Mark Futyan – Anesco

David Hunt 0:32
Hello, I’m David Hunt CEO and founder of Hyperion executive search and your host for the evening clean tech podcast. I hope that things are all well with you. Firstly, an apology for the delay in episodes recently caused partly by workload and partly due to an ongoing AI condition that’s required some surgery. But we’re back with a bang. I think. As you know, I mostly interview founders and CEOs from the clean tech sector. But sometimes my inner nerd breaks out and we talk to an industry insider about an area of technology, or markets that really matter and really impact the clean energy and mobility transitions. Now, so much of both of these transitions depend on batteries, and a significant proportion of those batteries are lithium based. So it’s my absolute delight to have as my guest Lucas bednarski, battery materials analyst, former commodity trader and author of a super book, lithium, the global race for battery dominance and the new energy revolution. So whether you’re relaxing, running or at the gym, I hope you enjoy the episode. Hello, and welcome to listen cleanser podcast. Lucas, it’s a pleasure to have you with us.

Lukasz Bednarski 1:37
Thank you, David. It’s a pleasure to be here. Thank you for having me on the show. I think it’s a great way to spread the word about the book.

David Hunt 1:47
Thank you. Yeah, no, it’s great to have an audience member as a guest. Again, I appreciate that you’ve listened to the podcast previously. So it’s, but it’s good, lots of us, too, for us to talk around. And clearly lots for us to delve into around your research and findings into lithium. And it’s important that the clean energy and mobility transitions. But before we do that, as is usually the case, can we share a little bit of your backstory and how you came to authored the book on the topic of lithium?

Lukasz Bednarski 2:16
Yes, sure. So since the beginning of my career, I have been working in commodity industry, I have worked in a variety of roles. I’ve traded commodities, I provided consulting services on the creation of software solutions for for mining, and commodity trading companies. I was also working on the research side analysing the markets. And I also teach courses on physical commodities trading. And at some point where I have been working in the company which which, where I basically traded minor metals, I’ve started to realise the growing importance of lithium as raw material, which at the time, seemed likely to drive the electrification of transportation. And I thought that this is the niche, which is worth pursuing. And for a few years, I was basically focused on getting to know more and more about this market, both both professionally and as a hobbyist, which which led me to the idea to write a book about it. You know, I have always been a bookworm. So I had this plan to write the book at some point in my life. And I realised that, you know, doing that, on a subject that I spend so much time on in the last few years, would be the best idea.

David Hunt 4:27
Yeah, no, I noticed that actually, from your comments in the very beginning, in terms of your gratitude for family culture of reading, which I of course share, which is great. And it’s a you know, it’s despite the topic, and you know, it’s and some of us and most of us, in fact, on the podcast may be a little bit nerdy and clearly a very interest but it’s a it’s a very readable and very well defined book, and we’ll talk a little bit about the subject matter. Now, and of course, people can then always follow through if they if they wish to, but going back to that point, we have a pretty educated audience in the clean tech sector, but I think still probably quite useful if maybe we start with some basics and look at what is lithium? Why is it important? And where do we get it?

Lukasz Bednarski 5:08
Well, so lithium is metal, you can find it in the periodic periodic table in one of the first places in the periodic table, because it’s the lightest of all metals. but crucially, this is the LeMond which is used in all types of lithium ion batteries. And obviously now for the future and past, you had different battery technologies out there on the market. But at the moment, the lithium ion battery industry is dominating the landscape. This is the technology which is continuously improved. And in all types of lithium ion battery, you have lithium as an element. And regarding the resources, meaning Where do you get the lithium from? Well, maybe let’s let’s start with that, that there are two ways of getting lithium out of the ground. So one type are these conventional open pit mining operations, where you are basically getting lithium out of the rock where you produce the concentrate, which is later sold to chemicals producers, which produce out of it a chemical, which is implemented in the battery. In cathode of the battery, also, to some extent in electrolyte. The other route is based on the production of the film from the brain. This route is also often called water mining, because basically you’re getting lithium out of the very salty solution. And regarding the deputy, you know, at the moment, the biggest producers are Australia. And here, the lithium is produced from the hardrock only. And then we have the producers in Latin America. Mostly Chile, and Argentina.

