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The policy to encourage the renewal of the vehicle fleet with a focus on electromobility could attract the other links in the production chain, from the extraction of lithium to the local manufacturing of battery cells. The companies advocate for the creation of specific public policies, including financing and incentives for the electrification of the fleet.
With new programs to promote green industrialization, Brazil could be moving closer to the local manufacturing of lithium batteries, closing a gap between the extraction of the mineral and the manufacture of electric vehicles, activities that are already carried out in the country. Since 2023, Sigma Lithium has begun exporting green lithium from Brazil to battery manufacturers in China, while companies such as BYD, Volkswagen and Marcopolo assemble heavy electric vehicles in the country that will receive the imported batteries.
According to the International Energy Agency, a typical electric car requires six times more mineral resources than a conventional car and an offshore wind plant requires 13 times more mineral resources than a gas plant of similar size. Since 2010, the average amount of mineral resources required for a new unit of energy production capacity has increased by 50%, as the proportion of renewable sources in new installations has increased.
The mineral resources required vary depending on the technology. Lithium, nickel, cobalt, manganese and graphite are crucial for batteries. Rare earth elements are essential for permanent magnets used in wind turbines and electric vehicle motors.
To promote the exploration and production of these minerals, with an eye on the expansion of demand, the Brazilian Ministry of Mines and Energy (MME) announced a new program to promote the production of strategic and critical minerals for transition technologies energy. “We will launch the Clean Energy Mining Program, which will aim to develop the mineral processing industry and strengthen geological knowledge and mining research. This program will have clear guidelines: environmentally responsible and socially conscious measures will be crucial,” said Minister Alexandres Silveira, during the Mining and Transformation of Strategic Minerals seminar for the energy transition, organized by the MME.
One of the main objectives of these new green industrialization policies should be to densify the productive chain - that is, bring more links of the industry to the country - argued the secretary of Industrial Development, Innovation, Commerce and Services of the Ministry of Development, Industry and Foreign Trade (MDIC), Uallace Moreira.
“Brazil already has bus and truck technology made here, with the entire chain in Brazil, except for the loophole in the battery cell. By covering this gap, we will be more competitive and leaders in the green economy,” says Daniel Godinho, director of Sustainability and Institutional Relations at WEG, which produces battery packs in the country, with imported cells.
The manufacturing of lithium batteries in Brazil is one of the topics of the New Industry Brazil (NIB) program, announced in January by the Federal Government, according to the MDIC secretary. According to Moreira, the ministries are in the process of reviewing the NIB, which must be presented by April 22, improving the goals, counterparts and actions.
Tax incentives and financing
Access to competitive financing and tax incentives are some of the instruments that could attract investments.
In electromobility, “the Mover Program [of tax incentives] of 19.3 billion reais (3.8 billion dollars) has already generated investments of 40 billion reais and opens a window of opportunity to work with these actors of the productive chain [of electromobility], to exploit natural resources such as our lithium reserves,” Moreira recalls.
The secretary of the MDIC also mentions the development of the Plan Mais Produção, in association with the National Bank for Economic and Social Development (BNDES), the Funding Agency for Studies and Projects ( Finep) and other ministries, to give the industrial sector investment predictability.
In the next two months, the BNDES must launch a fund that will be co-participated with private actors to guarantee capital for strategic minerals. The fund is in the market dispute phase and final definition of the investment thesis, according to the banks legal director, Walter Baère.
WEG defends encouraging the demand for heavy vehicles
“There is no business, investment or innovation without demand. The first public policy is to encourage demand at the front, for example with the financing line for electric buses. São Paulo alone has a fleet of 15,000 buses. It is not a scale that guarantees the long-term continuity of this chain, but it would be enough for this first movement to occur,” comments WEG Director of Sustainability and Institutional Relations, Daniel Godinho. “We are going to need R&D, production incentives and financing to set up our factories, in the refining phase and in the production of additive materials and battery cells,” he adds.
According to the executive, one of WEGs main focuses at this time is to serve the electric bus and truck market. Currently, WEG imports the battery cell and adds in Brazil the management system, the cooling system and the electronic connections, which form the battery pack for the automotive solution.
