Carmakers face battery supply chain risk

17 April 2018

Auto manufacturers could face potentially significant supply chain disruption when it comes to batteries for electric vehicles, according to an insurance broker.

JLT Specialty said it believed eight of the 11 countries which principally supply key raw materials for electric vehicle (EV) batteries, such as cobalt and lithium, are in territories designated as at “high or very high risk of disruption”.

These countries include the Democratic Republic of the Congo, Guinea, Russia and the Philippines.

Risks affecting these countries include political instability, natural catastrophe and supply and demand pressures.

Carmakers are heavily reliant on a small number of countries to supply raw materials for EV batteries.

The DRC, for example, produces more than 80% of global cobalt exports.

Political instability in the country has created uncertainty around the investment in new operations and the prospect of political interference.

JLT said political interference was more likely in the light of a new mining code that had been agreed last month, which would double the DRC government’s stake in mining projects.

Other supplier countries face a high risk of natural disaster.

For example the Philippines – a major source of nickel – is prone to flooding, landslides, earthquakes and typhoons.

Over the last year prices of raw materials for EV batteries have risen sharply, with copper up 39% and cobalt up 127%, according to figures from Business Monitor International.

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