Hybrids, Hydrogen and Hype: Peak Resource Issues Affect Future of Hybrid Cars

DETROIT () -- The measurement of the average abundance of the chemical elements in the earth's crust has no bearing whatsoever on the accessibility of the reproducibly identified concentrations (ores) of these elements to commercial recovery by mining.

It is only when such ores are present close enough to the surface, so that they are within the range of contemporary excavating techniques and machinery, and the chemistry of the extraction of the metals involves abundantly available reagents and economical processes, so that the resulting metals can be sold for more than their cost of production, that the metals are said to be of commercial value.

Because of the basically indisputable above definition of "metals having commercial value" investors in natural resources who have common sense are aware of the fact that there is no such thing as pure versus applied mining.

No one on earth can be "commercially" extracting and refining a metal or a mineral for which it is recognized that there is no profitable (i.e., commercial) use, and therefore no demand. Of course newly discovered critical applications for a particular metal, which has not yet been produced in large quantities may lead to research both in academic and industrial laboratories for the purpose of developing more efficient separation and refining of the material from its known ores or for finding a new source of the metal as an overlooked byproduct in the ore of another metal.

In the last two weeks, I have written about three metals, one a commodity metal, nickel, which is widely available and two others, lithium and gallium, one of which, lithium is commercially recovered from, literally, subsurface concentrations called brines, because historically they were looked upon as very concentrated solutions of salt resulting from the dehydration of isolated salt lakes, and the other, gallium, is present at 50 parts per million or so in some ores of aluminum and, to a lesser extent, some ores of zinc.

Because of the enormous global production both of aluminum and zinc, and mainly because of an unusual once critical use for gallium (the stabilization, by alloying, of a particular metallurgical phase (atomic arrangement) of plutonium, a great deal of investment was made to develop processes to recover gallium from both aluminum and zinc as a byproduct.

The world production of nickel today is 1.5 million tonnes annually. The known reserves of nickel globally, as estimated by the United States Geological Survey, are about 100 times this production figure. One half of all the nickel mined in the world is used to manufacture (stainless or stainless type) steels. It takes about 40 pounds of nickel to produce one nickel metal hydride battery pack for a hybrid vehicle. Therefore if all of the world's current production of motor vehicles were to use nickel metal hydride batteries then it would need, each year, all of the world's annual production of nickel.

Yet, this is feasible, because the changeover from internal combustion operation to battery operation could be spread over a minimum of, say, 10 years, so that the amount needed for new production annually wouldn't reach saturation of supply for a number of years.

Moreover, this nickel is not used up. It is rented out, and can be recycled, so that after a period the need for new material could be progressively reduced. This scenario is only possible if people would accept that they must keep their vehicles running for their entire useful, not just, as today, status-, life and that ultimately a new vehicle would be manufactured only for a new customer or to replace natural attrition. This is not American consumerism. It is a kind of product socialism for the good of the environment that no one in America would like but that, also, no one could say was a bad idea.

The world production of lithium from subsurface brines is today 21,000 tonnes per year, and the known reserves, according to the USGS, are 4,000,000 tonnes. Most of the lithium produced today is used to make organic chemicals used in the manufacture of plastics, or to make strong lightweight metal alloys for aircraft use, or to make lightweight glass or ceramics. A small proportion is used to make batteries, mainly primary, one use, batteries for portable electronics, hearing aids, and health and safety devices, such as pacemakers, some is used to make rechargeable batteries for use in laptop computers and, in much larger circular or prismatic packs, for vehicles.

Let's say, for argument's sake, that it takes 25 pounds of lithium to make a battery pack for a hybrid car the size of the Toyota Prius. This means if all annual global lithium production were diverted into making vehicular battery packs of that size then you could produce 1,600,000 such vehicles per year. Assuming that you could use the batteries, and recycle their core lithium, indefinitely, it would take 50 years to make as many hybrid cars using lithium battery technology in their propulsion systems as were made using only internal combustion engines in the last year (mid 2006 - mid 2007) globally.

