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Production and logistics of raw materials are limited, and the novel coronavirus epidemic endangers the global supply of lithium-ion batteries


原材料停产物流受限 新冠病毒疫情危及锂离子电池全球供应

On April 5, according to foreign media reports, as the epidemic of covid-19 continues to spread around the world, it is causing new risks in the global supply chain of lithium-ion batteries. Because almost all countries that produce lithium and other metals necessary for battery manufacturing have introduced restrictive measures to control the spread of the virus.

Benchmark minal intelligence, an information provider specializing in the lithium-ion battery industry, wrote in a recent report that the outbreak of the covid-19 epidemic has led to a slowdown in the logistics of the entire lithium-ion battery supply chain and is extending to all parts of the world.

In Australia, a major producer of lithium, the association of mining and exploration companies warned its members to pay attention to strict intercontinental travel restrictions. In South America, Chile has implemented a national ban, parts of Santiago are isolated, and Argentina has implemented isolation measures nationwide. In Africa, due to the closure of borders and ports in South Africa and the quarantine policy of Congo, which produces cobalt, cobalt supply may be interrupted.

According to the data of benchmark, so far, there has been no report of major supply shortage of battery raw materials or anode and cathode materials, which is mainly due to the oversupply of this industry since 2019. However, transportation bans and delays in China have raised concerns about the ability to ship raw materials and deliver finished products to customers.

First quarter impact

Upstream mining companies have begun to remind investors that the covid-19 epidemic may affect their revenue and profits. Major lithium producers Sociedad quimica y minera de Chile SA and Albemarle have pointed out the financial impact. Albemarle told investors in February that the adjusted EBITDA in the first quarter is expected to decline by 20% to 25% year-on-year, and by 15% to 20% year-on-year in the first half of the year, which is largely due to the logistics restrictions related to the epidemic.

In a fireside chat with investors on March 24, Luke Kissam, CEO of Albemarle, said that the company was working hard to complete the bromine order scheduled for delivery at the end of March. He explained: "this is not a problem of lack of orders, nor is it a problem of production lagging behind, but can we deliver goods in time? Can we get the ship? Can we get the containers? This will not be a problem in 2020, but a problem in the first quarter, because I can't complete these deliveries until the 31st, but I'm not sure whether we can do it."

In an email sent to s&p global market intelligence on April 1, a spokesperson for Albemarle said that the company had no further updates on the status of shipments.

During the epidemic, the pressure felt by companies in the battery supply chain was not limited to their industries. However, observers say they provide insight into how the electric vehicle, battery storage and consumer technology industries may need to mitigate the expanding risks associated with long-distance transportation of materials during and after the epidemic.

Change the rules of logistics game

Emily Hersh, managing partner of DCDB research in Argentina, a research institution specializing in mining and energy, said in an interview that although some governments such as Argentina have designated mining as a necessary industry, restrictions on personal travel are another complex issue, even within the country.

Hesh said, "the speed of transporting things from one place to another will be slower. I think logistics will become slower on a global scale." He added that enterprises may start to consider how to tighten the supply chain so that the physical distance between different parts is closer, "which has changed the rules of the game of international logistics".

Bob stall, head of metals and mining in the United States at ey, said that during the epidemic, mining companies in the battery supply chain will find it difficult to deliver goods in time, and some companies will "possibly" declare it as a "force majeure factor" in their supply contracts on the grounds that they are affected by the covid-19 epidemic.

Sto said that considering the current situation of traffic disruption, the epidemic may change the company's view of the risks related to the global supply chain for decades. Therefore, the localization of battery manufacturing and electric vehicle assembly plants of automobile manufacturers may accelerate.

Sto continued, "will the impact of the covid-19 epidemic recover in 6, 12 or 18 months? I think it will depend on your region. But the problem is that we are a global economy, and the supply chain has gone to the lowest cost part in the past 20 years. No matter who is the lowest cost, I think this dynamic will change."

Article source:Battery net

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