It’s Hard to Keep Up With All That Lithium Demand

by Laura Millan Lombrana and Jonathan Gilbert (Bloomberg) As established players expand, some newcomers seen struggling; New mine teething problems tightening credit for projects -- ... Producers everywhere have struggled to keep up with demand as electric cars went from almost no sales a decade ago to more than half a million vehicles last year. The battery in a Model S from Musk’s Tesla Inc. uses about 45 kilograms (100 pounds) of lithium carbonate.

“The uncertainty on the supply side is driving prices up and making investors nervous,” said Daniela Desormeaux, CEO of Santiago-based lithium consulting firm SignumBOX. “We need a new project entering the market every year to satisfy growing demand. If that doesn’t happen, the market will be tight.”

Prices of lithium carbonate, the primary base-chemical produced by the industry, more than doubled in the five years to 2016, according to UBS Group AG. The material advanced about 5 percent to average $14,250 a ton in July from June, according to Benchmark Mineral. READ MORE

Excerpt from Bloomberg Businessweek: Miners must tread into sensitive areas, some with government caps on the amount of lithium that can be dug up. About half the world’s reserves are in Chile, predominantly in the arid Atacama Plateau, which straddles the border with Argentina and is home to herders worried about the pollution and water shortages that tend to accompany the mining process, as well as the potential damage to sites they consider sacred. Another deposit is in the picturesque English county of Cornwall, famed for its clotted cream and pirate cove beaches. READ MORE

Excerpt from The New Economy: A steady supply of lithium is now crucial to the auto industry and, as Spencer (Reg Spencer, Mining Analyst at investment firm Canaccord) pointed out, this requires a structural shift in a very old business model: “For the last hundred years, their supply chains have relied on materials that are not scarce, so really the auto companies have never had to worry about the raw materials that they use for their motor vehicles.

“Now, all of a sudden, a $1trn auto industry is moving towards a technology that is based on a very small market in terms of lithium. The aluminium market is about $120bn a year, iron ore or steel markets are over $100bn and the oil market around $1trn.

“Compare that with the size of the global lithium market, at about $2bn, and you start to see how sourcing enough lithium to supply the electrification of their products can be quite challenging.”

If electric vehicles are to run petrol cars off the roads, lithium supply must catch up to accelerating demand. According to Spencer, this will require a hefty $8bn investment by 2025: “Today, we have a reasonable amount of visibility on sources of supply up to 2021 or 2023, beyond that it gets rather difficult to see where a lot of this new production comes from. READ MORE

Excerpt from REnewable Energy World: The Puna Plateau is a region of the Andes Mountains spanning 1,800km across Argentina, Bolivia, and Chile. This region houses the largest proven deposit of lithium on the globe but, at present, only Chile is a major producer of the white metal. Bolivia, with its nationalistic view and poor lithium chemical grades, has been exceptionally slow to respond to the increase in global demand for lithium.

Chile has been a long-time producer of lithium but is challenged due to ongoing political issues, which has delayed the expansion of its lithium assets. Although Chile is expected to increase its annual output, it is clear that this will not occur in the mid-term, which provides an opportunity for other countries that are capable and willing to invest in this strategic metal to increase supply.

Australia has been the most rapid to respond by quickly moving to increase hard-rock supply into China. Although there are still processing bottlenecks for the exported hard-rock material, it is a step in the right direction for Australia and the entire battery supply chain.

Due to the change in political landscape and increase in global lithium demand, Argentina is now well-positioned to benefit from production expansion at existing facilities and Greenfield projects. In recent years, FMC, a multinational chemical company, has expanded its production capabilities at Salar de Hombre Muerto. The expansion saw an increase in annual output from 17,000 tonnes of lithium carbonate equivalent (T LCE) to 22,000 T LCE.

On the exploration side, in the past two years, dozens of junior exploration companies have raised capital and flocked to Argentina to secure land rights and undertake initial drilling programs. Although most of these companies lack the technical expertise to bring lithium brines from exploration to production, some of them will move forward due to the global undersupply that is expected to last over the next half decade.

In December, NextView, a Chinese mineral investment company, purchased Toronto-based lithium exploration company Lithium X. Prior to the $350 million acquisition, Lithium X was developing its flagship asset in Salta, Argentina, which had resource estimates of over 2 million T LCE. READ MORE