Lithium: A year in review | Siobhan Lismore-Scott

The lithium markets have been experiencing a boom for several years now, since demand has risen from the lithium-ion battery sector. In 2017, prices rose – despite some new capacity coming online – and interest in the mineral peaked.

Industrial Minerals recorded this interest in the importance given to the new Battery Price report, which launched in October 2016, and in the record number of delegates who attended the 2017 9th Industrial Minerals Lithium Supply & Markets conference, held in Montreal, Canada.

The demand driver in lithium is reported to be the automotive sector. This year alone, several car manufacturers have either released a new electric vehicle model or announced their intention to do so.

2017

In some quarters, lithium carbonate – the material used to make lithium-ion batteries and derived from either hard rock (spodumene) or brines – is referred to as white gold.

It is not surprising, then, that the current tally of junior producers hoping to bring a lithium project online stands at 300.Indeed, supply is still one of the most hotly debated topics in the industry. No one now doubts that new supply will be needed – the nay-sayers have long been silenced on that topic. But there is some dispute about where the new supply will come from.

Through 2017, the imbalance between supply and demand was as prevalent as it had been over the previous two years. Prices remained strong, much to the investors’ relief – a softening of the current market prices remains one of the investors’ and juniors’ greatest fears, as it could threaten the development of projects.

Although the number of developing projects is large, the know-how of the lithium industry remains underdeveloped. Producing lithium carbonate or hydroxide requires technical knowledge, an understanding of the challenges facing the market and perseverance.

Traditional producers such as SQM, Albemarle, FMC, Ganfeng and Tianqi, among others, have sought to increase their total output and production capacity to fulfil current market demand (see below).

To secure raw materials supplies, several of the traditional producers have engaged in offtake agreements with junior lithium producers and have started to participate in their projects to speed up their development processes.

Fanning the flames

Concerns regarding the safety of lithium-ion batteries have continued. At the start of the year, the United States consumer safety watchdog called for heightened safety regulations on lithium-ion batteries after details were released by Samsung Electronics Co Ltd, outlining what had caused a number of its Galaxy Note 7 smartphone devices to overheat and catch fire in 2016, prompting two recalls and a cessation of production.

In April, a train carrying electric vehicle lithium-ion batteries exploded near the US city of Houston on its way to Los Angeles, where the batteries were being shipped for recycling.

Company news

Chile’s state-owned Corporación Nacional del Cobre de Chile (Codelco) opened a bidding process for the development of lithium projects at its two salt flats, Pedernarles and Maricunga, in northern Chile. By the end of the year, it had still not announced the winner.

GFL International Co Ltd (Ganfeng) agreed to invest $174 million in the Lithium Americas Corp (LAC) Cauchari Olaroz project in Argentina to secure an offtake agreement and to ensure the project’s development.

The deal sees Ganfeng, the largest integrated lithium producer in China, picking up 75 million common LAC shares for a total of $49 million, as well as the right to purchase as much as 70% of LAC’s share of Cauchari’s Stage 1 lithium carbonate production at market prices.

Albemarle Corp, the world’s largest producer of lithium, revealed that it will pay royalties of as much as 40% to Chilean state economic body Corporación de Fomento de la Producción (CORFO) under its agreement to expand lithium production in the country.

The joint venture between Albermarle and Tianqi Lithium Corp, Talison Lithium, has approved the expansion of lithium concentrate production at its Greenbushes spodumene mine in Australia.

The expansion is intended to more than double lithium carbonate equivalent (LCE) capacity at Greenbushes from 80,000 tonnes per year to more than 160,000 tpy. Commissioning of the expansion is expected to begin in the second quarter of 2019.

Chinese lithium producer Tianqi Lithium Corp said that it will not proceed with the exercising of an option that would have seen it acquire a 20% stake in Rockwood Lithium GmbH, a subsidiary of US counterpart Albemarle.

Albemarle and Tianqi entered into a deed of termination in relation to the planned share purchase in February.

Electric vehicle (EV) producer Tesla Motors Inc commenced lithium-ion (Li-ion) battery cell production at its gigafactory in Reno, Nevada, US, in January.

Tesla said that, by 2018, it intends to produce 35 GWh per year of lithium-ion battery cells, nearly as much as the rest of the world’s battery production combined.

It then revealed that it would be building three further battery gigafactories, but did not say where.

Japanese car manufacturer Toyota announced that it has completed the sale of its stake in Tesla Motors following the termination of the contract at the end of 2016, ending the previous partnership between the companies.

In 2010, Toyota and Tesla agreed to work jointly on the manufacturing of electric vehicles, with the Japanese company acquiring 3.15% of Tesla’s outstanding shares, valued at $40.5 million (¥4.50 billion).

Nemaska Lithium received a lump-sum payment of $10 million from FMC Corp as part of a previously-agreed supply deal for lithium carbonate.

Under the amended agreement, Nemaska Lithium will start to supply FMC no later than April 1, 2019, and had to supply lithium carbonate samples to FMC for qualification in 2017.

Breaking with the delivery obligations agreed in the supply agreement will force Nemaska Lithium to return the full $10 million payment plus an agreed penalty.