I posted on the PLS thread the last couple of days around the issue of lithium demand and how it translates to spodumene supply. I have created this thread purely as a basis for us to keep tabs on demand and supply fundamentals of the lithium market so that we can gauge the ability for AVZ to enter the market at either a 2 mtpa or 5 mtpa or 10 mtpa ore feed facility in a timely manner.
We know the resource AVZ is outstanding so it is only about two factors for me 1.) transport options and 2.) timing to market which is influenced by the supply/demand conditions. It is the 2nd point the focus here for me in this post. Some, not all, of the material below is a duplication of stuff I summed up in the PLS thread (note: I do not have PLS shares btw) so to those who might have read them there, its up to you whether you want to read the below.
Short summary
1. The LCE (Lithium Carbonate Equivalent) kg needs in batteries for passenger vehicles is some 0.9 kg per kWh.
2. In my opinion, given the growth in EV demand, at the end of the day the existing mines plus their expansions IMO will not be able to align their supply to meet projected LCE demand. For every 1 million new EV passenger vehicles, an equivalent 45,000 tonnes LCE is needed at a installed battery size of 50 kWh assumption (which roughly translates to 45 kg of LCE in each battery).
3. For every 1,000,000 EV's it will need the equivalent, at the mine site, of the addition of a 2 mtpa ore feed facility producing some 340,000 tonnes of 6% grade spodumene (assuming ore grade is 1.26% for example and yes I know it is higher for AVZ). Or another way to look at it 2.94 EVs are produced per tonne of 6% grade spodumene concentrate.
4. The outlook for passenger EVs is extremely positive, hence why I believe AVZ can enter the market in 2021/22 with a starting configuration at 2 mtpa ore feed facility.
5. Currently based on 2018 data, passenger EVs account for 1/3 of total LCE consumption, but obviously expected to increase to 2030. The "Other category" currently accounts for 2/3, and 'other' essentially is about say batteries in appliances such as phones, and probably EV scooters etc and probably the stationary energy storage market (particularly at the household level). But 'other' will also grow IMO to 2030.
6. A key to future lithium demand is also related to battery size, and if average battery size in EV increases then LCE demand further increases. Alternatively, if lithium battery efficiency moves closer to the theoretical 100% efficiency level then demand reduces so these are the two competing forces going forward in estimating LCE growth. The LCE equivalent need in batteries is currently over two times theoretical efficiency.
Long version for those that want the data
1.0 EV spodumene needs
If you say take an average grade for PLS of say 1.26% Li20 at a 77.5% recovery rate, as per the DFS for the 2mtpa facility, you need 6.2 tonnes of ore to get to 6% spodumene concentrate (6.2 tonnes of ore feed *1.26% * 77.5% = 1 tonne of 6% grade spodumene). So at 2mtpa ore feed it can produce say 322,600 tonnes of 6% grade spodumene. Yes I know AVZ has a higher grade so for us a 2 mtpa facility at a ore grade of 1.5% Li20 and 80% recovery (given grade our recovery is likely to be slightly higher than PLS) yields 400,000 tonnes of 6% grade spodumene, meaning AVZ is likely to produce an additional 24% additional tonnes to PLS from a 2 mtpa ore feed facility.
Spodumene grades theoretically 8.03% Li20, so if exporting 6% grade spodumene in effect saying 74.7% of that concentrate is spodumene - https://www.911metallurgist.com/blog/froth-flotation-spodumene-processing-lithium-extraction. At 8.03% theoretical Li20, essentially saying Li content is 3.72% (as you divide by 2.153 to go from Li20 to Li) - https://rocktechlithium.com/lithium-conversion-table/
So 6% grade spodumene in effect has equivalent Li of 2.79% (74.7% * 3.72%). Which means you need 7.5 tonnes of 6% grade spodumene to produce one tonne of lithium carbonate, as lithium carbonate grades 18.8% Li using a 90% recovery rate assumption in the conversion of spodumene to carbonate (i.e. 2.79% Li * 7.5 tonnes of 6% grade spodumene feed * 90% = 18.8% Li).
So a 2mtpa facility, depending on ore feed grade can essentially produce 43,000 tonnes of lithium carbonate equivalent (i.e. 322,600/7.5, PLS data above) to 53,000 LCE (400,000/7.5, AVZ data above). Obviously if the ore feed grade is less than say 1.26%, a lower amount of LCE equivalent from a 2 mtpa operation will be produced.
