Lithium Supply and Demand Picture Looking Favorable

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The upcoming Managing Supply Chain Risk for Critical & Strategic Metals Conference co-chaired by MetalMiner on October 20-22 in Washington DC will no doubt hear plenty of advice from industry experts on the risks and opportunities for lithium. From its use in laptops and rechargeable electronic devices like i-pods, lithium could develop a potentially massive market in electric vehicles if boosters of that industry segment are to be believed. But interestingly Jon Hykawy, Byron Capital Markets’ recently appointed lithium analyst, extols the opportunities for lithium in a wider range of electronic devices with more enthusiasm than in autos during a recent interview with the Gold Report. Hykawy is predicting a 40% increase in lithium ion battery demand by 2014 supported by a growing trend to supply electronic devices like the new Nintendo DSi which is now shipped with an integral rechargeable Li-ion battery rather than earlier models that were supplied with regular AA batteries. In his opinion, demand for nickel-metal hydride (NiMH) batteries for items like power tools will disappear as prices for Li-ion batteries continue to fall and the capability of Li-ion batteries to deliver high specific power outputs continues to rise. Industry experts may disagree but Hykawy feels much of the 30-40,000 tons of additional demand we have seen for lithium since 2000 has been unexpected and largely as a result of this unseen shift by manufacturers to integral Li-ion batteries. Lithium consumption in electric car batteries hasn’t figured yet on the demand curve as early hybrids like the Prius have largely relied on NiMH.

Fortunately supply is not one of those it can only be sourced from China situations. Indeed the US has sizable potential reserves in Nevada. Chile is a major producer and new resources are being opened up in Argentina, Bolivia and elsewhere. The principal source is brines where lithium carbonate is usually present with potash and sometimes with magnesium. The magnesium can be a problem making the separation of the lithium less economical but the co-location with potash is actually the key to lithium availability. Most lithium is produced as a by or co product of potash extraction.

Several of the speakers at the upcoming conference have specifically referenced lithium as one of many minor, rare or strategic metals that will play a critical role in the western world’s economies in the years to come. As a precursor to the conference, Jon Hykawy’s interview makes interesting reading and is worth taking the time to review.

–Stuart Burns

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