Sustainability has many different dimensions in the battery value chain

It has been emphasised in the public debate and in Finland’s national battery strategy that sustainability (or responsibility) provides Finnish industries with a competitive advantage. In the battery sector, sustainability can refer to many different things, such as legislation, approval of the local community (social licence), circular economy or a small carbon footprint.

 In connection with the battery sector, there is often talk of the battery value chain, in which raw materials are processed into finished products so that each stage of the process enhances the value of the product. Sustainability (or responsibility) in the building of this value chain is a complex matter, which involves the extraction and processing of battery minerals and the assembly and recycling of batteries.

In a recent audit, we examined the different meanings of sustainability in the building of the battery value chain and the success of the efforts to ensure sustainable production.

Duration and unpredictability of the permit process are seen as problems

Legislation is the key societal instrument used to steer sustainable development. The environmental impact assessment (EIA) procedure and the environmental permit procedure are reasonably effective in preventing environmental damage and safeguarding natural values in Finland.

However, these procedures also involve problems. Over the years, the EIA and environmental permit procedures have become more extensive and protracted. Companies planning investments often view long EIA and permit procedures as a risk, which delays the start of production activities.

From the companies’ perspective, it is also important that the regulatory environment of the target country is predictable. In mining and battery industry projects, predictability of the permit process is often seen as a problem. The environmental permit process of the battery chemical plant that BASF Battery Materials Finland Oy is building in Harjavalta has attracted a great deal of publicity. The environmental permit granted by the Regional State Administrative Agency for Southern Finland was revoked by the Vaasa Administrative Court and, in the latest development, the Supreme Administrative Court returned the application for reconsideration.

Companies generally assume that courts do not make any substantial changes to environmental permits already granted. However, the revocation of the environmental permit granted to BASF is an isolated case. Environmental permits already granted are not usually revoked and only minor changes are made to them at different court instances.

Approval of the local community is essential

Especially in mining activities, approval of the local community is often referred to as the social licence to operate (SLO). SLO is an interactive process through which approval and trust are gained and maintained, and it is based on the concept of socially sustainable development and corporate social responsibility. The question is to which parties and in what matters the company is accountable.

The social licence to operate is not an administrative permit but a voluntary self-regulation mechanism applied by a company in its stakeholder relationships and supplementing obligatory regulation. It is usually difficult for a mine to operate successfully without a social licence.

In Finland, the problems of the Talvivaara mine in 2012 triggered a heated public debate on the environmental impacts of mining activities. Local residents were concerned about the impacts of the mining accident on the environment, and the accident also highlighted the matter of local approval in connection with mining activities.

After the accident, local attitudes towards the mine have become more positive. The Talvivaara mine is now operated by Terrafame Ltd, which extracts and processes battery minerals, and the new operator has sought to listen to the concerns of local residents and to engage in a dialogue with the local community. Two developments have also made it easier for the company to obtain a social licence: its operations have given a boost to the region and professional fishing can again be carried out in the lakes adjacent to the mine.

Mining projects arouse particularly strong opposition during the exploration stage and when the mine is established. Mines are a major source of income for local communities, which makes them more acceptable, and it often happens that local residents get used to the mining operations. However, even an operational mine can ‘lose’ its social licence if it does something wrong.

In addition to mines, battery industry projects must also obtain the approval of local communities. In Finland, it has been recognised in the Kotka-Hamina and Vaasa regions that battery plant projects arouse fears among local residents. Efforts have been made to alleviate these worries by keeping the local communities up to date on the projects and by listening to their concerns.

Recycling of battery materials is becoming increasingly important

Circular economy is a key component of sustainable development. Recycling of metals can help the mineral resources occurring in the earth’s crust to last longer. An effective circular economy based on the recycling of metals also ensures that their supply can meet the demand and that the mining industry remains on a sustainable basis.

Recycling is the final stage in the value chain of the battery business. Recycling of battery materials will not secure the supply of minerals. Recycled raw materials will only become more important when electrification of transport has made sufficient progress and batteries are removed from use in large numbers.

However, batteries are already recycled in Finland on a commercial basis. Fortum Corporation, a Finnish state-owned company, has a plant in Ikaalinen where decommissioned batteries are processed mechanically. The black mass separated from them is recycled in a hydrometallurgic process at Fortum’s Harjavalta plant, after which it is made into a secondary raw material for new batteries.

The metal recycling requirements laid out in the EU battery regulation (2023/1542) will have an impact on the recycling of battery materials.

Charging a higher price for a small carbon footprint

Carbon footprint means the climate load generated by a product, an activity or a service, and it is often used as an indicator of sustainability and responsibility. The car industry is working to reduce the carbon footprint of its products and the materials used in car manufacturing.

Low climate load may be a requirement for operating a battery business, and a company may also be able to charge a higher price for products with a small carbon footprint. For example, Terrafame’s European customers value battery materials with a small carbon footprint. The bioleaching method used by the company consumes 90% less energy than traditional methods. At the moment, it seems that the company may be able to charge a higher price for battery chemicals with a small carbon footprint.