7-minute read
keywords: economics, natural resources

This is the second of a two-part review on the batteries that are powering electric vehicles (EVs). Where the previously reviewed Volt Rush gave a good general overview of the challenges and opportunities that come with mining the metals needed for batteries, Lithium takes a deeper dive into the one metal common to many different batteries on the market today. An informative book with a pragmatic outlook, it provided much more information on the dominant role of China and the large lithium reserves in South America.

Lukasz Bednarski’s aim in writing this book is to give readers a better understanding of the emerging lithium industry. While many people have some idea of how the oil industry operates (even if it is incomplete or wrong), “lithium is a tabula rasa” (p. 5). Unless, like Bednarski, you are particularly interested in the subject. Formerly a rare earths and minor metals trader, he is now a lithium and battery metals analyst and can thus provide an insider’s perspective.

Lithium stood out for being particularly informative and adding nuance to what I had read on the subject so far. Take the dominant role of China in this industry. Having missed the opportunity to dominate the fossil fuel market, the country is keen not to miss the boat on the new economy of renewable energy and batteries. Next to introducing the two major lithium companies, Bednarski points out an important difference to China’s brand of capitalism: profit maximization for shareholders is not always the prime directive. Companies also have to heed the government’s vision for their industry. China’s goal is to use investment and acquisition abroad to secure the raw materials the country needs to grow and industrialize. Backed by ambitious government-funded strategies such as the Belt and Road Initiative and the lesser-known Made in China 2025, they have already successfully done this in e.g. the aluminium industry and are now doing the same for lithium.

“Bednarski points out an important difference to China’s brand of capitalism: profit maximization for shareholders is not always the prime directive. Companies also have to heed the government’s vision for their industry.”

Similarly enlightening is Bednarski’s overview of the lithium reserves found in South America. Here, it is found dissolved in groundwater deposits (brines) under the salt flats of Chile’s Atacama Desert and nearby regions in Argentina and Bolivia. Chile is currently a major lithium exporter, though the government has only allowed two companies to extract it. Neighbouring Argentina has larger lithium reserves but does not extract as much yet, and has some 40 different projects trying different approaches, necessitated by local variations in the brine deposits. But the most remarkable story Bednarski tells is that of Bolivia, home to the world’s largest lithium reserves, that has failed to develop an industry. An unstable political situation and local opposition have led to a history of failed attempts at commercial exploitation. On the other side of the value chain, the batteries, Bednarski shows how China has already developed a mature battery recycling industry. The government has put the responsibility for this with car manufacturers, with serial numbers making batteries individually traceable. There is also an aftermarket to give batteries a second life in less energy-intensive applications such as backup power in data centres or as storage units for renewable energy from solar and wind farms.

Bednarski has a pragmatic outlook and this shows especially in the chapter on the negative impacts of the industry, appropriately titled “Are we really making the world a better place?”. He briefly deals with other problematic battery metals such as cobalt, but of interest is the impact of lithium extraction. Brine extraction potentially impacts nearby freshwater aquifers, though we lack independent data; there is only proprietary data gathered by mining companies. Hard rock extraction such as that done in Australia creates large amounts of mining waste. The process of making various refined lithium compounds is very energy-intensive. And, one thing that I think cannot be repeated often enough, “EVs will be only as green as the electricity that powers them” (p. 160). In many countries, this electricity is still generated by burning coal. So, is driving an EV better for the environment? The answer is complicated and depends on where in the world you live. Sometimes the difference might be “disillusioningly small” (p. 161). Returning to mining, Bednarski does not try to sugarcoat it: “it is close to impossible to do no harm” (p. 167). However, in his pragmatic view, progress is both inevitable and desirable. Information and enforceable oversight are thus important to do the least environmental harm, to choose the lesser evil. Currently, this is often lacking and society “remains widely uninformed and prone to green slogans with little substance” (p. 167). Logically, he does not seem to think much of environmental activists “who block commercial activities[,] and thus progress[,] without presenting alternatives” (pp. 167–168). To me, this somewhat misses the point: they question our very definition of progress and point out that no technofix will magic away its inevitable environmental cost. But I will avoid another digression. Suffice it to say that Bednarski gives no indication of being concerned about humanity rapidly consuming our planet’s finite resources.

“Despite Lithium being a book about business and trade, it thankfully is accessible to readers without a background in economics.”

Despite Lithium being a book about business and trade, it thankfully is accessible to readers without a background in economics. When these come up, Bednarski briefly explains concepts such as trusts, countries defaulting on their debt, or corporate governance. Though the various chapters follow each other logically, section breaks or section headers within each chapter would have helped to break up the text somewhat. Chapters are now an uninterrupted flow of paragraphs, even though most cover multiple topics and feature various diversions. The only section that fell somewhat flat for me was the last one where Bednarski briefly considers how battery materials and components might be improved. This presentation would have benefitted from some illustrations, and I was left feeling that the discussion was somewhat unstructured and incomplete.

Finally, how does this book compare to Sanderson’s Volt Rush? I made the right choice reading them in this order. Given the limited number of relevant companies and people, there is some inevitable overlap, but Lithium digs deeper. Where Volt Rush was a reportage by an outsider that partially relied on site visits and interviews, Lithium is written by an industry insider. Notably, because this is such a young industry, Bednarski references a large number of online sources such as news articles, press releases, and reports. Both books argue that EVs are the way forward to a better world. But where Sanderson’s conclusion was jarring in light of the many problems he witnessed and the awareness of longer-term issues he professed (leading to a soapbox rant from my side), Bednarski’s conclusion follows logically from his background as a trader and analyst (that I retain doubts is by the by). Those looking to better understand the emerging lithium industry will be well-served by this book.

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Disclosure: The publisher provided a review copy of this book. The opinion expressed here is my own, however.

Lithium

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