David Merriman, Research Director at Project Blue, sheds light on key topics in electromobility, batteries, and raw materials.
Ahead of the Critical Materials Conference: EV & Battery 2025 in Germany’s financial hub of Frankfurt am Main, hosted by market intelligence firm Project Blue, we sat down with Research Director David Merriman for insights into the evolving critical mineral markets.
Mr. Merriman, thank you for taking the time. In your opinion, what were the most significant developments in critical raw material markets in 2024?
There have been numerous developments in critical raw materials markets within 2024 across the wide range of markets covered, though there have been some stand-out developments that have impacted the markets more widely. China’s introduction of trade bans on germanium, gallium and antimony exports to the United States in December 2024 represented intensifying trade tensions between the two nations. The trade bans, imposed as a retaliation to the USA imposing limits on Chinese computer chip manufacturers, indicate both nations’ willingness to disrupt international trade of critical materials and the end-use applications which consume them. With China being a dominant supplier of several critical minerals to the global markets, there is a heightened risk to international supply chains of many critical raw materials, particularly for manufacturers in the USA.
Staying in the USA, the decision by the US House of Representatives in September 2024 to repeal the Environmental Protection Agency’s tailpipe emissions regulation introduced earlier in 2024 resulted in a significant slowing of projected battery and plug-in hybrid vehicle sales projects in the second-largest automotive market. This has had significant impacts on the demand outlook for several critical raw materials, particularly those linked to Li-ion batteries such as lithium, graphite, nickel, and cobalt. The slower uptake of electric and hybrid vehicles in the USA over the coming decade will also impact markets associated with the automotive industry, such as semiconductors, magnets, LEDs, and lightweight alloys, impacting a considerably wider range of critical materials markets.
Finally, within the European Union, the commencement of the EU Critical Raw Materials Act (CRMA) will see European manufacturers forced to form more diverse supply chain sources, assist in developing EU-based mining and processing capabilities, and work towards building a circular economy via boosting usage of recycled critical materials feedstocks. The introduction of 2030 targets in the CRMA is expected to see EU-based manufacturers scramble to lock in the limited EU-based mine, refining, and recycling production capabilities existing in key critical raw materials markets such as lithium, rare earth, and nickel. This will likely push higher prices for materials within the EU and could see manufacturers choose to relocate manufacturing capabilities to other regions instead.
Looking ahead, which of these trends are likely to continue in 2025?
The intensifying global trade situation between the USA, China, and an increasing number of counterparts is expected to continue in 2025, as has already been observed in the first month of the year. The introduction of further tariffs and trade bans on critical raw materials, along with other non-critical materials markets, is expected during 2025, with US President Trump stating that he wants to phase out all Chinese imports of essential goods, restrict the ability of US companies to invest in China, and revoke China’s most-favored-nation (MFN) trade status established with the WTO. Further worsening of international trade relations is expected to slow global demand growth in critical materials markets, cause the formation of more regional supply networks, and result in inflationary pressures on commodity prices within import-dependent regions.
Under the Trump Administration, the reinstating of more stringent emissions regulation within the USA is considered unlikely in 2025, with the Republican party being the driving force behind their repeal in 2024. As a result, the slower EV uptake within the USA looks to be the new normal, which will continue to weigh on demand growth for several critical materials. Within the EU, a kickback from EU-based consumers of critical materials and a lack of upstream development in key critical materials markets could see CRMA targets relaxed, particularly if key industries start to investigate migrating from the EU to lower-cost regions with less regulation.
The Critical Materials Conference: EV & Battery 2025 in Frankfurt will bring together key stakeholders from politics, industry, and financial institutions in late February.
Given the conference’s focus, what are currently the key topics in electromobility, and how might they impact raw material demand?
