Lithium Industry and Market

The lithium industry continues to be a particularly vibrant market segment and this is expected to continue well into the next decade as the clean energy revolution establishes itself globally. It is lithium’s unique properties which make it a crucial element in high-performance rechargeable batteries that is creating such strong future demand growth projections from industry commentators, which in turn is supporting an attractive medium to longer term market outlook for future suppliers.

Lithium and its uses

Lithium is a chemical element with the symbol Li, and atomic number 3 in the Periodic Table of Elements. It is the lightest solid element at ambient temperature, indeed the lightest metal.

Lithium has numerous uses including in medical applications, ceramics, glass, lubricants and nuclear technology. Most importantly it is a key component of long life, rechargeable lithium-ion batteries, used to power mobile devices (phones, laptops and other consumer electronics). However, in more recent times battery manufacture has been accelerating due to the burgeoning demand in automotive applications (electric vehicles – EVs), and also energy storage systems (ESS) to better utilise renewable energy supply, particularly solar and wind generated power.

Lithium-ion batteries are lighter and can store three times more energy than nickel-hydride and lead-acid batteries. Their unit cost continues to fall with technological improvements, adding further to demand and improving competitiveness.

Supply

Approximately half the world’s lithium chemical production comes from pegmatites – often referred to as hard rock sources – and predominantly from the mineral spodumene. The second main source of current lithium chemical supply are brine deposits, mostly located in South America and China.

Lepidico aims to introduce an additional supply source, from largely ignored lithium mica and lithium phosphate rich deposits, thanks to its proprietary L-Max®technology.

Lithium mica and phosphate minerals, such as lepidolite and amblygonite respectively can also occur within pegmatite rocks but until recently have rarely been of commercial interest. The advent of Lepidico’s L-Max®process provides a new hydrometallurgical solution for extracting lithium carbonate from these overlooked lithium bearing minerals. As a result of its proprietary technology, Lepidico is operating in a much less contested space for mineral feed sources versus spodumene and brine producers. Furthermore, L-Max®is a clean-tech process with competitive capital intensity and operating costs after eco-friendly by-product credits.

Demand

Numerous sources of new lithium supply will be required over the next five to ten years to satisfy the huge demand growth that many lithium commentators now predict. Global lithium chemical consumption jumped to over 200,000 tonnes in 2017, of which approximately 60,000 tonnes was consumed in lithium-ion batteries (LIBs). Between 2010 and 2017 the compound annual growth rate (CAGR) for lithium chemical demand was 11.7%. However, the CAGR for electric vehicle batteries was a massive 60.2% over the same period, albeit from a relatively low base. Many lithium chemical commentators and producers predict that lithium chemical demand will continue to grow at between 16% and 18% annually from 2017 to 2030, with LIBs accounting for the majority of this growth. This being the case, by 2025 lithium demand would be between 630,000 tonnes and 860,000 tonnes of lithium carbonate equivalent (LCE) and by 2030 demand would rise to between 1.4 million tonnes and 1.9 million tonnes of LCE.

Around the globe countries and corporations are embracing clean energy initiatives to improve the environment that we live in, in particular air quality, with EVs playing an important role. China is spearheading the electrification of the world’s automobile industry, as motor vehicles have been among the largest source of pollution in many cities. New energy vehicle (NEV) adoption in China is proving to be rapid, in part due to government incentives but as more model options become available and NEV’s become more affordable such incentives are expected to become unnecessary.

While other lithium applications grow at a slow but steady rate, projected demand growth in batteries, especially for use in EVs and other forms of mobile energy storage is much higher. Furthermore, LIBs are gaining popularity in secondary storage applications which is forecast to become another area of strong demand growth.

It’s all about the batteries…

  • ~700kg LCE is required per GWh of LIB.
  • Roskill foresee possible 1,000GWh of batteries being required by 2026 just for EVs, up from an estimated ~90GWh in 2016.
  • Hence approximately 1Mtpa of LCE would be required by 2026, a mighty 25% compound annual growth rate.
  • Global electric vehicle sales grew 54% year on year in 2017 and are projected to rise by around 66% in 2018, based on data for the first 11 months on the year.
  • Lithium-ion cell costs continue to fall from US$280/kWh in 2014 to below US$130/kWh in 2018. US$100/kWh is seen as the tipping point for EV price parity with ICE vehicles.
  • The cost of lithium ion batteries, as a proportion of total battery cost varies from 2-10% based on size and chemical composition of the battery. All in, lithium price fluctuations should have limited impact on the end user via product pricing.
  • Lepidico sees the opportunity for it to enter the lithium chemical market as a new competitive cost producer with attractive margins throughout the commodity price cycle. The lithium market is relatively opaque when compared to those for many other metals. This however, is likely to change as demand increases, with for example the London Metals Exchange considering its involvement via the introduction of lithium contract to better manage the market and provide greater price transparency.

Silica and its uses

Silica is an oxide of silicon with the chemical formula SiO2, which most commonly is found in nature as quartz and in various living organisms. Silica has various forms which can be important when considering its potential commercial application.  Highly crystalline silica, such as in quartz is not reactive, but non-crystalline or amorphous silica, as produced from leaching mica minerals in acid, is extremely reactive.

Amorphous silica also acts as a pozzolanic material.  Pozzolanic materials do not react with water other than in the presence of lime, which occurs in concrete as a result of cement hydration. Lime is liberated from cement during its hydration at ambient temperatures.  Amorphous silica materials form a class of Supplementary Cementitious Materials (SCM’s), which can be used to replace Ordinary Portland Cement in the manufacture of concrete and in so doing increase its compressive strength and resistance to chemical attack while reducing its carbon footprint.

SCM’s include fly ashes, slag cement (ground, granulated blast-furnace slag), silica fume and amorphous silica. These can be used individually with Portland Cement or blended cement or in different combinations.

Concrete is the most widely used material other than water worldwide. There is about 3.5 billion cubic metres of concrete produced annually worldwide primarily for use in construction related applications.

Potash and its uses

Sulphate of Potash (SOP) is an inorganic compound with formula K2SO4. SOP is a white water-soluble solid that is commonly used in higher value fertilizers, providing both potassium and a source of sulphur. Its high potassium content makes it ideal for encouraging strong plant development, particularly for fruits and vegetables. It also helps to ripen and strengthen plants ensuring they can defend against pest, disease and weather damage.  Globally some 2 million tonnes of SOP is consumed each year.