Lithium iron phosphate (LFP) batteries now supply almost half the global electric car market up from less than 10% in 2020, at the expense of the previously dominant nickel-based NMC lithium-ion batteries, due to improved performance and lower costs. This remarkable battery chemistry shift is leading to new battery critical mineral supply chains coming into focus beyond nickel and cobalt. Simultaneously, there is also the emergence of manganese-rich lithium-ion cathodes, sodium-ion batteries, as well as the anticipated impact of solid-state batteries in the years ahead, opening even more mineral supply chains.

The LFP battery supply chain is significantly more concentrated in China compared to nickel-based supply chains, with over 98% of LFP cathode material and LFP battery cells produced in China, compared to less than two-thirds of nickel-based cathode material and 60% of nickel-based battery cells. China holds significant advantages in LFP production: access to low-cost raw materials from its highly integrated supply chain, cheaper and higher efficiency LFP production equipment and machinery with lower lead times, and finally, holding considerable LFP patents. 

The refining of phosphate rock into battery-grade purified phosphoric acid (PPA) is a growing potential bottleneck for LFP and LMFP production with a PPA deficit anticipated as early as 2030. Refined manganese is another emerging bottleneck, critical for not only many nickel-based chemistries, but also leading sodium-ion chemistries and LMFP. Based on the project pipeline, battery-grade manganese sulphate supply would only cover 55% of demand in the STEPS in 2035. China currently dominates both global PPA production (three-quarters of global supply) and battery-grade manganese sulphate production (95% of global supply). 

Given the growing importance of LFP batteries and other emerging chemistries, and the concentration of key supply chains and material production in China, coupled with proposed export controls on Chinese LFP technology, it is becoming increasingly important for policy makers to develop diversified supply chains. De-risking LFP cathode, PPA and manganese sulphate production projects is crucial, also reducing domestic equipment and machinery costs, as well as providing demand incentives for domestic production. Sodium-ion presents a potential supply security opportunity due to its more diversified upstream supply chain, with the United States and Europe already playing key roles in soda ash, caustic soda and biomass supply. Yet, the downstream supply chain – cell, cathode and hard carbon anode – remains dominated by China. Given the growing competitiveness and market share of LFP and other emerging technologies, it is becoming increasingly important for policy makers to pay close attention to supply chain vulnerabilities in these new technologies.