Part 2: The rise of lithium
Warren Dick/SP Angel | 27 December 2015 20:35 A previously obscure mineral has come to the forefront of technological developments supporting the growth in production of electric cars – lithium. Regular readers of Mineweb would have learnt about Tesla’s efforts to secure lithium supply ahead of the opening of its Gigafactory near Reno, Nevada.
The Gigafactory will be responsible for building roughly half a million lithium-ion batteries for Tesla motorcars by the end of the decade. To help us get our heads around the market for lithium we asked the analysts at SP Angel to prepare some information which we have included here – Ed.
What is it used for?
Two separate markets for lithium currently exist: chemical and technical products. Lithium use in primary (non-rechargeable) and secondary (re-chargeable) batteries in production of cathodes and lithium-containing electrolytes accounts for nearly a third of global demand and is the major user of lithium chemicals (see graph).
Additional lithium chemicals applications include greases, air-conditioning units, aluminium production, catalysts pharmaceuticals, polymers and cements. The lithium technical market includes uses in glass and ceramics and metallurgical industries (used as a scavenger or remover of impurities).
While the use of lithium in batteries used in electric and hybrid cars is not currently its biggest application, its use in rechargeable batteries – typically lithium-ion – will undoubtedly be a major driver of future demand growth. Lithium-ion batteries are also being increasingly used in portable electronic devices.
Application of lithium in batteries
Lithium-ion batteries have minimal memory effect (capacity of the battery drops if it is recharged before being fully depleted) and show high charge discharge rates, making it useful in mobility applications for acceleration in vehicles using electric motors. These properties have driven lithium-ion’s share in global usage of rechargeable batteries from non-existent in 1991 to more than 80% by the end of 2000’s.
Annual lithium demand currently runs at around 160 thousand tonnes per annum (Ktpa) for lithium carbonate equivalent (LCE), which translates to 30Ktpa lithium. This marks a 6.8% p.a. compound annual growth rate (CAGR) from the beginning of the 2000’s based on Roskill estimates. Market estimates are for an aggressive expansion in demand primarily led by the lithium-ion batteries sector on the back of increasing penetration levels of electric vehicles and hybrids.
Roskill expects demand to hit 290kt LCE in 2020 with a potential upside of growing up to 420kt LCE under “optimistic” scenario which would imply between a 10-17% annual growth rate. Rockwood Lithium, a subsidiary of Albemarle, estimates lithium demand to hit 250ktpa LCE in 2020 based on its “low” scenario, and 320ktpa LCE according to its “high” scenario, implying 8-12% growth rates.
To what degree will electric vehicles affect that?
The number of electric vehicles on the roads is set to increase moving forwards with more models to choose from and lower purchase prices which will be driven by the falling price per vehicle, led by developments in battery technology.
Latest estimates showed battery pack costs (which account for 15-20% of the total cost of an electric vehicle) has fallen by about 14% per annum between 2007 and 2014, from US$1,000/kWh to US$410/kWh. Forecasts are for costs to continue to fall towards the US$150/kWh threshold which will make electric cars price-competitive with internal combustion engines.
But the penetration of electric cars will also depend on the price of oil. The recent decline in oil prices has cut the equivalent miles per gallon of comparable electric cars.
