Bloomberg NEF (BNEF), a leading organization that analyzes and tracks the battery industry, its supply chain, and the raw materials market, produces an annual ranking of the most competitive countries in the sector.
The ranking is based on 46 different parameters to assess supply chain performance in five main areas, each with equal weighting. These areas are:
- Raw materials
- Battery production
- Final demand
- ESG (environmental, social, and governance) considerations
- Industry, infrastructure, and innovation
A ranking is then produced for each category, which is then combined to obtain an overall ranking.
Canada Surpasses China
In a surprise to many of us, but probably less so to industry insiders and analysts, Canada has overtaken China to take the top spot on BloombergNEF’s ranking, with the North American country’s lithium battery supply chain considered the safest, most reliable and most sustainable in 2023.
Traditionally, we have considered China untouchable in the battery sector. This is not the first time this has happened, as the Asian giant has consistently topped the rankings to date.
Canada’s continued advancements in manufacturing and production, combined with its strong environmental, social and governance (ESG) credentials, have positioned it as a leader in shaping the battery supply chains of the future.
In addition, Canada’s close integration with the U.S. auto industry has also benefited, as it benefits from its North American neighbor’s aggressive and ambitious Inflation Reduction Act (IRA). In addition, Canada is benefiting from the momentum of political commitment at the provincial and federal levels.
China, however, remains in the lead in terms of the most established supply chain. However, the growing importance of sustainability throughout the lithium-ion battery lifecycle indicates that China needs to take a more proactive approach to ESG issues in order to strengthen its supply chain in the long term.
North America on the Rise
If there is one thing that sets the three most competitive North American countries—Canada, the United States, and Mexico—apart, it is their political commitment.
While the top two solidify their positions at the top of the rankings, Mexico has made a notable advance, reaching 19th place thanks to improvements in all areas assessed.
In contrast, Mexico is struggling to develop its electric vehicle industry, despite having a solid foundation for growth in mining and the automotive industry. According to BNEF, government support, particularly through the U.S. IRA, is essential to ensure the sustainability of these improvements. Kwasi Ampofo, director of metals and mining at BNEF, notes that “global investment in the clean energy supply chain, including equipment plants and battery metal production, reached a new record of $135 billion this year.”
“That said, trade relations will be an interesting factor to watch in 2024 as US and EU foreign policy efforts continue to make it difficult for international companies to operate in important markets such as China “, he added.
The auto industry remains highly dependent on China, although aggressive U.S. policies are starting to have an effect.
Africa and Asia
While in Europe, no significant progress has been made in the sector. African countries included in the ranking, including South Africa, Morocco and the Democratic Republic of Congo, improved their share of primary production.
Aware of the wealth of their mineral resources, they are working with international partners to expand mining and establish new production facilities.
BloombergNEF notes, however, that to foster local supply chains, these countries must continue to maximize value added, particularly in metal refining and battery precursor production.
In South and Southeast Asia, India and Indonesia are leading the growth of supply chains. And the momentum is expected to continue with the launch of already announced projects, which will impact the global supply chain.
BNEF’s Ellie Gomes-Callus highlights the rapid development of specific supply chain strategies in emerging economies, and urges this momentum to be maintained to reach its full potential.
Source: BloombergNEF