16 Nov Lithium – the time is now!
There has never been a better time to source and invest in lithium production.
Currently there are a limited number of economically extractable lithium resources with a concentrated global production – 80% of world supply from Chile (SQM, Rockwood), Argentina (FMC) and Australia (Talison). The majority of Talison supply goes directly to China
These companies have not expanded their lithium hydroxide capacity fast enough to support Tesla’s projected demand for lithium. As a result of their hesitation, an opportunity has been created for Chinese hydroxide producers and their Australian feed stock suppliers.
Panasonic, Tesla’s battery supplier, has imported a lot of lithium from Chinese suppliers recently. In the second half of 2014, lithium exports to Japan from China rose sharply. However, the cost of lithium supplied – which is extracted from the spodumene ore – is much higher than the lithium extracted from lithium carbonate. The addition of Chinese VAT on top of these extraction costs makes it prohibitively expensive. Moreover, historically, the lithium quality from Chinese suppliers has not met the standards required for car batteries. Chinese producers will have to improve the quality to meet the specifications from Panasonic, adding more complexity to their supply chain.
Demand expected to outstrip supply from 2017
The market demand in 2013 is estimated at approx. 165,000tpa with an anticipated CAGR of 10%. Though demand is forecast to outstrip supply from 2017 in China and 2016-17 for the rest of the world.
Production capacity of lithium-ion batteries is anticipated to more than triple by 2020. The Lithium market continues to demonstrate strong demand and tight supply, with market growth of >10% year on year
Existing suppliers announced market price increase of approx. 10% for 2015 Lithium prices are predicted to continue to increase from a level of US$5,000 – $5,500/tonne last year to currently in excess of US$7,000/tonne