General Discussion, page-67

Shared from the 5/27/2022 The West Australian eEdition
LITHIUM ENTERS CRISIS MODE


BLOOMBERG



A 500pc spike in the key EV metal puts the brakes on global net-zero goals
Elon Musk wants to mine it, China is scouring Tibet for it, battery makers are crying out for it.
Lithium, the wonder metal at the heart of the global shift to electric cars, is in a full-blown crisis.
Demand has outstripped supply, pushing prices up almost 500 per cent in a year and hindering the world’s most successful effort yet to halt global warming.
The shortage of lithium is so acute that in China, which makes about 80 per cent of the world’s lithium-ion batteries, the government corralled suppliers and manufacturers to demand “a rational return” to lower prices. Analysts at Macquarie Group warned of “a perpetual deficit”, while Citigroup nearly doubled its price forecast for 2022, saying an “extreme” rally could be coming.
The consequences of failure to produce enough lithium are potentially devastating. Global investment in EVs has grown faster than any other new-energy sector over the past few years, outstripping even wind and solar power. Current lithium spot prices could add up to $US1000 ($1400) to the cost of a new vehicle, Benchmark Mineral Intelligence said. Along with higher prices of other raw materials, that is reversing years of falling prices as EVs race to become cost-competitive with petrol-powered cars. If battery makers can’t get enough lithium, it would curb the expansion of clean-energy vehicles, making it harder to meet global emissions targets.
“It looks like the expansion ramp-up is not going to be fast enough to hit demand” over the next three years, said Cameron Perks, an analyst at Benchmark. EV makers “have been asleep at the wheel”.
The crunch prompted a characteristically blunt tweet from Mr Musk in April. “Price of lithium has gone to insane levels!” he posted on Twitter. “Tesla might actually have to get into the mining and refining directly at scale, unless costs improve.”
Mr Musk’s Tesla and Chinese automakers BYD, Xpeng and Li Auto have all already raised sticker prices, as has Contemporary Amperex Technology Co, the world’s biggest EV battery maker.
The silvery-white metal, the third-lightest element after hydrogen and helium, is in the throes of an unprecedented boom because a slump in 2018-2020 that halved its value and caused chronic underinvestment in new sources of supply just as EV demand was taking off.
Tightening supply and higher prices have prompted a flurry of acquisitions and joint ventures as battery makers and automakers try to secure supplies, and unleashed a wave of resource nationalism among governments. As early as last June, Fitch Solutions said lithium had become a “strategic mineral”, and warned of “rising government intervention”.
EVs and batteries drew $US271b and $US7.9b of investment, respectively, in 2021, according to Kwasi Ampofo, head of metals and mining at BloombergNEF.
Lithium has taken a long time to hit the mainstream. Discovered in 1817 by Swedish chemist Johan August Arfwedson, it wasn’t produced in quantity until the US government began stockpiling it to make hydrogen bombs in the late 1950s. After the Cold War, production declined until the metal began to be adopted for use in light alloys, coin cells and then mobile phone batteries in the 1990s.
More than half of the global resources are located in the socalled lithium triangle between Argentina, Bolivia
and Chile, where producers pump lithium-rich brine from underground lakes and allow the liquid to evaporate for 12-28 months to yield a slurry that can be profitably processed. Current technology recovers only about 50 per cent of the lithium in the brine.
Much of the remaining supply comes from deposits of an igneous rock called spodumene, with Australia the biggest miner. The ore is roasted and leached with sulfuric acid and the silvery-gray residue typically shipped to China to be made into lithium hydroxide and lithium carbonate — compounds that can be combined with nickel or cobalt to make battery electrodes, or with solvents to make electrolytes. The quickest way to increase supply is to ramp up output from these existing sources. Australia’s Pilbara Minerals aims to raise production capacity more than 50 per cent by the September quarter by expanding its Pilgangoora mine in WA, a project that includes Chinese partners Great Wall Motor and CATL.
Mining superpowers Australia and Canada have both promised to help develop critical mineral resources, including lithium.
“There is plenty of lithium in the ground, but timely investment is the issue,” Joe Lowry, founder of advisory firm Global Lithium, said. “Tesla can build a gigafactory in about two years, cathode plants can be built in less time, but it can take up to 10 years to build a greenfield lithium brine project.”
Part of the reason consumers are prepared to pay a premium for an electric vehicle is that it’s better for the environment. But the lithium supply chain is far from green.
“Producing lithium to use as little electricity and water is a critical goal,” Ken Hoffman, senior expert at McKinsey & Co, said. “Coming up with one or several of these novel ways to produce ‘green lithium’ will be vital to the long-term success of this industry.”
The environmental and supply issues have prompted companies to look for alternatives to the lithium-ion battery, including hydrogen.
But none have come close to supplanting lithium in the allimportant passenger car market, and most are years away from commercial viability.
“Lithium-ion will remain the dominant battery technology, at least up to 2035,” said BloombergNEF’s Mr Ampofo.
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