Then, as with nickel metal hydride batteries the best solution would be only to make new vehicles for new buyers and replacement cars and batteries for the rest, this may again sound like a socialist/communist version of consumer choice nullification, but it is the only way to do the job with the natural resources we have.

Of course this brings me to the actual solution, one which would leave our consumer society intact. We could make a mix of lithium battery technology-powered hybrid or all-electric vehicles for high performance and a much larger number of nickel metal hydride battery technology powered hybrid or all electric vehicles for "ordinary use," and as many pure hydrogen powered internal combustion engine cars and trucks as could be sold to those who would accept very expensive and inconvenient supplies of hydrogen at first to be followed by a conversion and or diversion of part of our utilities to the production of hydrogen as well as electricity and the progressive conversion of our petroleum hydrocarbon distribution system to the handling of hydrogen over the next 50 years (This is the actual estimated time for this process stated by the U.S. National Academies of Science in a recent article.).

Now we come to gallium again. The world produces less than 100 tonnes of gallium a year, so any production of hydrogen using a technology that involves even a small percentage of gallium is impractical and impossible today. There are geological surveys that say that on average gallium is more abundant in the earth's crust than lead. I was reminded of that last week by a comment to that effect from a professor at Purdue, which challenged the assertion I made in that article and repeated in the first sentence of this paragraph about the commercial possibilities of a gallium/aluminum recyclable, on demand, hydrogen generator.

Nonetheless, I repeat that even if there is a huge amount of gallium distributed throughout the earth's crust the accessible portion of that reserve is at most 200 tonnes a year and this if, and only if, present aluminum and zinc production double from present values and stay that way.

There is no way that today's civilian and military industrial use of gallium, 97% of U.S. supply, for example, for electronic device fabrication is going to be diverted to make a very few hydrogen generators. Since there is no new commodity level supply on any time horizon gallium/aluminum hydrogen generators may fly to the outer planets one day in unmanned probes, but they will never drive to the supermarket in a car.

Attention natural resource investors: The problem addressed by hybrid, or battery powered, or hydrogen powered solutions to greenhouse gas emission and dependence on imported petroleum hydrocarbons is not going to be solved by any one technology. Hedge your bets. Don't count out nickel metal hydride battery technology; Don't count out lithium-ion battery technology; and Don't count out hydrogen as a fuel. The all or nothing attitude of proponents of each of these technologies is an expensive mistake.

The public relations departments at all of the global OEM automotive companies should be cleaned out of journalism majors and re-staffed with people with broad backgrounds that include expertise and experience in natural resource availability and utilization. Then the car companies wouldn't easily make announcements that they are and are not going to make hybrids (Ford), they are and are not going to use lithium-ion batteries in place of nickel metal hydride batteries (Toyota), and that they are against and then for hybrids (Nissan).

One last point: Toyota announced last month that, for safety reasons, it would not be putting lithium-ion technology batteries in the next generation of Prius due in 2008-09. It would continue, it further said, to use (proven technology) nickel metal hydride batteries which alone among car companies it makes itself (In a j/v with Panasonic, majority owned by Toyota).

GM has stood pat on its prior commitment to using lithium-ion batteries in its new line of gas and diesel-hybrid SUVs due out in 2009. Does GM have something special going? A lead acid curtain has dropped over the normal channels of buzz in Detroit about engineering breakthroughs, and I suspect that GM is hoping to knock the socks off of industry pundits in 2009 with something special.

I am going to speculate for my readers: I think that GM is looking, for near term marketing, at a some combination of a platinum free fuel cell and a lithium-ion storage battery, and back up power unit, first in a hybrid and then in a fuel cell powered Volt, and I think that the fuel cell they have in mind may be of a type based on nickel metal hydride technology, which was publicly demonstrated two years ago. Next week I'll tell you all about that and what it could mean for the natural resource investment community.

About the Author
Jack Lifton

Jack Lifton is a leading authority on the sourcing and end use trends of rare and strategic metals. He is a founding principal of Technology Metals Research LLC and president of Jack Lifton LLC, consulting for institutional investors doing due diligence on metal- and material-related opportunities.

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