Lithium

A while back I was called by a journalist at a prominent paper and asked what I thought about the lithium market. Was it another rare earth metals story – limited supply and rapidly escalating demand? Or, worse, was the world simply going to run out of lithium in the face of surging battery demand and, either way, where did I see prices going?

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My position was the world is not short of lithium. It is abundant as an element — it is, or was at the time, just short of scaled-up extraction projects. So no, I did not see the world running out of lithium but that a healthy run-up in prices would encourage more investment and, hence, increased supply – maybe a less dramatic version of the financing that became available for Mountain Pass after the run-up in REM prices.

Interestingly, the journalist did not print any of my comments — fair enough, as they did not support his position that the world is running out of lithium.

Since then, the prices have indeed doubled. The Financial Times reports the price for lithium carbonate from South America has hit $14,500 a ton over the past two years, quoting Benchmark Minerals Intelligence.

Source: Benchmark Minerals Intelligence via the Financial Times

Much of the excitement is due to the rise in electric vehicles (EVs) and hybrids, and although there is no futures market in Lithium – prices are set in long term contracts – buyers have to contend with a bullish supply market as battery makers scramble to cover forward under long term agreements, as the rise in prices affirms.

Indeed, not only product prices but the share prices of producers is set in large part by predictions on the uptake of electric and hybrid cars.

Back to the main thrust of the Financial Times article, Sociedad Química y Minera de Chile (SQM) is up for sale following regulators enforcement of a sale by parent PotashCorp as a prerequisite of aquiring its Canadian rival Agrium. SQM accounts for more than 20% of the world’s lithium supply, making it one of five companies that dominate the global market alongside China’s Ganfeng, Tianqi Lithium, FMC and Albemarle, while its lithium division accounts for 60% of SQM’s profits – arguably a high price regulators are demanding PotashCorp pay to acquire Agrium. But that depends very much on what price the market puts on SQM, which in turn depends on how bullish bidders feel about the prospects for electric and hybrid transport.

PotashCorp could conceivably be getting out at the peak.

According to the Financial Times, quoting consultancy Wood Mackenzie, if electric vehicles reach 5% of car and light truck sales globally by 2025 from their current level of 2%, then lithium prices will fall to $6,900 a metric ton by 2025. However, if that share, including plug-in hybrids, climbs to 12% by 2025, lithium prices will remain at current levels and then move toward a long-term price of $13,600 a ton, the consultancy forecasts. This suggests lithium prices and the share prices of major lithium producers are highly dependent on a very uncertain metric.

Source: Frost & Sullivan via the Financial Times

Uptake of electric cars has consistently underperformed expectations, so exceeding SQM’s current valuation of about $4.7 billion requires a big and bold bet on EVs and hybrids. The Financial Times quotes Ben Isaacson, an analyst at Scotiabank in Toronto, who said SQM’s share price reflects lithium prices well above the marginal costs of production, “which isn’t realistic.” The lithium price will fall to a long-term average of between $8,000 and $10,000 a ton, he forecasts. “This should be bought at a discount (to the current lithium price) — this should not be bought at a premium,” he said.

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With new projects coming onstream in Australia, the U.S. and elsewhere, supply will increase, but so too, of course, will demand. But at current prices, the money is chasing new resource development and EV uptake appears to be lagging.

As one investor is quoted by the Financial Times as saying, “Why would you buy a $5 billion stake in a resource that is geologically abundant?”

Well, my point exactly.

Iakov Kalinin/Adobe Stock

This morning in metals news, the U.K. is looking to be a low-carbon player in the post-Brexit world, Chinese steel mills get a win and the City of Chicago files a lawsuit against U.S. Steel related to toxic spills into Lake Michigan by the company last year.

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U.K. Devotes Funds for Satellite Research

As the U.K. prepares for the world after Brexit, it is looking to develop its low-carbon industry. One way in which that is being manifested is by a $1 million investment in satellite research to find new deposits of minerals, like lithium (used in lithium-ion batteries), according to Reuters.