David Hunt 7:53
Yeah, thanks for that overview. And I think sometimes people forget, or it’s easy to forget, for those of us who are focused so much on the electrification of transport and energy more broadly that consumer electronics clearly are a huge consumer of lithium and batteries. And there are those markets, which are equally as vested and need the supplies of the raw materials. And I think sometimes we forget that. One thing I’d like to explore Lucas, and I always like to either explore myths or bust them where possible. And there’s two obvious ones that we hear quite often around. The sufficient availability of lithium is one of them, of course, and the other is about the negative impact of its extraction, both of which we’ve discussed or you discuss in the book, but let’s start with a little bit of the first one. So is there enough lithium to supply all of the Giga factories for example that exists and those very many Giga factories which are in development?

Lukasz Bednarski 8:55
I don’t think that we will run out of lithium anytime soon. So I don’t think that within the next five years to 10 years, we will experience long standing lithium shortage on the market. However, we need to keep in mind that this is the industry which is growing very fast. So there might be some sort of tempura mismatches. So the times when, okay, life will not be catching up with demand, which may lead to you know, temporary price spikes, panic buying and generally volatility.

David Hunt 9:53
Yeah, I think I guess that’s clearly a concern with any clearly as a commodities person yourself, you understand that you Sometimes those where there’s a disparity between supply and demand, then clearly there are spikes, as you say, in price, which affects a number of things as clearly we’ve seen in the last number of years, both the massive increase in, you know, the efficiency or energy density within batteries, but of course, that the cost of batteries has come down significantly. And the, I guess there is maybe a threat that if there are pinch points in the supply of lithium, then that will affect the ability for us to continue that downward trend.

Lukasz Bednarski 10:27
Yeah, I mean, when we look at the battery supply chain at large, you know, we need to realise that the first thing that is not only mining because especially we continue this hardrock production route. And now, most of the lithium on the market comes from the hardrock deposits. So, you have in mind, but then you also need my capacities on the side of the chemical producers, which will transform lithium concentrate either into lithium carbonate for relief from hydroxide. And then these chemical substances needs to be of adequate quality to be accepted by battery makers, especially for such demanding applications as battery packs used in electric vehicles. And that that doesn’t end on that those chemicals, they need to subsequently be used in the production of cathode materials. And the companies which produce cathode materials, they are typically separate companies separate, you know, market players with separate capacities. And after that only lithium contained in the cathode materials is consumed by battery makers. So at all these stages of the supply chains, you can have potential bottlenecks. Right, so it’s not only mining, when we talk about looking shortage, I think people mostly, you know, focus on on the mining side, while they they often ignore these other steps in the supply chain.

David Hunt 12:31
Yeah, yeah, no, it is complex, as you say, but but as you said, there’s also a lot of focus on mining, both in terms of the actual supply and the other points, which is often muted. And it annoys me sometimes when people always think of this as a zero sum game, in terms of they might complain that there’s negative consequences to mining lithium, which, of course, is an issue, but it’s as if the alternative, ie fossil fuels doesn’t come with an impact, but then that’s something that I guess we face daily, but on that point, you actually devote a whole chapter of the book to asking her a question, which is, are we really making the world a better place, which I know in which you address some of those things? So what was behind that question? And what have you concluded in your research?

Lukasz Bednarski 13:12
Yeah, I think we need to, and I do that in the book, look at different aspects of the mining, of production of battery materials and the production of the battery to overall sum up how sustainable the whole industry is. And starting with mining, you know, marine mining is, by definition, a process that in some way impacts the environment, right by by changing the landscape by producing piles of tailings and other material waste. But we need to keep in mind that all the elements materials that we use in our daily life, from which our syllabus civilization is viewed from our coming from the ground, and this is not likely to change soon because you know, it’s unlikely that we will replace mining for all those all those metals out there with recycling. It’s not it’s not feasible in the moment. The question is what how we mind what technologies we apply during mining, whatever we do it in Sister cities is less damaging way or not. So so definitely this this should be a point of focus to you know, decrease this negative footprint of the of the mining industry and other issues that that are often associated with lithium mining, specifically, is the issue of water impact. Because I’ve already say that, you know, these mining operations that we have the moments especially in in South America are based on on brined mining, which is in a way water mining. But still, you know, to assess the impact on the environment. We need more studies. Because the thing is that mining in south of lithium in South America happens in very arid environment, for instance, Atacama Desert. But the question remains whatever, it really uses the water resources, which are used by people by plant by animals or not, because if we look at the brain itself, it’s extremely salty, it’s 10 times as salty as water that we find in the seas or oceans. So in that form, this water is not really useful, okay, people, plants animals, but the question is, if if when we extract these water, whenever these extraction impacts the reservoirs of good water, right, which which interact with the reservoirs, brine, and here, you know, there are private companies that that do studies on that. We need to ask ourselves the questions, whatever they are biassed or not. But you know, in this public domain there is there is no no definitive answer. And there is not enough data for the experts, independent experts to really delve into and decide once and for all, on this issue. So another another issue that often comes up in relation to the battery supply chain, is the fact that it’s so global nowadays, meaning that these different elements of the supply chain that we discussed, are situated in different places over the globe. And the battery raw materials, battery components throttle long way in the containers, before they end up in the car, in the battery, and then in the car, which which consumers use. And obviously all these transportation also creates emissions. So it’s it’s gets us further, our net net zero goals. And on the third, I think,

