Keeping up with market demand for lithium
By Blaine Denton
The demand for lithium has been steadily increasing in recent years, due in large part to the ever-growing prevalence of mobile devices, which require lithium-ion batteries. According to research from the Tru Group, batteries account for 50% of total global demand for lithium. Beyond its applications for energy storage, lithium is used in lubricating greases, glass and frits, which are used in industrial ceramic glazes.
Part of the challenge in meeting increasing demand for lithium lies in the difficulty in mining and production. Felipe Smith, Sociedad Química y Minera (SQM), explained that the metal is extracted from water in mineral springs, brine pools, and brine deposits, at which point the metal undergoes electrolysis. Other producers mine the mineral through traditional extraction processes. These processes include mining the ore and separating the lithium into a usable powder. The former method is less costly, but more complicated. Given these challenges and the resulting low supply coupled with high demand, it is no surprise that lithium prices are currently at an historic high.
In addition to portable devices, plug-in hybrid electric vehicles (PHEVs) and electric vehicles (EVs) make up a significant portion of lithium demand. Currently, demand from portable electronics has continued to grow at a rate of 25% per year, which could potentially leave only 30,000 tonnes of chemical-grade lithium for the vehicle market. Tesla Motors, in particular, has ambitions to take up as much of the supply as possible.
Historically, lithium greases have accounted for around 15% of demand while batteries made up roughly 30%. Today, energy storage accounts for 50%.
According to Meridian International Research, an independent strategy research and technology consultancy, lithium carbonate production will be sufficient for only a small fraction of future PHEV and EV global market requirements, as demand from the portable electronics sector will absorb much of the planned production increases in the next decade. Of particular concern is the fact that some estimates for lithium reserves have not taken into account the concentration of the metal in deposits, which range from 8 parts per million (ppm) to 3,000 ppm.
Speaking at the Annual Meeting of the European Lubricating Grease Institute (ELGI) in Venice, Italy, in April, Smith said that SQM plans to increase production and sales by 20% in 2016. The company, which is one of the leading players in the lithium market with a 26% share, expects demand to grow by around 10% this year. Though lithium accounts for less than 15% of SQM’s turnover, it is a key part of the company’s business plan, which began 20 years ago (see sidebar).
The Chile-based company is split up between five business units: specialty plant nutrition, iodine and derivatives, lithium and derivatives, industrial chemicals and potassium. SQM predicts that the current high demand and low supply will eventually find equilibrium in the marketplace. In March, the company announced a joint venture with Lithium Americas Corp. (LAC) to develop a 40,000-metric-tonne-per-year lithium carbonate project in Salar de Caucharí, located a few hundred kilometres from Salar de Atacama.
“We expect to have similar production processes at both sites, and as a result we should benefit from operating synergies,” said Patricio de Solminihac, CEO of SQM.
“One of the principal objectives of the joint venture is to leverage the technical experience of SQM to materially de-risk the development of Cauchari-Olaroz and to successfully advance the project to bring new supply to the market on a timely basis. Lithium plays an important strategic role in the energy revolution and it is critical that our industry respond by delivering more supply to meet increasing demand,” said Tom Hodgson, CEO of LAC.
The 50-50 joint venture expects to start production at Salar de Caucharí in 2019. Capital investment in the project is between USD 500 and 600 million.
In addition to the increase in portable devices, market demand is being driven by the changing Chinese market, where pressure to reduce pollution through the use of electric and hybrid public transport vehicles has drastically increased demand for lithium batteries. To facilitate this, the Chinese government has begun subsidising these vehicles as well as the production of batteries. Premier Li Keqiang has stated that China’s goal is to remove almost 4 million old or high-emission vehicles from use within the next five years. Furthermore, China plans to increase the production and sale of new energy vehicles (NEVs) from 300,000 to five million in the same timeframe.
In his presentation, Smith noted another less common use for lithium. Lithium greases account for 10% of the current usage. Grease is a bit of a misnomer however, as the actual product is lithium soap which is then mixed in with greases. LIthium greases adhere very well to metal, are non-corrosive, has good temperature tolerance, and can be used under heavy loads. These greases are used in both automotive and industrial applications.
Lithium and lithium complex greases make up a majority of the grease market today. According to the latest survey of the National Lubricating Grease Institute (NLGI), 74.18% of worldwide grease production by thickener type is lithium soap. Conventional lithium greases make up 54.51%, while lithium complex greases make up 19.67%.
Over the years, there has been a slight decline in lithium’s market share, however, while aluminum and calcium soap greases show a slight uptick. In 2013, lithium greases had a market share of 76.70%, with conventional lithium soap greases making up 58.09% and lithium complex soap greases making up 18.61%.
According to a 2007 U.S. Geological Survey, the worldwide lithium reserve is estimated at 13 million tonnes. Half of these reserves is located in Bolivia, and another 20% is found within the “Lithium Triangle,” which includes Chile and Argentina, although large reserves have also been found in the state of Wyoming, U.S.A.
Beyond the difficulties inherent to the extraction of lithium, Smith also noted the difficulties in producing and distributing the metal. He added, “New players that were supposed to be in the market today, never started to produce or were halted by technical challenges.” In fact, over the past seven years, more than USD 1 billion has been invested globally in lithium development projects, which has resulted in minimal increase in lithium supply.
As such, the market has been under the pressure of low supply and extremely high demand, which is reflected in the price of lithium. Looking ahead, it is possible that there are some potential replacements for lithium in portable devices. Such replacements include sodium-ion (Na-ion), magnesium-ion (Mg-ion) and aluminum-graphite. Each of these comes with its own set of drawbacks however.
Of the potential alternatives, graphite has probably shown the most promise. Researchers from Stanford University have developed aluminum-graphite batteries that can go from an empty to a full charge in 60 seconds as opposed to the several hours it takes a comparable lithium battery to charge. Additionally, these graphite batteries have a life of 7,500 cycles compared to 1,000 for lithium. There is also the added benefit of aluminum’s abundance as a resource.
Other groups have taken a divergent path to meeting future demand, and though these solutions are further away from being technologically feasible to produce on a mass-scale, they hold some promise. Scientists at Virginia Tech, for example, have developed a fuel cell that runs on sugar and uses an enzymatic pathway to create electricity. The only byproduct other than electricity is water.
What does all this mean for the lithium market? It’s hard to say for certain, but it appears that demand for the metal will continue to grow at a hurried pace. However, if the forecasts of a limited lithium reserve prove to be correct, then perhaps we will see new battery technology emerge on the market in response to demand.