Based on my readings, the average battery size in EV passenger vehicles is 45 kg of LCE (discussed in separate section below) (one tonne = 1000kg), meaning for each tonne of lithium carbonate is good for 22.22 vehicles (1000/45). To get to 1 million passenger EVs vehicles, you need roughly 45,000 tonnes of lithium carbonate equivalent above (which translates to roughly 340,000 tonnes of 6% grade spodumene).
If just wanting to go with using a spodumene figures, for each tonne of 6% spodumene concentrate you get 2.94 vehicles where you assume 45kg LCE is the battery need (1 million vehicles/340,000 tonnes of spodumene). Obviously that 2.94 number falls the larger the batteries - for example if assume 63 kg of LCE in the battery - Telsa example - then for each tonne of spodumene concentrate you get 2.12 vehicles - https://electrek.co/2016/11/01/breakdown-raw-materials-tesla-batteries-possible-bottleneck/ ).
2.0 EV vehicle demand and other demand
a.) Passenger vehicles
My current understanding is that current world production of LCE in 2018 was around 300,000 tonnes, and that EV sales were around 2 million units in 2018. Using say 50kg LCE as an assumption in batteries suggests 100,000 of that LCE was for the EV's, the rest for the other uses of lithium (the other 200,000 LCE for 2018) (i.e 2 million sales * 50kg LCE and then divide answer by 1000 = 100,000 LCE).
What is actually been suggested,if battery size is 50kg, is that for every 1,000,000 additional sales of EVs (above the base 2 million sold in 2018) requires an additional 50,000 LCE, which translates to an additional need for 375,000 tonnes of 6% grade spodumene feed (i.e. 50,000 * 7.5). Essentially each demand growth of 1 million EV per year requires a new mine, or expansion of an existing mine, slightly bigger than say PLS Stage 1 development, which was for a 2mtpa ore feed operation.
My understanding is that there are now 6 million EV passenger vehicles around the world, so the 2 million sold in 2018 is starting to show some exponential growth. In the following link the following shows the future growth potential in EV passenger vehicles, and obviously how that might translate through to spodumene demand - https://about.bnef.com/electric-vehicle-outlook/
""Our latest forecast shows sales of electric vehicles (EVs) increasing from a record1.1 million worldwide in 2017, to 11 million in 2025 and then surging to 30million in 2030 as they become cheaper to make than internal combustion engine(ICE) cars. China will lead this transition, with sales there accounting for almost 50% of the global EV market in 2025.””
Given in 2018 the sales figures for passenger vehicles was 2 million units, essentially the additional 9 million EV (and I presume passenger vehicle) units in 2025 essentially mean an additional 450,000 LCE need alone.
In effect as there are 7.5 tonnes of spodumene in 1 tonne of lithium carbonate essentially an additional 3.4 million tonnes of the equivalent of 6% grade spodumene is required, assuming the additional demand is solely met through hardrock. Which translates to about 18 million tonnes of installed ore feed capacity for converting the feed ore to 6% grade spodumene at the mine site (before taking into account 'other' below). .
So by 2025, adding the current 2018 100,000 LCE currently required for passenger vehicles to the additional 450,000 LCE required in 2025 gives 550,000 tonnes LCE needed for the passenger EV market in 2025 assuming the estimates of vehicle growth are correct. And they may IMO be on the low side given the exponential growth we are seeing in the EV passenger vehicle market based on 2018 figures alone, so will be very interesting how the figures pan out and are revised by analysts/forecasters.
Obviously, the lower the passenger EV forecasts the reduced ability for AVZ to enter the market by 2022 to 2025.
The 2018 EV passenger vehicle sales figures are here, and the key is growth in 2018 was 70% on 2017:
:https://insideevs.com/global-sales-in-december-full-year-2018-2-million-plug-in-cars-sold/
https://cleantechnica.com/2019/01/03/100-electric-vehicle-sales-up-130-in-2018-210-in-q4-2018-us-electric-car-sales-report/
The 6 million passenger cumulative total is here:
refer https://en.wikipedia.org/wiki/Electric_car_use_by_country
If you look at US data sales of EVs in that year were also some 360,000 vehicles an increase of 80% on the previous year. Therefore a lot of EVs are bought outside the US and the above wikepedia link gives you where those actual sales are occurring.
refer: https://www.greentechmedia.com/articles/read/us-electric-vehicle-sales-increase-by-81-in-2018
b.) Other lithium demand needs
So what is the other 200,000 LCE used for - probably appliances such as phones/ipads etc and IMO other types of transport vehicles outside passenger car EVs such as scooters I presume. And obviously the emerging stationary energy storage market, particularly relating to the smaller batteries required at household storage level IMO. This 'other' category can also be a significant source for underpinning LCE demand, one that is generally not modeled IMO in the literature I have seen.
