Hydrogen Fuel cars have been the forgotten cousin in the EV market. It was no more than six months ago, over a typical BBQ lunch, I expressed my opinion that Hydrogen Fuel cells had a lot of advantages. My guests would disagree and insisted that electric cars would dominate. The race for emission targets in 2020 seems to be fueling all the discussion about cleaner car emissions, but I fee that the debate should be more on what is the most economical means for the First World and Third World economies. The Electric Power or Hydrogen Fuel Cell, in my opinion, is more about something new or you can use existing infrastructure, which means, spend more money or spend less and use what you have already.
When we think about EV and Hydrogen Fuel Cell vehicles, we forget that commercially, according to CNBC, there are over 20,000 hydrogen fuel celled forklifts running around the warehouses and distribution centres across the US in more than 40 states including factories of Amazon and Walmart. Also, there are hydrogen fuel cell buses in use or planned in the US states of Ohio, Michigan, Illinois and Massachusetts, as well as California. Hydrogen Fuel Cell buses are also now increasingly being used in Asia and Europe.
The central aspect of hydrogen fuel cells is the ability to adapt to existing cars and save users money instead of buying a completely new vehicle.
What are the current thoughts?
There is no question about the technology with the widespread use of hydrogen vehicles already in place. Since my last article – Hydrogen Cars – Are they safe? How do they work?– I think there are now clear results that the “potential” of Hydrogen Fuel Cells is real and are being embraced.
Hydrogen infrastructure is coming slowly but is building momentum with US news reporting a breakout in the building of hydrogen stations. There is not going to be an instant rise as reports show that most of these ecosystems will not be at maturity until 2020. Some argue that this slow build up is keeping doors opened for the EV market.
![A bus recharges at a hydrogen station in Foshan, Guangdong province. [Photo by Zheng Junbin / for China Daily]. Samso Insights.](https://static.wixstatic.com/media/9d665f_9d7c1f7b616640299eeb2f8f2de0ca35~mv2.jpeg/v1/fill/w_147,h_98,al_c,q_80,usm_0.66_1.00_0.01,blur_2,enc_auto/9d665f_9d7c1f7b616640299eeb2f8f2de0ca35~mv2.jpeg)
The fact that the Chinese government is now cancelling subsidies to manufacturers of EV and looking to cancel all grants in 2020 is sending a loud message to the market. At the same time, there is now more news being released outlining that the Chinese government is supporting Hydrogen Fuel cells is a clear message that “they” don’t think this is going to be the only alternative to clean energy.
China Daily reports that the Premier Li Keqiang included the development of hydrogen stations for new energy vehicles for the first time in his Government Work Report this year, 2019.
This move is a clear indicator of the government’s endorsement of the hydrogen energy economy. China has been actively developing hydrogen energy in recent years to make the nation’s automobile industry cleaner and more efficient. Many domestic companies have been actively pushing forward their hydrogen industry layout.
Recently, Great Wall Motor Co Ltd, one of the country’s largest sport utility vehicle and pickup manufacturers, is making hydrogen fuel cell electric vehicles a new focus for its business. If you need convincing if all these “talks’ are severe, the company has invested more than 1 billion yuan ($149 million) in research and development in hydrogen energy and fuel cell vehicles.
![Visitors look at a hydrogen energy car, which was displayed during the Third International Hydrogen Fuel Cell Vehicle Congress in Rugao, Jiangsu province, on Oct 23, 2018. [Photo by Xu Congjun / for China Daily] Samso Insights](https://static.wixstatic.com/media/9d665f_bb4e30068f5145418f04a663a2983b60~mv2.jpeg/v1/fill/w_162,h_108,al_c,q_80,usm_0.66_1.00_0.01,blur_2,enc_auto/9d665f_bb4e30068f5145418f04a663a2983b60~mv2.jpeg)
Yin Tongyue, chairman of Chery Automobile Co Ltd and a deputy to the 13th National People’s Congress, proposed at this year’s two sessions the drafting of a national development strategy to promote the healthy development of the hydrogen energy industry.
One must remember that the discussion at the Party meetings is as good as endorsements for the path forward. Don’t get me wrong, I am not implying that China is abandoning EV.
What does this mean for Lithium and Cobalt?
