Plenty of lithium to go around for now
New Aussie mines outpaces battery production in short term Metal Tech News Weekly Edition – January 15, 2020
Last updated 6/27/2020 at 5am
Half as dense as water, lithium is the lightest of all metals. Because it is highly reactive, however, it would not work to make super buoyant boats. Instead, this metal believed to be one of only three elements created with any abundance during the Big Bang (the other two being hydrogen and helium) has found a use that takes advantage of both its light weight and reactiveness – lithium-ion batteries.
"Lithium consumption for batteries has increased significantly in recent years because rechargeable lithium batteries are used extensively in the growing market for portable electronic devices and increasingly are used in electric tools, electric vehicles and (electrical) grid storage applications," the United States Geological Survey penned in its 2019 commodities report.
In fact, roughly 56 percent of the lithium used during 2018 went into batteries, compared to only 35 percent in 2014.
Electric vehicle manufactures, green energy advocates and consumers can rest easy knowing that there is currently an abundant supply of lithium-ion batteries' namesake metal.
This is because miners, especially in Australia, were able to quickly ramp up lithium production ahead of the rapidly growing demand being driven by EV and renewable energy storage.
Those keeping close tabs on lithium markets, however, caution that despite the current oversupply of lithium, and the drop in prices that comes with that, miners need to remain diligent in bringing on new supplies of this battery metal to stay out in front of the skyrocketing demand expected over the next four decades.
"If forecasts for EV penetration are to be believed – along with the billions of dollars car companies have sunk or will sink into EV development and production – then lithium demand is set to increase 10-fold over the next decade." Asa Bridle, business development manager, Savanah Resources, told S&P Global Platts.
This rapid growth in demand is expected to eat up all the excess inventory and renew pressure for new supplies of this key ingredient in lithium-ion batteries.
Taking advantage of the supply-demand paradigm tipped in favor of the buyer, luxury German automaker BMW Group recently secured a five-year supply of lithium for its coming EV models by purchasing this battery ingredient directly from mines in Australia.
Hardrock overtakes brine
Because of it is high reactivity, or tendency to lose or gain electrons, pure lithium metal is not found in nature. Instead, lithium is locked in minerals that are primarily recovered from brines, salt rich waters with lithium in them, or spodumene, a hard rock mineral.
Lithium brines are typically found in underground reservoirs formed in tectonically active, arid regions. Places like the American Southwest, South America and certain parts of China.
South American brine operations have traditionally supplied the majority of the world's needs.
Battery driven lithium demand, however, has pushed the growth of hard rock spodumene mining in Australia.
By 2018, Australia mines produced approximately 51,000 metric tons of lithium, or roughly 60 percent of the 85,000 metric tons mined globally that year. Due largely to the emergence of the Australian spodumene mines, global supplies of lithium have increased nearly 269 percent since 2015.
This has pushed the lithium market into oversupply, resulting in a plummet in prices for this key battery ingredient. After nearly doubling in price from US$8,650 per metric ton in 2016 to roughly US$17,000/mt in 2018, battery-grade lithium prices have dropped back to around US$11,000/mt.
BMW buys Aussie lithium
The oversupply of lithium, along with the lower prices that go with it, have created a buying opportunity for battery and EV manufacturers.
German luxury automaker BMW has grasped this opportunity with a 540 million euro (US$600 million) deal to source its lithium needs from Australia over a five-year span that began this year.
"In this way, the BMW Group is securing 100 percent of its lithium hydroxide needs for fifth-generation battery cells in its high-voltage batteries," said Dr. Andreas Wendt, member of the BMW board responsible for purchasing.
Wendt said BMW plans to have 25 electrified models in its line-up by 2023, more than half of which will be fully electric.
"Our need for raw materials will continue to grow accordingly," he said. "By 2025, for lithium alone, we expect to need about seven times the amount we do today."
BMW believes that the ethically responsible sourcing of lithium and other raw materials that go into its batteries begins in the mines and carries through the entire supply chain.
"Sustainability is an important aspect of our corporate strategy and plays a central role in expanding electromobility. We are fully aware of our responsibilities – lithium and other raw materials must be extracted and processed under ethically responsible conditions," said Wendt.
The German carmaker said the spodumene sourced lithium from Australia is mined "under the strictest sustainability standards."
The Australian lithium contract is part of BMW's larger plan to directly buy the materials that go into powering the fifth generation of battery cells powering its upcoming models, ensuring its customers that these materials are sourced ethically.
The company is currently working on deals to source cobalt – a battery metal that has been plagued by human rights abuses in the Democratic Republic of Congo (DRC) – from Australia and Morocco.
These raw materials purchased by BMW will be supplied to the CATL and Samsung SDI, which are producing the batteries going int BMWs.
"In this way, we are securing our long-term battery cell needs," said Wendt.
This also ensures BMW has secured its lithium needs before the battery market mops up the excess supply and the mining sector must once again race to keep up with demand driven by the lithium-ion battery market.