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BMW Group signs supply contract with Ganfeng for sustainable lithium from mines in Australia

As part of its electromobility expansion, the BMW Group is deepening its existing business relationship with Ganfeng Lithium Co., Ltd. based in Jiangxi (China). The two companies have signed a supply contract for the lithium needed as a key raw material for battery cells. The contract is for a term of five years (2020 – 2024).

“The projected order volume totals €540 million ($599.4 million). In this way, the BMW Group is securing 100% of its lithium hydroxide needs for fifth-generation battery cells in its high-voltage batteries,” said Dr. Andreas Wendt, member of the Board of Management of BMW AG responsible for Purchasing and Supplier Network.

“Alongside cobalt, lithium is one of the key raw materials for electromobility. With the signing of this contract, we are securing our lithium needs for battery cells,” continued Wendt. “We aim to have 25 electrified models in our line-up by 2023 – and more than half will be fully electric. Our need for raw materials will continue to grow accordingly. By 2025, for lithium alone, we expect to need about seven times the amount we do today.”

Sustainability and security of supply are important factors in the expansion of electromobility. For the BMW Group’s purchasing experts, ethically responsible raw material extraction and processing begins right at the start of the value chain. They are intensively involved throughout the battery cell supply chains – all the way down to the mines themselves. Compliance with environmental standards and respect for human rights have absolute priority.

“Sustainability is an important aspect of our corporate strategy and plays a central role in expanding electromobility. We are fully aware of our responsibilities: Lithium and other raw materials must be extracted and processed under ethically responsible conditions,” underlined Wendt. Ganfeng extracts lithium by mining so-called hard-rock deposits in Australia under the strictest sustainability standards.

The BMW Group already publishes the countries of origin of the cobalt it uses on its website. For the upcoming fifth generation of battery cells, the company has also restructured its supply chains and will be sourcing both lithium and cobalt directly from 2020, making the raw materials available to the two battery cell manufacturers, CATL and Samsung SDI. This ensures full transparency over where raw materials come from. Cobalt will be sourced directly from mines in Australia and Morocco in the future. Supply contracts will ensure the company’s security of supply up to 2025 and beyond.

The BMW Group also recently announced that it is increasing the order volume for battery cells from CATL to €7.3 billion ($8.1 billion) (contract: 2020 to 2031) and also signed a long-term contract worth €2.9 billion ($3.22 billion) with Samsung SDI for its fifth-generation electric drive trains (contract: 2021 to 2031). “In this way, we are securing our long-term battery cell needs. Every cell generation is awarded in global competition to the leading manufacturer from both a technology and a business perspective. This ensures we always have access to the best possible cell technology,” added Wendt.

The BMW Group’s fifth-generation electric drive trains from 2021 on will also be produced entirely without using rare earths. “This means we will no longer be dependent on their availability,” emphasised Wendt.

The BMW Group possesses extensive in-house expertise throughout the entire value chain for battery cell technology. In-house battery production takes place at BMW Group Plants Dingolfing (Germany) and Spartanburg (USA), and at the BBA plant in Shenyang (China). The BMW Group has also localised battery production in Thailand and is working with the Dräxlmaier Group in this area.

In mid-November, the company opened its Battery Cell Competence Centre in Munich. The aim of the competence centre is to advance battery cell technology and introduce it into production processes. The company is investing a total of €200 million ($222 million) in the location, which is set to create up to 200 jobs. The production of battery cell prototypes makes it possible to fully analyse and understand cell value creation processes. “Whether we set up our own standard production of cells at a later date will largely depend on how the supplier market develops,” according to Wendt.

The BMW Group has formed a joint technology consortium with Swedish battery manufacturer Northvolt and Umicore, a Belgian developer of battery materials, for the purpose of developing the cell technology crucial to electromobility. The cooperation will focus on creating a complete, sustainable value chain for battery cells in Europe, extending from development and production all the way to recycling. Recycling of battery components plays a decisive role in closing the materials cycle as far as possible and maximising reuse of raw materials as demand for battery cells grows.

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