“Although the IRA is helping to support the [Western battery] supply chain, broadly speaking, the supply-chain development in the region is still facing a lot of challenges,” Albemarle’s Kevin Chan told delegates of Fastmarkets’ Asian Battery Raw Materials Conference in Seoul, South Korea on Monday April 22.
The Act, which was signed into law in August 2022, provides tax incentives to source critical battery raw materials domestically within the US or from free-trade partners. Supply Chain Audit Process
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The recent financial results of some companies in the lithium-ion battery sector have started to show the positive impact of IRA tax credits on revenue.
Supply-chain regionalization is lengthening lead times for global delivery, while geopolitical conflicts are making projects more time consuming and costlier, according to Chan.
“Physical regionalization lengthens the global supply chain. For example, a considerable amount of equipment [needed for battery supply-chain development] right now is still being sourced from China,” Chan said.
He pointed to the Russia-Ukraine war and the Red Sea shipping crisis as examples of geopolitical factors affecting investment in the development of the battery supply chain in the US and extending the time taken for projects to come online.
A lack of experienced labor in the West, contributing to higher production costs, is another hurdle to the development of a Western battery-supply chain, Chan said, especially compared with China, which has ample experienced labor and more competitive costs.
“Australia is typically dealing with labor scarcity issues right now, which is translating into the highest unit labor costs,” Chan told delegates.
Australian spodumene producer Pilbara Minerals reported in 2022 that there was an industry-wide shortage of specialized labor in the country.
Chan also noted that a lack of market for byproducts such as solid tailings and sodium sulfate was contributing to higher operating costs outside of China, because companies were incurring additional costs to dispose of these byproducts.
“China right now has a market for these [byproducts], which is also supporting the execution of all these [battery materials] projects and commercial facilities [in the country],” Chan added.
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