This below link to 2025 is interesting in that it shows LCE been some 914,000 tonnes in 2025. Difficult to understand the underlying basis of the forecasts but if passenger vehicle LCE need is some 550,000 tonnes in 2025, as estimated by me above in this post using the data above, then the remainder is in the 'other' category (or the data in the link below assumes a bigger growth rate for passenger EVs). In any event it would appear that in the 'other' category that demand is also estimated to double IMO by 2025 to 2030.
http://www.mining.com/lithium-demand-battery-makers-almost-double-2027/
So overall lithium demand is expected to grow exponentially IMO to 2025 - whether the forecasts also delve in growth issues in the non-passenger vehicle area is a question I nonetheless always have at the back of my mind when looking at LCE forecasts.
3.0 Opportunity for AVZ
If some of the forward estimates I have read do come to fruition then a number of new mines (and expansions of existing mines) will be required (and obviously one assumption would be that hard rock is better placed than brine to meet that demand especially in the growing lithium hydroxide market).
I suspect the existing hard rock producers and brine producers will expand production but will not be able to bridge the demand gap needed through their own supply hence the opportunity for AVZ to enter the market in 2021/22 IMO at a ore feed design of 2mtpa, and ramping up by 2025 to 2030. Certainly it is also possible the demand forecasts are also understated given the 2018 results in demand growth itself.
But obviously AVZ need to find the transport solution and ensure that they can enter the market in a timely manner, orelse the unmet demand will be met by other potential potential greenfields projects IMO, thus delaying AVZ's entry into the market beyond 2025 if it doesn't get its act together in the now. Without rehashing old ground I went through that in this embedded post below and as I said this thread is about mapping supply and demand opportunities to see whether there is an opportunity for AVZ to enter the market in a timely manner rather than debating transport options which have been dealt with in other threads - refer Post #: 37739957
4.0 How much lithium is in a battery
Now this is a key question, and surprisingly there is little literature on the subject.
a.) Battery size
My understanding, and as also stated in the article below, that lithium in Tesla EVs constitutes 63kg of LCE for 70 kWh of installed capacity (or 0.9 kg LCE for each 1 kWh of installed capacity). Obviously depending on vehicle (and battery type) can be higher or lower
https://electrek.co/2016/11/01/breakdown-raw-materials-tesla-batteries-possible-bottleneck/
In the link below, battery sizes for full electric vehicles differ btw but going through the list you can see some vehicles having battery sizes significantly above 50 kWh and some significantly below that to: https://en.m.wikipedia.org/wiki/Electric_vehicle_battery
The size of the battery effects range, an obvious point. For example a model S Telsa 100 kWh battery can go 500km before recharge whilst a Nissan Leaf 30 kWh battery can only go 151 km before recharge needed.
See:https://www.ergon.com.au/network/smarter-energy/electric-vehicles/electric-vehicle-range
and https://www.electriccarsguide.com.au/buyers-guide/how-far-can-electric-cars-travel/
Obviously the size of the battery is going to be the key. If the battery sizes are bigger than what I am looking at as an average above, the LCE demand need would be greater than what I am suggesting is required to meet the increased need of the passenger car EV market. If the battery size is lower, then they need less LCE.
The estimates banded around on LCE kg in batteries in the literature are generally based on pure lithium equivalent in batteries, and surprisingly are hard to come by. Because lithium carbonate grades 18.8 Li, in effect saying that 5.3 tonnes of LCE is required to produce 1 tonne of lithium for the battery market. Refer here to understand this conversion - https://www.weare121.com/blog/a-lithium-primer/
b.) Theoretical lithium content in batteries
This is a key to understanding the lithium needs in batteries.