According to the report, other entities involved in the project are the British Geological Survey, the Camborne School of Mines and environmental consultancy North Coast Consulting.

Chinese Steel Mills Get a Win in 2018 Pricing

Chinese steel mills got a victory as domestic iron ore price indices will be included in some 2018 annual supply contracts with global miners, according to Reuters.

The move is expected to boost the confidence of Chinese buyers, according to the report.

City of Chicago Files Lawsuit Against U.S. Steel Related to Toxic Spills

On the heels of two toxic spills into Lake Michigan last year, the City of Chicago filed suit against U.S. Steel, the Chicago Sun-Times reported.

“We will not stand idly by as U.S. Steel repeatedly disregards and violates federal laws and puts our greatest natural resource at risk,” Chicago Mayor Rahm Emanuel was quoted as saying in a press release.

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Chicago accused U.S. Steel of violating the Clean Water Act by allowing the discharge of nearly 300 pounds of hexavalent chromium into Lake Michigan last spring and failing to notify downstream users of the impacted waters, according to the Sun-Times.

Steve Young/Adobe Stock

While tantalum and lithium aren’t materials we often talk about in this space — even so, founder and Executive Editor Lisa Reisman’s 2011 post on tantalum prices remains one of MetalMiner’s most-viewed posts — they are metals that could see their stock rise in the coming years, according to a recent report.

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According to a report by London-based market research firm Technavio, the global tantalum market is expected to grow by a compound annual growth rate (CAGR) of more than 3% from 2017-2021.

Tantalum was discovered by the Swedish chemist Anders Gustaf Ekeberg in 1802 and named after the Greek mythological figure Tantalus. It is highly resistant to corrosion by acids, boasts a high melting point, and is a good conductor of heat and electricity.

While that’s all very interesting to you, you might be wondering: what is it actually used for?

Applications of Tantalum

According to the research report, tantalum will see its stock rise as a result of global penetration by the smartphone market. Smartphone shipments will increase by 1.3 billion units in the next few years, according to the report, as smartphone technology and internet functionality become more prevalent in developing countries.

Tantalum capacitors are used in automotive electronics, mobile phones and personal computers, according to the U.S. Geologic Survey (USGS).

However, when it comes to the U.S., it has had to get its tantalum from elsewhere.

Read more

Cobalt and lithium have big roles in the burgeoning electric-vehicle market, but they’re still subject to price volatility. scharfsinn86/Adobe Stock

This morning in metals news, demand for cobalt and lithium will only grow with the electric car industry, but price ups and downs are likely in the offing, too; London copper took a dip after the U.S. Federal Reserve’s interest rate hike announcement Wednesday; and the U.S. coal industry, in a world with less demand for coal as an energy product, might have to get creative. One writer suggests mining for coal — not for coal itself, but for rare-earth metals contained within it.

Cobalt, lithium markets growing with EVs, but could see fluctuation

One thing is certain: the electric-car industry is growing rapidly.

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According to a Reuters story Thursday by Andy Home, the number of electric cars on roads worldwide doubled last year to 2 million — but only accounted for 0.2% of the global total. However, estimates indicate that number will grow to 3% as soon as 2021 and 14% in 2025.

With that growth comes a need for certain kinds of metals, like cobalt and lithium.

But with a still relatively young electric-vehicle industry, what will demand for these metals look like in the near future?

Cobalt and lithium, for example, are on the “front-line” of the “green transport revolution, Home writes. But that means, to an extent, being subject to the whims of an industry in its early stages.

Large price hikes in lithium late last year and early this year have leveled off. Home added there could be further price volatility, as producers, analysts and traders try to construct consensus demand models.

Copper falls to one-week low

Copper on the London Metal Exchange (LME) dropped to a one-week low Thursday, on the heels of the U.S. Federal Reserve’s decision to hike interest rates for the second time this year, Reuters reported.