fourth, yes, on four issue is that, you know, it’s it’s very important, and what type of electricity we use to power electric vehicles, whatever it comes from renewable sources, from fossil fuels that has their huge impact on how, you know, EBS really helps us to enable EBS are as the solution.

David Hunt 18:41
Yeah, I think it’s important to keep all of these things in mind, none of Nothing happens without any form of consequence or impact. And I think it’s important, we don’t shy away from that. And sometimes I think some people in a in an attempt to highlight the benefits of electric vehicles, of which I wholeheartedly believe, but they’re not without impact. But then again, often as you say, the people who do these researches and the people who counter those arguments clearly don’t seem to acknowledge that the alternative fossil fuels go through a significantly large and equal and probably substantially higher range of impacts and energy consumptions and everything else. But equally, I think it is important that you say that we still look at the sustainability of all of these issues in the supply chain and look to improve them where we can.

Lukasz Bednarski 19:32
No, I just wanted to say that obviously as a net effect, you know, battery powered powered cars ranks much better than than fossil fuel powered cars, and there is no doubt about it. I just wanted to underline these these companies should

David Hunt 19:47
Yeah, no, absolutely. And there’s a lot of studies that verify that as much as there are some much refuted and rebuffed articles to the contrary But absolutely, and you Yeah, it’s clearly I should say it’s not something without impact, but clearly is an improvement on the alternative. One of the other areas that’s quite obvious when we’re talking about batteries, and you address this in the first couple of chapters of your book is the current dominance of China. And also that broader than topic of the struggle for global dominance as you refer to it, clearly trying to refer ahead in many aspects of the battery race. Why do you think that is? And Alternatively, you know, the questions might be that, you know, can they be caught and doesn’t really matter if they can’t.

Lukasz Bednarski 20:36
So, so, clearly there is some sort of the economic competition between supranational organisations and nation state to take you know, good pole position in the battery economy and now, different states follow different development models regarding that. So, we have China China managed to build really enormous capacities in terms of production of battery chemicals, battery components, you know batteries at large it doesn’t do that well regarding the amount of the battery raw materials that they have in the ground here they options are quiet a limited as you know, such nature’s such rich natural riches has not been bestowed by by the nature for for for for China, but at the same time, they have nowadays really large mining companies that got very early into this game and managed to secure quality resources abroad for acquisition of the mining projects or by taking the shares in the mining projects or by signing long standing supply agreements. And yeah, basically China China managed to build in that way and integrated battery supply chain from mind to market not to not to mention Chinese homebred Evie companies, which often offer also very interesting technological solutions and very interesting Evie models, which are maybe not so well known in the West, but they sell well on the domestic market and also increasingly in the in the emerging markets all over the world. And in order to reach this point, China follow this top down, I would say development model, where private players have been heavily subsidised by the state, where selection of the standards have been developed, which for for electric vehicles for batteries, which basically insulated the domestic industry from foreign competition, as it has grown. And, and also those those subsidies. They also played a large part in making people buy electric vehicles, because they were also very, very generous for consumers. And also the economics which which are maybe more free market liberal economics than China, but which which nowadays play an important role in global battery economy is Japan and South Korea. They also to certain extent has these top down approach where the government prepared the plan to get early into battery economy, where this kind of economic activity has been encouraged, in different way. And now we are at the stage where please

David Hunt 25:26
notice you’re going to say that move on to a point actually on geopolitics will continue your points and then we can jump on to that.

