Monday 10th Dec 2018 - Logistics Manager Magazine

Risks to battery supply chain growing

Motor manufacturers globally could face significant disruption as a result of a slowdown of the supply of batteries for electric vehicles, according to a study by insurance broker JLT Specialty.

Eight of the 11 principal countries which supply raw materials for electric vehicle batteries, such as cobalt and lithium, are in territories designated as ‘high or very high risk of disruption’, the report points out.

The Democratic Republic of Congo, for example is responsible for 80 per cent of cobalt exports. “Political instability in the country has created uncertainty over the investment environment for new operations, and the prospect of political interference also looms large – especially in light of a new mining code agreed last month which will double the DRC government’s stake in mining projects,” said JLT.

The Philippines, which is a major source of nickel, is prone to flooding, landslides, earthquakes and typhoons, which can hinder or entirely halt supply.

Prices of raw materials for EV batteries have also spiralled – with copper up 39 per cent and cobalt up 127 per cent over the last year according to research from Business Monitor International.

“The overwhelming reliance on raw materials from high risk regions for EV battery production represents a major threat of disruption to supply and poses a business-critical risk to manufacturers,” said Matt Grimwade, head of automotive at JLT Specialty. “The risk is real and growing, and it is imperative that auto makers take the necessary steps to mitigate and protect from a potential supply chain catastrophe.”