Lithium Market

Lithium Market

There is currently no battery grade lithium production in UK or in the whole of Europe. Lithium is purchased by battery cathode and cell makers as lithium carbonate or hydroxide from suppliers in Chile, Argentina or China. Western Australia produces 60% of world supply, as a mineral concentrate which is shipped to China for refining to lithium carbonate or hydroxide.  China therefore dominates production of Li-ion cells and batteries. Argentina, Chile and Australia hold 99% of global lithium reserves3.

World Economic Forum (WEF) concluded4 lithium-ion batteries are essential to achieve the Paris Climate Agreement COP21. Between 2010 and 2018, battery demand grew by 30% annually, and WEF project the market will keep growing at 25% pa.  WEF calculate that lithium supply must increase by a remarkable factor of 6 times from 2018’s 229 kt to 1.5 mt in 2030, (worth $15 billion at today’s prices). Roskill predict demand of 1.4mt by 2030. This will require the discovery and development of vast new lithium resources. Diversity of supply is expected to become a critical factor in establishing the lithium – EV value chain.

Automotive OEMs and suppliers have invested more than $100 billion in EVs over the past three years, and the battery value chain is projected by WEF to expand 19-fold over today’s levels, requiring a substantive scale-up from mining lithium to cell production. There are eight lithium gigafactories planned or under construction in Europe and many more will be required. No Gigafactory is currently planned for UK, although government has been actively attempting to attract one through initiatives such as the Faraday Battery Challenge.

Our preference is to use the strategic advantage of UK supply of lithium to attract a battery plant to Britain as a customer, however fast growing demand from Europe could also be met from UK.

Discussion with marketing managers of major Australian producers suggests that almost all supply is peer to peer, direct from mine to refinery to battery cell maker.

One majory barrier to entry is demonstrating the consistient production battery quality lithium. The nascent market has not settled on a uniform purity standard. London Metal Exchange and data supplier Fastmarkets are attempting to settle a widely accepted common standard and is currently posting spot prices for 3 lithium chemicals. As battery chemistries are improving there has been a transition from lithium carbonate to lithium hydroxide.

There is currently no production of battery grade lithium in UK, and none in Europe, and we have the opportunity to be first. There are no Gigafactories using lithium in UK, although this must change if UK is to preserve its car making industry. AESC have a small battery plant in Sunderland, England, to produce battery cells and modules, and assembles packs for the Nissan Leaf.

Strategic Supply of Battery Metals

Battery metals are likely in time to replace hydrocarbons as the most strategic of minerals. The strategic importance of battery metal supply will grow as widespread adoption continues, inevitably leading to concerns of Government policymakers and commercial users as to security of supply.  Europe currently has no production of either the lithium or the cobalt required to support government’s ambitious policies to replace internal combustion cars with electric ones.

Whilst a large number of junior companies are exploring for battery metals and proposing mine developments, the production of high purity battery metals such as lithium carbonate and lithium hydroxide is metallurgically very complex;  Likely beyond the ability of most juniors. British Lithium’s experience in complex metallurgical processing and strategic alliances with technology partners enhances its ability to see successful exploration through to development and production.

Alternative Battery Technologies

With the accelerated adoption of storage technologies, interest in broadening the application of renewables through storage, supply restrictions and inevitable increasing price of battery metals, $ billions are being invested around the world, on research into alternative battery technologies.

A question that must occur to any investor in battery metals, including British Lithium, is whether a new battery type may replace demand for lithium and cobalt. British Lithium is confident based on first-principals, that lithium-ion batteries will remain the principal energy storage technology. Whilst developments such as solid state Li-ion will increase the energy density and lower cost of lithium batteries, they are unlikely to be replaced by an alternative that does not use lithium. Research is successfully leading to a lower requirement for cobalt, but not lower lithium.

Lithium is the lightest metal, the lightest element after helium and hydrogen, and has one of the highest electrical potentials of any element (3.04V). There is nowhere else in the periodic table to go. Helium is inert so has no promise for energy storage. Whilst hydrogen gas has far greater energy density than lithium batteries, its storage requires heavy pressure vessels, and large-scale production and distribution facilities do not exist. Gradual roll-out of charging points for electric vehicles using the existing electricity grid appears far more feasible.

The energy density of hydrogen at 142MJ/kg is higher than diesel fuel at 48 MJ/kg and much higher than lithium-ion batteries. However, production of hydrogen (by reforming hydrocarbons) is expensive and produces more CO2 and less net energy than would be produced by simply burning the hydrocarbons! Producing hydrogen by electrolysis is even more expensive than reforming, and is not energy efficient. Compressing the gas for storage and transport consumes additional energy. Given that government support for the rollout of electric vehicles is driven by environmental concerns, hydrogen fuel cells are, in British Lithium’s view, unlikely to overtake lithium-ion batteries as an energy storage/transfer technology.

Recently, vanadium redox flow batteries have received favourable press. Professor Maria Skyllas-Kazacos at the University of Sydney invented this technology in 1986, and we negotiate global licences for its use back in 1999. Having built and operated a vanadium mine, and spent years financing and working on the vanadium battery, we have concluded that the technical complexity of vanadium electrolyte production, and the complexity of the vanadium redox battery itself is prohibitive for successful implementation by junior companies. In addition, a vanadium battery is twenty times the weight of a lithium-ion battery of the same capacity, so is unlikely to find application outside of fixed installations.