Lithium

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The Importance of Lithium

Lithium is a highly reactive metal that is most commonly extracted from brine solutions. These brines are essentially mixtures of other elements that are contained in salt lakes scattered across the world. Lithium does not occur naturally in its purist form; it must first be separated from these other elements. After lithium is extracted from these deposits, it is usually processed into lithium carbonate or lithium hydroxide. If attained at a high enough quality, lithium carbonate and lithium hydroxide can be used to make the important cathode material that is used in lithium-ion batteries.

Lithium plays a key role in global sustainability mostly due to the popularity of electric vehicles. Nearly every automaker including BMW, Mercedes Benz, Nissan, and Toyota are racing to gain market share in electric vehicles. To store this electric energy, these companies choose lithium-ion batteries because of its scale and production cost. Additionally, with its high reactivity and extremely low weight, it makes an effective electric car battery. These batteries can be recharged after use around the world using any ordinary power socket. Tesla Motors opened its massive lithium-ion battery producing “Gigafactory” in Sparks, Nevada on July, 2016. They aim to produce half a million electric cars by 2020. It is expected that 12 more gigafactories from other companies will be development soon.

"...we would basically need to absorb the entire world's lithium-ion production"

Elon Musk, on the Tesla Gigafactory

Independent researchers such as Benchmark Mineral Intelligence investigate pricing in the lithium industry: the deficit in lithium supplies around the world continue to price the metal higher each year. High and robust pricing in this market has been due to concerns over future availability. This has been exemplified by Albemarle, another top producer, who recently acquired a new lithium plant in China and Sichuan Tianqi’s lithium expansion plans in Australia. These concerning events drove the average global price of lithium to reach $16,000/tonne throughout August, 2016.

Although lithium is used in other industries such as pharmaceuticals and lubricants, the most important use of lithium is in rechargeable lithium-ion batteries for electric vehicles, grid-scale energy storage, cellphones, laptops, cameras, and many other modern devices. FMC Corp, a leading lithium producer, said it plans to double its output of lithium next year, signaling that the largest producers are increasing their supply to meet demand from our modern society. Like most critical metals, lithium is not traded on any public exchanges, meaning these top lithium producers don’t often give out their pricing statistics to the competition.

Source: Bloomberg New Energy Finance (Solar); Benchmark Mineral Intelligence (Batteries) - click to enlarge

Important Lithium Terminology

Lithium Carbonate

The primary base chemical produced by the lithium industry used in a wide range of end markets including lithium ion battery cathodes, ceramics and glass, and pharmaceuticals.

Lithium Hydroxide

The second largest chemical produced by the lithium industry, traditionally used in the production of greases but also competes with lithium carbonate in the lithium ion cathode sector, specifically NCA chemistry.

Lithium Feedstock

This refers to lithium concentrate, the majority of which is converted into lithium chemicals for a wide range of end markets including lithium ion batteries.

Lithium Chemicals

This refers to any downstream chemicals that are produced from spodumene feedstock or lithium brine.

Lithium Prices

Source: Benchmark Mineral Intelligence - click to enlarge