I do not check the geological news often, but one article in The Conversation quickly drew my attention. A few weeks ago, the Anglo-Norwegian consortium Norge Mining announced the discovery of a massive phosphate rock site in Southwestern Norway, in the region of Rogaland. According to early estimates, the potential yield of the site exceeds 70 billion tons of phosphate rock, which is the equivalent of all known reserves of the material worldwide. If we consider that the two largest producing countries of phosphate rock are China and Morroco (with 85 and 38 million tonnes per year respectively), you can easily understand why the discovery has caused shock waves and excitement among the green-policy apologists in Europe.
Why Are Phosphate Rocks So Important?
Because they are the key resource for producing two critical products in essential industries – phosphate-based fertilisers and LFP (lithium-ferrophosphate) batteries. So far, the assumed shortage of phosphate rock pinned EV enthusiasts against people who pointed out that the lack of fertilisers only aggravates the food crises in South East Asia and Africa. While electric cars are still mainly seen as luxury items, the images of starving children in Sudan or Somalia tip the scales in the debate.
The Rogaland discovery might make the whole argument defunct. If the fertiliser and EV industries do not have to compete for one of their raw resources, the development might be a turning point for both.
Growing Demand And Insufficient Supply. Or Is It?
Analysts expect the LFP market to grow exponentially in the next few years. If it is $10 billion in the US alone today, the projections are for a five-fold increase to $50 billion by the decade’s end. Sceptics have pointed out that such a tremendous rise will put significant pressure on existing resources. There is simply not enough phosphate, nickel, and lithium to produce millions of EVs that must replace the existing ICE cars fleet.
While there is some reason in this argument, it neglects a simple fact – you can never know what geologists will find under the surface of the Earth.
The Hubbert Peak theory is arguably the best-known example of this type of thinking. First proposed in 1956 to describe the impending peak of oil production, it has been largely discredited by the actual numbers. Oil production has indeed reached a peak. But instead of sharply declining due to exhausted reserves, as Hubbert predicted, it has plateaued because of the discovery of new, including unconventional sources of oil.
I see no reason we should expect anything different concerning lithium or phosphates, and the Rogaland discovery proves my point. When you add the recent significant lithium finds in Sweden, India, and Iran, I would say resource shortages are the last thing the EV industry should worry about today.
How Is This A Game Changer For Europe?
Ever since the beginning of the new millennium, Western Europe has made the conscious choice to de-industrialise, moving most of its heavy production overseas to China. The policy had its advantages until the outbreak of the Covid pandemic showed all its inherent weaknesses.
The European Union has scrambled to reverse course, with EV production in Germany leading the way. So far, critics have pointed out that since China is still the #1 producer of phosphate rocks and Chile and Australia – of lithium, it would make little sense logistically to produce EV batteries in Europe. Geology again has turned this argument into rubble. Rogaland and its endless deposits might be only the tip of the iceberg – American geologists believe that Covas do Barroso, a sleepy village in Portugal, might lie atop the biggest lithium deposit on the Old Continent.
With the discoveries mounting, Europe is in a prime position to snatch a leading place among the LFP producers in the world. And this is just the beginning…