SYDNEY -- Australia lithium miners are in prime position to benefit from a price surge for the soft light metal this year, as industrial users in China, Japan and South Korea rush to shore up their supply chains for vital materials to make electric vehicle batteries, home energy storage systems and consumer electronic devices such as smartphones.
Benchmark "battery grade" lithium carbonate that was selling for $5,000 to $6,000 a metric ton nine months ago reached $8,500 in June, and Australian producers expect prices to reach as high as $10,000 later this year.
Lithium is sourced either from lithium-bearing minerals such as spodumene -- known as hard-rock mining -- or from brine deposits via evaporation. After concentrating and processing into lithium carbonate or lithium hydroxide, various lithium chemicals are produced for use in batteries, ceramics, glass, lubricating greases, thermoplastics and pharmaceuticals.
BYD's 12-meter ebus -- or electric bus -- for SunLine Transit in California (Courtesy of BYD)
Australia is now the world's top lithium producer, led by Talison Lithium's massive Greenbushes hard-rock mine in Western Australia; the company is 51% owned by China's Tianqi Lithium and 49% by U.S.-based Albermarle.
In another example of the expanding lithium linkages between Western Australia and China, local groups Galaxy Resources and General Mining reopened their Mount Cattlin hard-rock mine in April and expect to begin full production in September to meet demand from Chinese customers and Japan's Mitsubishi Corp.
A third Western Australian project, a joint venture between Neometals, Mineral Resources and Ganfeng Lithium at Mount Marion near Kalgoorlie, will launch a pilot plant in the fiscal year to June 30, 2017. Ganfeng, China's largest lithium producer, has a 43% stake in Mount Marion and has committed to taking as much as 200,000 metric tons a year of lithium-bearing spodumene.
Another Western Australian project with a Chinese offtake partner, Pilbara Minerals' Pilgangoora mine, is targeting production by 2018, after signing an agreement in early July with Jiangsu-based General Lithium. Soaring stocks
As a result of the price surge, Australian stocks with a lithium focus have soared this year. Galaxy Resources, for example, which is in the middle of a friendly merger with General Mining, has seen its share price rise from less than one Australian cent a year ago to A$0.45 in the final week of July. General Mining has gone from A$0.04 to A$0.74. Once their merger is completed in coming months, Galaxy-General will become the second-biggest listed lithium stock in Australia after Orocobre, which is focused on its Olaroz brine-extraction lithium project in Argentina.
According to recent estimates by Macquarie Research, Australia will supply an estimated 64,000 metric tons of lithium carbonate equivalent (LCE) -- the industry's standard unit -- in 2016, putting it ahead of Chile (62,000 metric tons) and Argentina (30,000 metric tons), out of total supply of 180,000 metric tons.
Tesla's Powerwall home energy storage system and Model S electric car (Courtesy of Tesla)