The executive, however, highlights the important role of batteries in the expansion of renewable generation. “Wind and solar energy already represent 30% of Brazils generation capacity, but the theoretical potential is that these sources can reach 70%, and batteries will be key to this,” says Godinho.
Senai brings together 27 companies in a pre-industrial production project
To start producing battery cells in Brazil, the National Industrial Learning Service (SENAI) is developing a pre-industrial plant, in association with 27 companies, to produce lithium iron phosphate batteries ( LFP) and nickel manganese cobalt (NMC), which are the main chemicals used in the automotive sector.
“We created a project that we presented last week to Rota 2030 [the program to promote the energy transition in mobility that is being replaced by the Mover program], with 27 companies from the oil sector, the automotive sector, giants, medium-sized companies and start-ups, which will be carried out for three years, if approved, with an initial investment value of 68.5 million reais,” explains Marcos Berton, research director of the Senai Institute for Innovation in Electrochemistry, based in Curitiba, Paraná.
The objective is to develop the infrastructure for the pre-industrial production of lithium-ion cells, in cylindrical and prismatic geometries. The results of the presentation will be published on April 4, after which Senai will be able to sign the technical cooperation agreement between the companies.
“At the same time, we have to develop the value chain. Do we manufacture lithium sulfate? In technical grade or in battery grade? If it is only technical grade, we will have to develop a refinement process. We are going to work on this in parallel, it is not enough to have the manufacturing capacity, we have to have this developed chain,” says Berton.
A $320 billion market
As countries step up their efforts to reduce emissions, they also need to ensure that energy systems remain resilient and safe. The growing importance of critical minerals in a decarbonized energy system requires energy policymakers to broaden their horizons and take into account potential new vulnerabilities. Concerns about price volatility, security of supply and the shifting sands of geopolitics do not disappear in an electrified, renewable-rich energy system.
Electric car sales increased by 60% in 2022, exceeding 10 million units. Energy storage systems saw even faster growth, with capacity additions doubling in 2022. Solar PV installations continue to break records, and wind energy is expected to resume its upward march after two subdued years in 2021 and 2022. This has caused a significant increase in demand for critical minerals in recent years.
From 2017 to 2022, demand from the energy sector was the main factor responsible for the tripling of global lithium demand, a 70% jump in cobalt demand, and a 40% increase in nickel demand. In 2022, clean energy represented 56% of total lithium demand, 40% of cobalt demand and 16% of nickel demand.
Driven by rising demand and high prices, the market size for major energy transition minerals has doubled over the past five years, reaching $320 billion in 2022, globally similar to the size of the mining market. of iron ore. Investments in lithium production worldwide increased from $2.7 billion in 2021 to $4.1 billion in 2023.
Policies to encourage production in other countries
There is a growing movement of policy interventions to guarantee the supply of strategic minerals, such as the European Unions Critical Raw Materials (CRM) Act, the US Inflation Reduction Act, and the European Unions Critical Raw Materials (CRM) Act . (IRA), the Australian Critical Minerals Strategy and the Canadian Critical Minerals Strategy, among others.
The International Energy Agencys (IEA) Critical Minerals Policy Tracker has identified around 200 policies and regulations around the world, of which more than 100 have been enacted in recent years. Many of these interventions have implications for trade and investment, and some have included import or export restrictions.
Among resource-rich countries, Indonesia, Namibia and Zimbabwe have introduced measures to ban the export of raw minerals. Global export restrictions on key raw materials have increased five-fold since 2009.
National sovereignty
An industrial policy for certain production chains, such as strategic minerals for the energy transition, can also be a matter of national sovereignty, underlines Secretary Uallace Moreira.
“This is how the United States treats it [strategic mineral production] with the IRA, how Europe treats it in Net Zero, China in the 14th Five-Year Plan: as a question of sovereignty. And many of these countries do not have the privilege of having mineral wealth like Brazil. Our great challenge is to exploit these natural resources and we have actors with a high level of competitiveness operating in Brazil, agents interested in joining this productive chain,” says Moreira.
The secretary recalls that, according to the International Monetary Fund (IMF), 72% of industrial policy measures - instruments such as tariff and non-tariff barriers, subsidized credit, tax incentives and credit - are concentrated in developed countries, with 48% % of these policies applied in the US, China and Europe. “Why cant Brazil make use of these instruments?” he asks. |