As I understand it the theoretical figure is based on the following:1. The atomic weight of lithium is 6.94 grams/mole - https://pubchem.ncbi.nlm.nih.gov/compound/lithium
2. You get one electron per lithium atom, and there are 96485 coulombs per mole of electrons (or what some may refer to as the Faraday unit of charge)
https://en.wikipedia.org/wiki/Faraday_constant
3. Further more you have 3 electrons and 3 ions in lithium so becomes 1:1 so probably makes conversions easier
http://resources.schoolscience.co.uk/stfc/14-16/partch3pg2.html
4. One ampere is one coulomb per second.
5. One Amp Hour (Ah) therefore equals 3600 coulomb (60*60)
6. Theoretical lithium content becomes 96485/3600 = 26.80 AH, then divide by 6.94 grams/mole and you get 1 gram lithium = 3.86 Ah (or 0.26 grams lithium i= 1 Amp)
7. If your battery has a voltage of 3.6V multiply this by 3.86 Ah and you get 14.282 Watt Hours. See voltage data for batteries here: https://batteryuniversity.com/learn/article/confusion_with_voltages
8. 1000 Watt Hours = 1 kWh so divide 1000/14.282 = 70 g of pure lithium per kWh. If voltage is say 3.2V * 3.86Ah = 12.352 and divide this by 1000 and you get 81 g pure lithium per kWh
9. Multiply point 8 outcomes by 5.3 and you get a theoretical 371 grams of LCE per kWh of battery capacity, or 0.371 LCE per 1 kWh.
0.371 LCE per kWh is a long way from the 0.9 kWh you get by doing the Telsa battery conversion above, and this is where most get confused.
c.) Estimated actual lithium content in batteries
The simple answer for the difference as to why the theoretical lithium content in batteries differs to what you may see is simply that the batteries don't operate at 100% efficiency, and there are a number of reasons why, which are best explained in these links below. Reasons are among others irreversible capacity loss, discharge loss, cycle life capacity fade, etc which has in effect a doubling to tripling effect in the lithium content in the batteries themselves above the theoretical minimum making LCE per kWh range estimates up to 1.3kg of lithium per kWh in the literature.
http://publications.lib.chalmers.se/records/fulltext/230991/local_230991.pdfhttp://evworld.com/article.cfm?storyid=1826
https://www.linkedin.com/pulse/how-much-lithium-li-ion-vehicle-battery-paul-martin/
http://www.meridian-int-res.com/Projects/How_Much_Lithium_Per_Battery.pdf
The last link above provides the following conclusion in italics, which the other articles essentially agree with. It states:
"The best estimate is around 160 g of Li metal in the battery per kWh of battery,or if you prefer, about 850 g of lithium carbonate equivalent (LCE) in the battery per kWh."
It then further states in italics, when looking at the Nissan battery, the following:
This source does indeed give some data: it claims that a Nissan Leaf battery has about 4 kg of lithium init. Assuming the author is (or was) talking about the 24 kWh nominal capacity Leaf battery, that’s about167 g of lithium (in the battery) per kWh of nominal capacity, which it turns out isn’t far off the nominal value for Li ion batteries when you dig further into the literature."
Now 4kg lithium * 5.3 gets you to 21.2 kg LCE. Divide that by 24 kWh and you get 0.88 LCE per kWh. The irony is Paul Martin in the link above also bags the Golden Sach estimates, which working backwards gets you to 0.9 kg LCE per kWh of installed battery capacity (Tesla 63kg LCE/70kWh) but, at the end of the day, essentially recommends close to that figure anyway, whilst others give a higher figure and some a slightly lower figure.
The point of me rabbiting on is that if battery size increases, as some analysts are suggesting given the size of the Tesla batteries coming to the passenger EV market, and growth opportunities in markets like the US where distances traveled by drivers are greater than say Europe thus a need for the bigger batteries, improvements in battery efficiency can mean at the end of the day that the current set of forecasts for LCE demand might not change that much.
What will change the forecasts is growth rates for EVs being higher than currently forecast as well as further growth in the IMO overlooked 'other' category where demand is also likely to increase (like the battery needs of the stationary energy storage market for households where growth could be significant noting for the large scale energy stationary storage sector that IMO will be the sphere of vanadium IMO).
5.0 Conclusion
The above is all IMO IMO, with a few VBs drunk, but hopefully this thread might be added to by other posters. Obviously the AVZ resource is outstanding, but ultimately it is a question of whether the market opportunity is there for AVZ to enter the market in a timely manner.
Whilst obviously that means getting a cost effective transport solution, the other and important key factor is, is demand sufficient for AVZ to enter the market, noting AVZ's entrance assumes that the existing hardrock and brine producers cannot ramp up their operations to the extent required to meet the projected growth in LCE demand (and hence demand for feedstock to meeting that LCE demand).
Obviously the PFS will address these issues but thought I would give an opinion etc etc
All IMO, VB drunk and time to have another one and make even less sense than I generally make.
All IMO IMO