Copper fell to $5,462 per ton, according to the report.

Financial uncertainty in the U.S. and a slowing of the Chinese economy will put selling pressure on metals, according to a Kingdom Futures report quoted by Reuters.

Coal industry mining for … rare earths

Global coal production has declined each of the last three years. With a decline in demand, coal-mining operations have to adapt to a world increasingly powered by green energy.

The solution for some might be mining for coal, not for coal’s energy-producing properties, but for the rare-earth metals found within them, according to an article Thursday in Quartz. Per the article, China currently produces 90% of the world’s rare-earth metals.

It’s an interesting idea, even if author Akshat Rathi writes that his three ideas for extraction of rare-earth metals from coal are currently not economically feasible.

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But, as mentioned in yesterday’s This Morning in Metals post, producers have to adapt with the times. Whether we’re talking about copper producers looking for new markets for their copper or coal-mining operations mining for rare-earth metals found within coal, producers have to adjust or risk being left behind.

After rising aggressively, some would argue that lithium prices have already peaked.

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Reuters quotes Paul Robinson, director at consultancy CRU Group saying that prices have little upside because demand growth has been met with aggressive supply build up, similar to rare earths and vanadium in past cycles. Even though demand is projected to soar 60% to 300,000 metric tons of lithium carbonate equivalent (LCE) annually by 2020, the newspaper quotes a National Bank Financial report saying new players could flood the market.

Strong Demand is Company, 60% Growth is a Crowd

“It’s crowded, no doubt about it, and it will get culled,” said Jon Hykawy, president of Stormcrow Capital, calling lithium, the “latest bubble sector.”

An indication of extent to which lithium fever has gripped investors and junior miners is illustrated in a Bloomberg article which reports that in the wake of President Mauricio Macri’s decision to remove currency and capital controls and taxes introduced by his predecessors, about 40 foreign companies began to consider opportunities in Argentina’s mining industry. More than half of those planning to mine lithium. Read more

About a year ago I was interviewed by a columnist from a leading economic newspaper about the prospects for the lithium market.

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The gist of the article was the question of will lithium demand from electric vehicles unsustainably drive up prices due to supply shortages? I said no. I expected the market to rise as demand increased, but that there was no shortage of lithium in the world and supply would rise in response to price increases and demand.

Well, the paper went on to report that supply shortages would constrain the market and the lithium price was set to boom. That’s okay. I don’t expect everyone to take my advice as gospel and, to some extent, you could say the author was right, the price has risen as this graph from CRU illustrates.

Source CRU Group

Source: CRU Group

But the same CRU article goes on to explain that to every price rise there is a response. The extent to which the market responds with new capacity or expansion to existing capacities varies with the commodity, the market during the time frame involved and any number of other issues. We will come back to CRU’s modelling of the lithium market a little later but, for now, how has the lithium industry responded to this rise in demand and what effect has the rising price had?

Lithium Investing

Well, Reuters leads an article with “stampede to invest in lithium mines threatens price gains” and goes on, as the title suggests, to say a rush to invest in new and expanded mines for lithium means material will flood the market just as demand for lithium batteries is due to soar, curbing prices. Read more

I was asked recently if I thought the world was going to run out of lithium.

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It was the type of question that illustrates the fever that is gripping this small and specialist market, much as the hype that drove rare earth elements through the roof a few years ago and briefly allowed a flood of investment to be available for the development of new mines and processing operations such as Molycorp’s Mountain Pass, only for the market to then collapse again a year or two later.

Don’t Believe the Hype?

An Economist article underlines the case regarding lithium. Much of the recent hype is due to a doubling of lithium carbonate prices imported into China in the last two months of 2015 and comments by analysts from places such as Goldman Sachs calling lithium the “new gasoline” reflecting their opinion that electric vehicles are about to take off — in sales terms, not literally.

Is the investment hype over lithium-ion batteries justified? Source: Adobe Stock/bbbastien.

