Battery and energy-storage materials

Why the concentration exists

Battery materials encompass lithium, cobalt, nickel, manganese, graphite, and the electrolyte and separator inputs required for lithium-ion cell production. These materials undergo chemical conversion from mined ores and brines into precursor compounds that determine battery energy density, safety, and cycle life. The supply chain concentrates in China because sustained government support totaling $230 billion from 2009 to 2023 built dominant processing infrastructure. That investment created barriers to entry elsewhere, as new capacity requires comparable capital commitments and years of qualification with cell manufacturers.[14][11]

Geological endowment reinforces concentration, as specific regions dominate extraction of key inputs. The Democratic Republic of Congo accounts for more than half of the world's cobalt mining. South Africa holds the world's largest manganese deposit, accounting for around a third of global supply. Two-thirds of the world's graphite mining occurs in China, which gives domestic refiners direct access to anode feedstock.[15]

What the evidence shows

Who supplies it

Mining operations for lithium span hard rock and brine sources across multiple continents. Significant hard rock lithium resources are located in Australia, the United States, China, sub-Saharan Africa, Europe, Canada, Mexico, and Russia. Substantial brine lithium resources are located in the Lithium Triangle of South America, which spans Chile, Argentina, and Bolivia. Chinese companies control 25% of the world's lithium mining capacity, securing feedstock for domestic refining.[10][8]

Cobalt and nickel supplies originate from concentrated geographic sources. The Democratic Republic of Congo supplies more than half of global cobalt output, while China and Canada each contribute about 6%. Russia was the third-largest nickel producer in 2021, producing over 200,000 tons. These concentrated sources create dependencies that propagate through the battery supply chain.[15][18]

What it depends on, and what depends on it

Lithium-iron phosphate batteries now account for around 90% of battery storage deployments as of 2025. NMC chemistry continues to evolve for high-range vehicles, with research focusing on high-nickel variants to boost energy density. Tesla has pioneered battery chemistries that reduce or eliminate cobalt, including lithium iron phosphate alternatives. These chemistry choices determine which materials face the strongest demand growth.[4][2][17]

Downstream demand for battery materials reached 108 GW of new storage capacity deployed worldwide in 2025, 40% more than in 2024. China accounted for around 60% of global battery storage additions in 2025. The U.S. grid may need between 225 and 460 gigawatts of long-duration energy storage by 2050, requiring $330 billion in capital. This scale of deployment will multiply requirements for refined battery materials over coming decades.[4][5]

Where it sits in the stack

What would break it

Supply deficits are projected across multiple materials in the near term. Short-term deficits were expected for lithium in 2022-2023, with tight supply for graphite by 2024, manganese by 2025, and nickel by 2029. By 2040, recycling could contribute up to 51% of cobalt and 42% of nickel demand in the European Union. These projections indicate that secondary supply from recycling may partially offset primary extraction constraints.[7]

Alternative battery chemistries could reduce dependence on constrained materials. Sodium-ion chemistry will attract strong interest for cost-sensitive applications, with manufacturers expected to deploy sodium-ion batteries increasingly in stationary energy storage and low-cost mobility solutions in 2026. China dominates the sodium-ion supply chain, which limits the diversification benefit for Western buyers. Iron-sodium battery storage systems have achieved 83% round-trip efficiency, competitive with high-performance lithium-ion.[3][12]

Solid-state batteries represent a potential disruption to liquid electrolyte requirements. These batteries replace the liquid electrolyte with a solid material and promise higher energy density, improved safety, and faster charging times. The technology remains in early stages of development but could reshape material requirements if commercialized at scale. Investors are monitoring progress closely, recognizing that a breakthrough could create competitive advantage.[1]

What to watch

Chinese battery manufacturers announced plans to add over 600 GWh of new energy storage system production capacity in the first two months of 2026. Nineteen mainland Chinese battery producers were set to invest a combined 180 billion yuan, equivalent to $26.3 billion, to build new lithium-ion battery factories. This expansion would add up to 900 GWh of annual production capacity. About 70% of the new capacity would serve the energy storage market, with the remaining 30% serving electric vehicles.[13]

Tesla's LFP cell factory at Gigafactory Nevada is scheduled to begin production in early 2026 at an initial annual capacity of 7 GWh. The facility uses equipment from CATL and represents an effort to domestic LFP production in the United States. Eos Energy Enterprises expects to manufacture 8 GWh of zinc-bromine battery storage capacity annually by 2026 at its Turtle Creek, Pennsylvania facility. The project received a $303.5 million loan guarantee from the Department of Energy in December 2024.[16][6]

Asahi Kasei's Canadian separator project in Port Colborne, Ontario, is scheduled to begin commercial production in 2027. The project involves a total investment of $1.24 billion and is expected to have an annual production capacity of 700 million square meters of coated membrane. This facility would add separator capacity outside China, addressing a concentrated segment of the supply chain. The expansion comes as Japanese companies' global separator market share shrank from 35% to 20% between 2018 and 2021.[9]

Related nodes

Sources

1. ch-open.ch · 2026-07-09T11:17:16
2. chemistryworld.com · 2026-05-18T00:00:00
3. batterybusinessclub.com · 2026-04-27T10:03:54
4. iea.org · 2026
5. energy.gov
6. energy.gov · June 2022
7. rmis.jrc.ec.europa.eu
8. eia.gov · 2023
9. cen.acs.org · 2026-10-01
10. sfa-oxford.com
11. csis.org
12. powermag.com
13. scmp.com · 2026-04-09
14. carnegieendowment.org · 2030
15. teslathunder.com · December 2022
16. chargedevs.com · March 6, 2026
17. eszoneo.com
18. cleantechnica.com