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MAJOR car-makers are avoiding China and Russia and are increasingly seeking out supplies of raw materials for EVs from other markets; including Australia and Canada.

The latest are Volkswagen Group and Mercedes-Benz Group which have sealed agreements with Canada to secure access to raw materials including nickel, cobalt and lithium for battery production.

The memorandums of understanding were signed this week in Toronto by German Chancellor Olaf Scholz and Canadian Prime Minister Justin Trudeau.

Automotive Industry Europe reported that Mr Scholz said Germany and Canada planned to work together in “areas such as critical raw materials”.

Canada “has similar rich natural resources as Russia – with the difference that it is a reliable democracy,” Mr Scholz said.

“This opens up new fields of cooperation. We want to cooperate closely, especially when it comes to building a hydrogen economy.”

Lithium’s price has skyrocketed by almost 500 per cent over the past year and is expected to remain strong for the rest of the year.

Analytical company Benchmark Mineral Intelligence estimated that the EV industry will need as much as $42 billion of investment by the end of the decade in order to meet demand.

The deal between Canada and the two German car-makers follows similar moves away from Chinese and Russian supplies towards Australian miners. These include:

  • Ford: In July this year, Ford announced an agreement with Liontown for almost one-third of the miner’s expected production from its Kathleen Valley resource in WA. Ford also provided a $A300 million debt facility to Liontown. It will supply Ford with 150,000 tonnes of lithium a year for five years
  • Ford: Is in talks with Australian company Lake Resources to supply lithium from its Agentinian mine
  • Tesla: Also signed an offtake deal with Liontown
  • Tesla: BHP supplies battery materials for Tesla from its Australian mines
  • LG Chem Ltd: South Korean battery manufacturer also signed an agreement with Liontown
  • Stellantis: Acquired an equity stake in Australian lithium miner Vulcan Energy Resources
  • Toyota: Australian lithium-boron producer Ioneer signed an agreement with a joint venture between Toyota and Panasonic to provide lithium carbonate from its project in Nevada. It will supply the JV with 4000 tonnes per annum of lithium carbonate over a five-year term to make batteries for use in US-made EVs
  • Toyota: BHP announced an agreement with Toyota to source nickel sulphate for automotive battery production. It will be processed at a new plant in Kwinana, south of Perth. Toyota built a fleet of full-electric Land Cruiser 70 Series utes for the facility.

In the US, Volkswagen’s agreement is designed to shorten supply chains for its EV manufacturing facilities and avoid difficulties linked to tariffs and tax regulations.

The move has partly been prompted by new rules that US president Joe Biden signed into law last week. The Biden administration’s Inflation Reduction Act allows consumers to continue getting as much as $A10,000 in tax credits for EVs if manufacturers meet conditions.

Minerals must be extracted from or processed in countries with which the US has a free trade agreement and a large percentage of battery components need to be manufactured or assembled in North America.

Car-makers including Volkswagen, Mercedes and Stellantis have embarked on ambitious plans to make batteries. 

Automotive News reported that Volkswagen is planning six facilities in Europe alone, while Mercedes has joined Stellantis in an $A13 billion battery venture and is pursuing a total of eight facilities globally.

Volkswagen is also considering setting up an in-house battery cell manufacturing operation in North America.

Its COO in North America, Johan De Nysschen, said the goal would be to ease a coming battery shortage by supplementing suppliers with its own production. 

The company has opened a battery testing lab near its car-making plants in Chattanooga, Tennessee.

By Neil Dowling

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