Originally posted by VivaLaVida
I can't remember if we have a thread that's for general news and info on the lithium sector... I went back a few pages and didn't find one, so decided to post this here...
This Benchmark Minerals Research Note is worth taking the time to read.
https://www.benchmarkminerals.com/lithium-supply-revisited/
My (some what lengthy) Summary:
- Supply expansions in 2018 were slower than expected by many at the start of the year. The ‘tsunami’ of new supply forecast by some has turned out to be little more than a changing in the lithium tides.
Brine:
- It was product from the Qinghai in China that threatened to swing the market into excess supply
- Benchmark visited the Qinghai operations. Whilst plans are in place to triple or quadruple capacities over the coming 3-4 years, technical challenges with high magnesium concentration are yet to be overcome.
- Across the region, only an additional 5-10,000 tonnes found its way to market, much of which was only technical grade. This means a large proportion was either reprocessed (adding cost) or converted to hydroxide to meet the growing demand for nickel rich cathode technologies.
Spodumene:
- As for the raft of new spodumene producers due to enter production in 2018, startups have proved slower than expected.
- Four new operations (Alliance, AMG, Pilbara Minerals and Altura Mining) are on track to produce over 20,000 tonnes LCE equivalent by the year's end. But factoring in shipment times, testing and qualification less than half found its way to market by the end of 2018.
- This material will only begin to have an impact throughout 2019, however, major questions remain about how quickly chemical quantities will reach the market.
Conversion Constraints:
- While (four) new operations have address
ed the short-term needs of the conversion market, entering 2019, 100% of spodumene capacity is either tied to offtake or fully integrated in the case of Greenbushes.
- If all producers were to meet their 2019 target capacities (as per above table), there would be over 2m tonnes of chemical grade spodumene concentrate entering the market next year.
- Over 62% of this feedstock would be controlled by three of the world’s top four lithium chemical producers – Albemarle, Tianqi and Ganfeng.
Spodumene Step Change:
- This leaves an industry that's trying to diversify it's supply chain heavily reliant on a small group of conversion gatekeepers.
- Firstly, will these three converters have capacity to process this amount of material, and secondly which companies will be in a position to convert the remaining supplies (upto 790,000 tonnes)?
- To convert all Greenbushes material will require Albemarle to double conversion capacity in China and Tianqi to achieve its ramp up ahead of schedule at its new hydroxide facilities in Western Australia.
- And Ganfeng would have to achieve a three-fold increase on it's 2017 production.
- The remaining converters have unclear timelines on plant expansions or will be relying on tolling contracts.
- As a result, even if the ramp up of new spodumene sources are successful, there is a strong possibility of a bottleneck in conversion capacity – especially for the high spec material required by the battery market.
- Applying favourable logic, there is likely to be less than an additional 80kt LCE equivalent enter the supply chain in 2019.
- Whether this finds its way through to the chemical market – and at what specification – remains a critical question, but even in the most favourable of ramp-ups, production from spodumene is only likely to take a step forward rather than a leap into the oversupply abyss.
Carbonate v Hydroxide:
- A trend which emerged in 2018, and will undoubtedly continue into 2019, is opposing cost curves for brine to lithium carbonate vs spodumene to lithium hydroxide production.
- Although the energy density requirements of China’s EV subsidies meant there was a concerted push towards hydroxide containing chemistries in 2018, Chinese producers and policies have withdrawn from this aggressive shift in recent months – strengthening the outlook for chemistries that can employ either lithium carbonate or lithium hydroxide feedstocks.
- It's clear is that there is a still a long way to go to reach the 1m tpa lithium threshold the industry is expected to exceed by 2026, and even if the market moves into excess in 2019, battery demand dictates that supply and demand will be finely balanced for the foreseeable future.
- While the addition of new capacity in the market guarantees a strong foundation for demand in the age of the megafactories, the journey for lithium’s supply growth has just begun.
Does anyone know what plans GLN have for our Greenbushes tenements?
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(20min delay)
