Electric vehicle revolution drives demand for lithium-ion batteries

• Where are the new big lithium projects, who is processing them and how much of the supply chain does China dominate?
• With a push by some automakers to diversify their supply chain risk, how is the market for lithium developing outside the China mainstays?

Managing consultant, James Whiteside, shares his thoughts in a Q&A session during the Thomson Reuters Global Base Metals Forum.

Q: The landscape seems to be changing so quickly.. we hear about lithium-ion batteries really taking off around 2021… Will there be enough battery-ready supply by then?

A: Yes, certainly an area we have seen more interest from customers over the last year or so. In terms of lithium-ion batteries, the main market to look at is EVs (electric vehicles). We see battery costs reducing significantly over the next few years to the point in the mid-2020s when EVs begin to become cost competitive with the traditional petrol/diesel driven vehicles, so it's a bit further on when we see lithium-ion battery demand really accelerating.

Q: And how does that match the supply side? Are we looking at any severe pinch points over the coming years, or is supply pretty much tracking in line?

A: On the lithium supply side a lot of the brine production is due to come on around 2020 and 2021 will be a big year for supply growth from Chile and Argentina. So in 2021 we expect to see the lithium chemicals market over supplied. In the near term it will be spodumene conversion capacity that is the bottleneck for supply. That's hard rock production. Many new mines are coming on in Australia this year producing lithium in the form of spodumene concentrate. Spodumene concentrates require significant further processing (roasting and leaching) to produce the lithium carbonate and hydroxide, which are the chemicals used to manufacture battery cathodes. 

Q: And are we seeing sufficient roasting and leaching capacity as well?

A: That's the conversion capacity - conversion plant development has been rapid, but not quite sufficient to keep up with mine supply. There's a bit of lag in development timeframes versus mine supply.

Q: So for example, Tianqi, the spodumene project in Kwinana, Western Australia is one - is it the largest?

A: Yes - at 48 Kt LCE hydroxide it will be the both the largest lithium hydroxide producing operation and the biggest converter in the world, once in full production.

Q: And that's next year as far as I understand. Are there many other major projects that are coming up that we should keep our eyes peeled for?

A: First production is expected in mid 2019 and first product sale by the end of 2019 - from the first train, but they've also began construction of the second. Yes, in terms of converters outside China, Nemaska are developing an integrated converter for the Whabouchi mine. So they'll be using their own concentrate to produce lithium hydroxide and lesser carbonate.

Q: In Canada?

A: That's right. 

Q: So I understand there's concern in some quarters about so much of the lithium ion-battery supply chain being dominated by China. Is that actually true? (For lithium)?

A: Yes - for example up until now all spodumene conversion currently happened in China and further down the value chain - China dominate cathode precursor manufacturing.

Q: Here's a recent story with some background about Chile's government asking antitrust regulators to block the sale of a stake in Chilean lithium company SQM to China's Tianqi on the grounds it would give it an unfair advantage in the global race to secure resources to develop electric vehicles.

A: But in terms of lithium extraction only a relatively small amount originates in China.

Q: So how would you categorize Tianqi which is obviously based in Australia, but I presume will be selling into China?

A: Yes and this is what we're hearing from auto manufactures, looking to secure offtake either from cathode manufactures or in some cases lithium chemicals - most of Chinese production is already tied up with sales to other Chinese auto or battery companies.

Q: Yeah, we also understand that some automakers are looking to develop a supply chain closer to Europe. How is that developing?

A: But for Australia there's signs of a battery industry emerging. In Europe, it's quite far off from a lithium prospective at least. Although there's been production in lepidolite (hard rock) in Portugal for some time, that has typically been consumed directly in the ceramics and glass industries.

Q: Well that would be very nice if we could do more than just digging it up and shipping it out!

A: Exactly, the first lepidolite to battery-grade conversion facility began production in 2017 in China. So there's potential there. Also Lepidico is developing a new technology which is aiming to reduce the production costs from lepidolite.

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