithium is another raw material that is in short supply, although it is currently more widely available than cobalt.
Lithium demand is expected to go up to 779,000 tons a year by 2025. It could well replace oil as India’s biggest import once EV production takes off.
Lithium is mainly extracted from the hard rock in the vast Australian outback and from the deserts of South America – especially in Argentina.
Remember – without access to cobalt and lithium, there can be no EV industry in India.
All of India’s plans to shift the production from gasoline cars to EV cars will come to a screeching halt unless that government makes the moves right now and procures cobalt resources directly from the source itself – from the Democratic Republic of Congo.
China has already been on the move and is far ahead of the game, having locked up their mines in the DRC. They are now looking at Australia and Canada to lock up lithium and other critical raw materials.
The Indian Government represented by public sector companies such as ONGC, NTPC Ltd, Bharat Heavy Electricals Ltd (BHEL) and Power Grid Corp of India Ltd. should hurry up and lock their own cobalt and lithium mines in the DRC, Australia and South America before they get shut out. Private players such as Reliance Industries and Adani Enterprises should take note as well.
The global race for cobalt and lithium is well and truly on, and India must hurry up or be left out!