Is the investment hype over lithium-ion batteries justified? Source: Adobe Stock/bbbastien.

Yet sales of lithium salts such as lithium carbonate and lithium hydroxide make up a market of only about $1 billion per year, small when you consider — like rare earth elements — their ubiquitous presence in just about every electronic gadget. All-electric cars and, increasingly, power tools and products previously powered by nickel-hydride batteries use lithium. Read more

There was a time (and I can remember it) when the streets of Shanghai at rush hour were a manic surge of bicycles either waiting at lights or streaming across junctions. Those have now gone, to be replaced by the roar of autos and the hum of electric bikes. Currently there are approximately 140 million e-bikes and scooters in use in China. Last year, China manufactured about 25 million EV 2-wheelers, of which some 600,000 were exported according to EVU Update. A China source is quoted as saying, ¨¨”We estimate the annual growth of EV2wheelers in China will maintain 10% or more than that. In 2015, we estimate the production volume will reach 35 million and export volume will reach 2 million. They offer low-cost personal mobility, can be stored indoors or securely by apartment dwellers and for the authorities fighting pollution have the great attraction of being non-polluting at least at the point of use. More than 90 Chinese cities ban petrol-powered motorcycles, providing a huge benefit to e-bike manufacturers.

The power sources are predominantly advanced lead-acid batteries, although Li-ion is gradually eating into the heavy metal’s market share. Businessweek reports that overall, the market for lead-acid batteries will grow from 83 GWh valued at $9.4 billion this year to 165 GWh valued at $16.1 billion by 2016. Gradually, Li-ion is making inroads supported by the intensely competitive nature of the market. There are some 800 e-bike manufacturers involved in mass production, never-mind the 2,600 approved manufacturers that include many assemblers. Differentiation at the top end can only be achieved by innovation such as lighter, more powerful batteries using Li-ion. Government-supported R&D and Li-ion battery exports are supported by tax breaks, further stimulating uptake. Even as lead use grows in absolute terms, Li-ion is growing alongside.

Nor is Li-ion battery development playing solely to the e-bike tune. While major EV car models like the Volt and Leaf get the headline attention, the market is being driven much faster by what are termed micro hybrid vehicles, meaning those that use storage towards stop/start and regenerative breaking applications, neither of which require drastic changes to existing car designs or rely on radically new technologies. Global growth is set to explode from a current lowly 5.1 GWh worth just $495 million today to some 41 GWh worth $3.1 billion in just five years.

China is not so unique in terms of city density, levels of disposable income and problems with pollution to make the China e-bike phenomenon unique. Indonesia, Vietnam, Thailand, India and even Brazil could develop similar e-bike cultures. However it is not a Chinese market industry that foreign manufacturers have much chance of breaking into, unlike auto manufacturing where the greater product sophistication gave western car makers an advantage in breaking into China. But metal demand, particularly lead and lithium growth, is already having a very significant impact on world prices as a result of e-bikes, and shows little sign of abating much before the second half of the decade.

–Stuart Burns

Perhaps the biggest hurdle to the widespread uptake of electric cars is not their comparatively short range, but the long time it takes to re-charge the batteries. If a car like the Nissan Leaf manages only an 80-90 mile range as this test suggests (as against the manufacturers’ 108 miles from a tank of sparks) you at least want to know you can re-charge and continue your journey, as with an internal combustion engine. In practice though, a Leaf takes seven to eight hours for a full charge using a 240V – 16A outlet as in the UK. Public quick-charging points are said to give an 80% charge in about 30 minutes. That’s OK if you want to have a cup of coffee and read the papers, but you don’t want to be doing that every 80 miles on a longer journey. So faster charging that would allow, say, a 2-minute turnaround similar to refueling a conventional car could open up use of cars like the Leaf to mainstream rather than just city users.