A key topic that is always of high importance is the evolution of cathode chemistries. Over the past few years, lithium iron phosphate (LFP) market share has continued to rise as a low-cost alternative to nickel-based chemistries. This rise has been particularly prevalent in China, where there has been a vast build-out in cathode (CAM) and precursor (pCAM) production capability to the point at which the market is now flooded with high-quality, low-cost LFP CAM. Access to this (and other raw materials) has been a game-changer for OEMs in China, who can now produce excellent EVs at a lower cost than ICE counterparts. Outside of China, demand is also expected to rise for LFP to help bring EV costs down and to entice new mass market consumers. However, the limited LFP CAM production capability ex-China means that Chinese exports of EVs, battery cells, and CAM will be relied on more heavily over the coming years. For raw materials, a shift in market share between iron-based and nickel-based chemistries has a substantial impact on respective demand. As lithium carbonate and lithium hydroxide are typically used for the synthesis of LFP and high-nickel Lithium nickel manganese cobalt oxides (NCM), respectively, a change in chemistry outlook has a direct impact on the quantities required of these two lithium forms. Moreover, cobalt and manganese are not present in LFP but are core contributors to the makeup of NCM. Material balances can, therefore, become unsettled by changes in cathode chemistry outlooks and variations in OEM roadmaps. Chemistry strategy is paramount for OEMs, cell manufacturers, and cathode producers looking to invest upstream and secure the relevant quantities of upstream materials.
Another key topic is the rise of plug-in hybrid electric vehicles (PHEVs), where 2024 global sales increased 56% compared with 2023 figures. China contributed to the vast majority of this growth in 2024, whereas Europe and North America saw mixed growth rates throughout the year. PHEVs are a stepping-stone technology and are especially attractive to consumers who are unwilling or unable to purchase a battery electric vehicle (BEV). Although this is primarily a China story, PHEVs are still estimated to be a growth vehicle segment moving forward, and OEMs will be allowed to offer compelling alternatives to boost EV sales amidst tightening emissions standards. A shift towards PHEVs at the expense of BEVs would result in softening demand across the battery raw materials as these models contain smaller battery packs. However, it is important to assess where PHEVs are taking market share from, as share taken from ICE models will result in increasing raw material demand.
Frankfurt often refers to itself as the heart of Europe and serves as a major financial hub, being home to the European Central Bank. However, internationally, Germany and the EU seem to be falling behind in the race for critical raw materials. Why is that?
On the extractive side, geographical constraints for the raw materials are unavoidable in some cases. However, the EU has fallen behind in refining/processing capability – an area where China has come to dominate across a wide range of raw materials. Many of these processes are energy intensive and, without proper regulation, environmentally damaging, which has led to much of the industry shifting from industrial sites in the EU to China and other parts of Asia over the past years and decades. This was coupled with a very clear and firm strategy by the Chinese state to support the growth and build-out of a vast amount of refining/processing capacity for many raw materials, which has led to the widespread availability of low-cost, high-quality materials. China has also made considerable technological advancements to elevate itself as a world-leading material producer. For the EU, bringing critical raw material production up to the speed needed to match domestic demand growth requires significant investment and time, which is not always available. The EU could elevate itself through collaboration and innovation. This would likely see a shift and return of industry to the EU. However, it is dependent on the eagerness of industry players to engage in partnerships and the cost-competitiveness of industry innovators.
How can Project Blue support companies in navigating the complex market for critical raw materials?
Project Blue provides independent market intelligence to support companies across critical material supply chains. Critical material markets are increasingly opaque, interconnected and rapidly-evolving, resulting in the need for market participants to mitigate risk strategically and operationally. Project Blue’s global team of analysts conducts both primary and secondary research to understand the complexities of these supply chains and translate this knowledge into accurate data and actionable insight for our clients. Through regular research, bespoke consulting, and global events, we support our clients with their strategic and investment planning.
David Merriman – EV and battery materials expert with 10+ years in rare earths and critical minerals. Now at Project Blue, formerly at Wood Mackenzie and Roskill. Photo: Project Blue
Article photo: Elektronik-Zeit via Canva