The demand for lithium and cobalt is not going to disappear in a rush nor the long term. We are not going to see abandoned lithium and cobalt mines. What I do feel is that this price range is not going to be rising in the medium term nor the long term. That is my opinion, and the evidence coming out seem to be more supportive than contradictory. When I wrote my article – Hydrogen Cars – Are they safe? How do they work? – There was not a lot of information, especially from the “China opinion”. However, for this article, there is plentiful of information which I have had to summarise to reduce the avalanche of research material.
This sudden influx of material on Hydrogen Fuel Cells and China’s public announcement of its adoption of the technology seem to be a clear message that there is a movement towards the Hydrogen Fuel Cell space. What this means for the Lithium and Cobalt industry or The Battery Minerals is that those who are efficient will be around and those with slim margins and all the negative aspect of a mineral resource project will be left behind. If your project does not meet the grade, cost and deliver marks, then you may as well give up. These factors have more of implication in the Lithium space as there is the divide of Hard Rock against Brine deposits.
Those that are already producing will be the last to go, and those with the slimmest of margins will be next on the list to leave the industry. These kinds of conversations may seem a bit outrageous, but from a “Nostradamus” point of view, I think that is pretty on the mark.
What Kind of Projects will make the List of Hopeful Survivors?
In a turn around of thoughts, I now think that for Brine Lithium projects may be the favoured style. I say this because the Brine mines are less expensive to run in the long run. The argument has always been that the Spodumene deposits are a higher grade, but their OPEX are larger. The Brine deposits are still struggling with technology to get it to happen. However, it seems that it is now just a matter of time before that is a reality. It is no longer or at least less of an unknown if the technology can make things work.
I will admit that I have not followed the Brine space as much, but from what I have read, the technology is getting closer to success now. The upside with the Brine deposits are the supply is never going to be an issue, and there is no doubt that OPEX will be lower. I am not sure about the CAPEX, but my two cents worth tells me that it has to be smaller than the hard rock cousins. Currently, the technology is the barrier.
As for Cobalt, the comments are much more straightforward. There is no need for a debate. The African sources are sufficient to feed the market. There is no other deposit in the world that will be bigger than those already in place in Africa and Morocco. The funding to explore for more sources have all disappeared. An announcement of a cobalt project no longer gets the capital market out of bed. If this revolution with Hydrogen Fuel Cell takes speed, the need for Cobalt will not see a significant future supply issue.
Conclusion
The whole Samso process is to look at things from a different angle, a different thought and to make the story interesting. This full Hydrogen Fuel Cell story is one that Samso thinks is not well understood and almost forgotten. Everyone is so focused on EV and the renewable story centred on electricity. Hydrogen Fuel Cell buses are now being trialled all over the world. A few years ago, I saw a technology applied to the storage and transportation of hydrogen. I never thought about the industry and took me a long time to understand the market potential. Now thinking back, that is more than a worthwhile project.
The industry research is showing there is an increase in Hydrogen stations and the manufacture of Hydrogen Fuel Vehicles. California is the model state that has a statewide link of stations. Holywood is now catching on the bandwagon and has even started a business that leases Hydrogen vehicles to the rich and famous for creating a trend. We all know who these trends can create revolutions that snowballs into a mass hysteria of “I want these cars because they are trendy” scenario.
After doing my first research into Hydrogen Fuel Cell vehicles, I have argued that this could well be better than EV. The history of hydrogen tanks blowing up is no more. The cost of using the Hydrogen Fuel Cell is negligible. The only issue is the cost of producing Hydrogen. However, like all technology, when there is a commercial win, the market usually funds the solution, and that seems to be the happening process from what I am reading.
The Japanese industry is also looking at Hydrogen Fuel Cell because the dense nature of the cities is not going to allow generous space for recharging stations. The adaptations of existing stations for refuelling hydrogen makes perfect sense. This is also the case in all the densely populated spaces such as New York. This ability to use existing infrastructure will make Hydrogen Fuel Cells more practical. Remember that refuelling will be less than five5 minutes as opposed to significantly more minutes for EV.
This resurgence to the Hydrogen Fuel Cell energy source could make the brine lithium industry more competitive and be more “investable” than the traditional spodumene deposits. The downside with that statement is that if the technology does not work, the brine lithium sector will not end well. Irrespective, if the Hydrogen Fuel Cell revolution happens, I don’t see the lithium market, in general, making any bullish runs.
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