Well, research at the University of Illinois holds out just that promise, according to an article by the Economist. Their most successful experiment has recharged to almost 100% in two minutes. In addition, the technology applies equally well to nickel hydride batteries as to lithium ion. As the article explains, a battery has two electrodes, an anode and a cathode, that are connected by an electrically conductive material”generally a liquid”called an electrolyte. Under normal discharge conditions, negatively charged electrons flow from the anode to the cathode providing a source of electric current. To balance the circuit, positively charged ions flow from the anode to cathode to balance the charges. During recharging, an external source of electrons flows in the opposite direction replacing the positively charged ions ready for discharge again in the future. The speed at which a battery recharges depends on the surface area of contact between the electrolyte and the cathode, but crucially, the amount of energy a battery can hold is dependent on the volume of the electrodes. What is needed is both a high volume and a high surface area for cathode and anode.

Dr. Paul Braun at the university has developed a process to achieve just such an outcome. His starting material is made of closely packed polystyrene spheres about 0.001 millimeters (0.00004 inches) in diameter. The next stage is to fill the gaps between the spheres with nickel by electro-deposition, similar to nickel-plating a piece of steel. After that, the material is heated, to melt the polystyrene and leave a sponge made of metallic nickel. This creates an electrically conductive framework suitable for coating with materials normally used to make cathodes such as a substance called nickel oxyhydroxide for the nickel-metal hydride version of the battery and lithium ion-spiked manganese dioxide for the lithium ion version.

The result is a charging rate 10 to 100 times faster than a normal commercial battery, but with an increase in production costs estimated to be only 20-30 percent more than current methods. 20-30 percent is not to be dismissed, as the battery is a very significant part of the cost of new electric vehicles, but for the convenience of internal combustion “refueling rates, it may be a price worth paying over the life of the car.

How far Dr. Braun’s technology is from commercial application is unclear, but if the wall of money that has poured into new battery technologies is anything to go by, there is no lack of enthusiasm out there to find just such a solution to improving charging rates.

–Stuart Burns

As a mother of two relatively young kids (almost 7 and almost 4), I tend to think we pay pretty close attention to product recalls and safety hazards. Though we had to return several Thomas the Train cars a few years ago (when we learned they contained lead paint) and had to stop using our Volo stroller (due to finger pinching dangers) I’ve always thought of our house as “relatively hazard free. We feel “lucky to have escaped the McDonald’s cadmium glass fiasco of last week. As a self-admitted neat freak, nothing gives me more pleasure than throwing something away (or recycling wherever possible). Though we had to clear out many of our drinking bottles (not BPA free), order anyone that cooks for our kids to “only microwave in glass or ceramic bowls and plates and try to limit the amount of time our kids interact with anything “digital, the reality is that we’re naïve to think our home is “safe.

And now we learn that lithium cell batteries (the ones that look like these pictured below):

(Photo Courtesy of ECVV.com)

specifically, battery ingestion is on the rise NY Times blog post.

Button cell batteries appear in, “remote controls, toys, musical greeting cards, bathroom scales and other home electronics. Apparently, the battery’s current can set off an internal chemical reaction which impacts the esophagus and as the case of a 13-month old referenced in the Times post who had ingested one of these batteries, the current affected the aorta and resulted in the child’s death, even though doctors found the battery and surgically removed it.

Though the absolute number of fatalities involving these batteries remains low, according to the NY Times, “Data from the National Capital Poison Center in Washington found a sevenfold increase in severe complications from button cell ingestions in recent years. Moderate to severe cases have risen from less than a half percent (about a dozen cases per year) to about 3 percent (nearly 100 cases per year), based on a review of 56,000 cases since 1985.

The study’s recommendations included revised treatment guidelines to speed the process of removing these batteries from the esophagus, greater “vigilance for delayed complications and identify patients who require urgent radiographs. The Times article also quoted the author of the study who suggested that electronics makers alter the battery replacement backs for these household items to require the use of a screwdriver (similar to how most battery operated children’s toys work today). I can’t say I’m a giant fan screwdriver enclosed batteries but I’ll take it over the alternative.

–Lisa Reisman