Lukasz Bednarski 25:34
So now we know we are at the, at the place where generic generally Western world starts to realise that we need to build our own battery supply chains, developed our own expertize Yeah, and most importantly, they realise that manufacturing solutions, that manufacturing cannot be a total fraud that because you know, for, for long, the West, followed this model, where there was this unquestioned assumption that it makes sense to keep research and development in the developed economies and then outsource manufacturing, to the places where labour cheaper, where production inputs are cheaper. But it led to the situation that these these companies, you know, lost the know how, in high tech manufacturing. And also the the companies realised that it’s very, sometimes very difficult to translate findings on the r&d side, on the factory floors, without the direct access to the factory floor. And did it change the attitude. And and now we see more and more of private players in Europe and in us trying to enter this field of battery manufacturing, battery components, manufacturing. And also, we see the effort on the side of the states to encourage the development of this industry, maybe not with this top down approach as it happened in Asia. But by, you know, believing in the Invisible Hand of free market, and creating a sort of incentives in the range of incentives in terms of the taxation, tax breaks, more business friendly legislation, to help, you know, kickstart these these projects in in Europe or in us.

David Hunt 28:29
Yeah, yeah, I think it’s a it’s very complex, of course, but quite interesting that clearly China has an advantage is to some extent in its political nature and structure where it can be, as you say, top down and driven, and that’s clearly given them a big advantage and effort. You know, they’ve moved significantly in the last few years. But it’s not so difficult, different, I don’t think from, you know, 100 120 years ago with the emergence of the oil industry, and the obviously the dominance of the US in that and we still see today, of course, significant subsidies and tax breaks and support shoring up the fossil fuel industries. So it’s easy, I think, for some people to point to China and say, Well, that’s because of and the there’s a, I guess, a different way in the West. But it’s not always quite so obvious, I don’t think. But it is interesting, as you say that there’s now this realisation that offshoring, everything isn’t and hasn’t always been the utopia that we thought perhaps it was in previously, and that the points you make there are very valid in terms of the proximity to manufacturing and r&d. And of course, the proximity of where the batteries are made and where the vehicles are made. Design is another issue where trying to keep that distance minimum exists. And when do we see in the future Lucas, the kind of geopolitics and even conflicts that oil has caused in the past in lithium

Lukasz Bednarski 30:00
Yeah, I think realistically speaking, we are far away from this point. There is rivarly between nation states. But on the economic level, and I think this is something that we discussed with the last question. But But I don’t think that that at the moment any any kinetic conflict over lithium resources would be possible?

David Hunt 30:34
I certainly hope not. But certainly there’s, as you say, a significant, legitimate attempt to to catch the Chinese and to have a home grown, whether there be in the US, of course, there’s a big focus now with the Biden administration, in Europe, of course. And sadly, with the UK no longer part of Europe, with the UK Government talking about, as you say, support for bringing battery manufacturing into the UK, of course, Germany is going through some of the things. So there’s so much I think, dynamism in the in the sector, which is interesting to stand by it. But again, I guess the overall impact, which we’ll move on to is no, all of these things are to drive for us to achieve and net zero or Sunday is no significant decarbonisation of our economies and societies such that we can avoid the worst impacts of climate change and anything, whether it’s supply or supply chains or geopolitics that interferes with that is, of course, always a worry. So your final chapter, bright green future looks at among other things, battery powered flight. What do you see as the new frontiers and opportunities for lithium batteries,

Lukasz Bednarski 31:44
so, you know, we, in case of the lithium ion battery or battery at large, we’re talking not only about the electrification of the transportation, but also there are possibilities for electric flights in the future. And a number of companies both both startup startups and established companies in aerospace field are looking at the solutions to make flights electric. And, you know, there are different approaches towards then there are the ideas and efforts to make fully electric flights but for the shorter distances, you know, taking lower number of passengers. And basically by by filling up the plane, we’ve we’ve cells in form of very extended Battery Park, place the, in different places of the of the, in different locations on the on the aeroplane, but there is also a second approach and it’s quite similar to what happened with the electrification of the automotive industry. So starting with hybrid solutions, where battery power is used only during landing or during, you know, during the start, or only at certain points of the journey as a support to the main to the main end. But of course, you know, if we one day we’ll be able to make flight flights electric, we wouldn’t be able to drastically bring down the emissions. And, you know, it doesn’t have to happen with the use of lithium ion battery, maybe it will be a solid state battery, we’ve higher energy density, by the way solid state battery will be also using lithium. So, so one is not not precluding the other. And there are also you know, opportunities later to do electrification of the marine transportation you know, most of the goods that we have at home, absolutely travels to us in in containers on the marine vessels. So, again, this is this is, you know, a big chunk of transportation ambitions to be to be eliminated, replaced with a battery, and, you know, marine vessels they are consuming, very polluting bunker fuel. So, so there’s there’s an opportunity there Yeah. And here I think we are a little bit closer in terms of what’s practically possible then then in case of aeroplanes, because already we can observe you know, the use Have electrically powered ferries all over the globe. Also electrically powered vessels which are carrying contain containers or board materials. In the book I described the the efforts on the side of the Norwegians. Therefore, on the side of the Chinese which are tempted to use electrify electrified vessels in parallel with the river delta delta, which which is very, you know, congested area of transportation with the manufacturing sector.

