Shortage of raw materials Logistics Limited “New Crown” outbreak threatens global lithium-ion battery supply

As the outbreak of the new coronavirus spreads, hidden risks in the global lithium-ion battery supply chain have been exposed,media reported. Countries that play a key role in producing lithium and other metals needed to make batteries have introduced restrictions to control the spread of the virus.

Benchmark Minerals Intelligence, which focuses on collecting information on lithium-ion batteries, wrote in a recent report that the outbreak of the new coronavirus has slowed logistics across the lithium-ion supply chain and is spreading around the world.

In Australia, a major producer of lithium, the Association of Mining and Exploration Companies has warned members to keep a close eye on intercontinental travel restrictions. In South America, Chile has imposed a nationwide curfew, parts of Santiago are in quarantine, and Argentina has imposed quarantines across the country. In Africa, the closure of South Africa’s borders and ports, as well as the closure of cobalt-producing Congo, could disrupt the supply of cobalt.

Benchmark said there had been no reports of a serious shortage of battery raw materials or positive and negative materials so far, mainly due to oversupply since 2019. However, China’s transport ban and delays have raised concerns about raw material shipping and the ability to deliver finished products to customers.

Upstream mining companies have begun to warn investors that this could affect their revenues and profits. Major lithium producers Sociedad Quimica y Minera de Chile SA and Albemarle have both said they have been affected by the outbreak.

Albemarle told investors in February that adjusted EBITDA in the first quarter of this year is expected to fall 20 to 25 percent from a year earlier and 15 to 20 percent in the first half of the year, largely due to logistical constraints associated with the new coronavirus.

In an investor conversation on March 24, Albemarle chief executive Luke Kissam said the company was working to complete the shipment by March. “The problem is not the lack of orders, it’s not the production restrictions, it’s about whether we can ship,” he said. Can we get the ship? Can we get the container? It’s not a question for the whole of 2020, it’s a question of the first quarter because I have to do all the work by the 31st and I’m not sure we can do it. “

In an April 1 email to Standard and Poor’s Global Markets Intelligence, a spokesman for Albemarle said there was no further update on the shipment.

During the new coronavirus outbreak, companies in the battery supply chain felt tremendous pressure, and these pressures were not limited to their industries. However, observers say this could help people understand how the electric car, battery storage and consumer technology industries may need to reduce the risks associated with long-distance transportation of materials during and after the outbreak.

Emily Hersh, managing partner at DCDB Research in Argentina, a research firm focused on mining and energy, says: “Moving things from one place to another slows down. I think logistics will become slower globally. He added that companies might start thinking about how to tighten supply chains to bring different parts physically closer, “which changes the rules of the game for international logistics”.

Bob Stall, head of US metals and mining at EY, said mining companies in the battery supply chain would struggle to ship in time during the outbreak, and some companies “may” declare “force majeure” in supply contracts on the grounds of a new coronavirus outbreak. Given the current transport disruption, The outbreak could change companies’ perception of the risks of global supply chains for decades, Mr Stoll said. As a result, the trend for automakers to localize battery production and electric vehicle assembly is likely to accelerate.

“Whether the recovery period for the new coronavirus outbreak is six months, 12 months or 18 months? I think that will depend on where you are,” Stowe said. But the problem is that we are now the global economy. Supply chains have been flowing to the lowest-cost businesses over the past 20 years, and I think these developments will change. “