David Hunt 35:47
And I think that’s an interesting point, as we’ve seen, you know, I have a couple of plug in hybrid vehicles and that that kind of hybrid technology does I think, enable and encourage a full transition and fills in a gap in the middle and she’s a whilst there are certainly some fully electrified ferries and even on a very small scale of fully electrified flight I think still there’s that place where there’s a hybrid solution which will Yeah, bridge the gap and support and encourage move towards the technologies and capabilities for full electrification which is which is really exciting I didn’t think even four or five years ago would be even talking realistically about electrified flights and already we’re seeing in as you say, in small use cases that already being a reality so things move pretty quickly for sure.

Lukasz Bednarski 36:36
Yeah, it’s all you know, the matter of parking more and more energy into a limited space right so increasing energy density of the batteries

David Hunt 36:51
so we’re gonna put you a little bit on the spot Lucas and given the obvious importance of lithium batteries to the global clean energy and mobility transitions you’ve been studying and reading and looking into this for for some years now, how confident are you that we have both the materials the tools and technologies and maybe hopefully even the policies to enable us to keep to a livable climate for free humans on this planet?

Lukasz Bednarski 37:16
You know, I think the the problem that we have is is not so much the lack of ideas on how to reach net zero goals, because ideas are out there and and you know, they are they seem pretty obvious, right, like increasing a number of renewable energy sources moving away from fossil fuels in regard of transportation, investing in research and development, you know, educating the new carts where which which can basically take this battery economy further on. But, you know, what’s difficult this is an implementation of these ideas. Because, you know, we’re in a world of limited resources. And for instance, lithium industry for long has been plagued by you know, lack of financing the same goes for battery startups for very long venture capital industry you know, was more interested in investing in software as something that they understood new is a growing and exciting field then in you know, promising solutions from from say, battery space. And, and also we need to we need to remember that, you know, as we introduce these changes, we need to consider the interests of all the stakeholders out there, because obviously, not not everybody is interested in changing the status quo. As we such changes, there are always you know, years and years and and corporations and even governments, which which, you know, have more to lose than to gain on electric transition. Might be might be, you know, less interested in, in realising it. So, so I think, what, what, when to assume this politics of, you know, small steps, iterative improvements, just we need to remember that in order to meet this climate goals, we need to Making these small steps very fast. One after the other.

David Hunt 40:04
Yeah, yeah, no, absolutely. I think what’s one of the great things is that in such a topic, which has so many complexities and stakeholders, going back to your points, and of course, enemies, let’s put it that way. There are a lot still that we need to be doing and be focused on and actually say the small steps but in rapid pace, and I think we’ve seen significantly that over the last few years. I think one of the great things, again, in terms of the book, you’ve been able to address a lot of these complex issues in quite an easily understandable and digestible way. So in terms of pointing the audience in the right direction, Lucas, I guess you’re, of course on Amazon, but where is the best place for people to find the book if they wish to do so.

Lukasz Bednarski 40:45
It’s available in most of the bookstores right now in the in the UK, in most of the bookstores, chains, Amazon ECS, also the great place to get it. It’s also available in ebook format on Amazon. So if somebody prefers that, it’s it’s out there.

David Hunt 41:05
Okay, I didn’t say that. Make sure I’d dig into that. I have the hardcopy on my desk at the moment. But we’ll put a link to the book and to your details on the episode page for the website for the podcast, I should say. But in the meantime, it’s been really fascinating. Thank you for the research that you’ve done and in simplifying and in clarifying universes, a complex topic and sharing your thoughts both on the podcast and of course in the book, so appreciate your time. If people do want to find out more Of course, you can reach out directly to Lucas via Twitter and and of course, read the book and we’ll make sure that you can find access to those on the episode page. But for now, Lucas, thanks very much for sharing your thoughts and your time.

Lukasz Bednarski 41:47
And thank you for having me on the podcast. David. I really appreciate Thank you.