General
I have a VB in hand so feel like adding to this post. For those interested:
1. This post explains conversions -
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2. This post explains how much lithium is in a battery -
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3. This post explains what are the predominant batteries going forward, been NCA and NCM batteries and views around solid state batteries - from Section 3 of this post
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NCA/NCM batteries require lithium hydroxide, whilst solid sate batteries require a lithium carbonate feedstock, noting it would be a much better lithium carbonate feedstock to general lithium carbonate feedstocks. Hydroxide has less impurities than carbonate and has a higher processing cost than carbonate.
4. We can agree that the biggest cost component of an EV is the battery, which is made up of a number of minerals - (graphite, lithium, etc etc depending on battery type associated with NMC, NCA, LFP, solid state etc
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5. I use lithium carbonate equivalent as that tends to be how much of the reported data is done.
Reason for Post
1. A lot of the lithium data when reporting batteries component parts in EV is in metal equivalent terms . You here on HC quite often IMO because a EV battery has 7kg - 10 kg of lithium, therefore the price of lithium can be well above say US$10000 per tonne for a very very very long time as lithium doesn't impact the cost of an EV battery/EV. That is not correct, as a lot confuse this 7kg - 10kg reporting with some lithium carbonate equivalent (LCE) (or even spodumene feedstock) - it is not, it is reported in lithium metal terms.
2. There is 5.3 tonnes of LCE to produce 1 tonne lithium metal assuming 100% recovery rate. Recovery is probably closer to 90% but I haven't found data, nor tried to work it out myself to date, but doesn't detract from the below.
3. You need 7.5 tonnes of 6% grade spodumene feedstock to produce 1 tonne of lithium carbonate equivalent - at a 90% recovery rate which is the generally reported rate (though 85% has been reported as well, making it 8 tonnes spodumene feedstock required then).
4.
LCE kg needs in batteries for passenger vehicles is some 0.9 kg per kWh - this is above the theoretical efficiency if achieved
5. 7 kg lithium metal is equivalent to a battery size in EVs of 41kWh (7 * 5.3)/0.9, whilst 10kg is equivalent to a battery size of 59kWh. So that gives the gauge of what is reported as it does align with the kWh battery kWh generally reported for EVs
6.
At 6% grade spodumene Li content is 2.78%, LCE is 18.8Li
Lithium cost per EV of feedstock
Here is the crunch, if your battery size in an EV is 50kWh, then effectively you need 45kg LCE (50*0.9) in it. So 1 tonne LCE is equivalent to 22 EV batteries. So if your cost of LCE is say US$80,000, then per battery, looking at a LCE input cost of around US$3,600. This is before we cost all the other minerals in the battery, and the remainder of the EV itself, and that is also a key. For example, there is more graphite in an EV than lithium, from recollection, noting again there is other minerals as well - obviously more information/analysis in the embedded posts above.
Taking this to 6% grade spodumene, in effect gets you 2.93 vehicles (22 EVs/7.5 tonne coversion). So, if you cost of 6% grade spodumene is say US$6000 per tonne, then the spodumene alone is US$2,040 per EV, which obviously needs to be grossed up when it becomes LCE (i.e. the processing cost to get to LCE), At US$3,000 per tonne 6% grade spodumene input cost (before processing to LCE) is US$1020.
Improving battery efficiency
A key area where I think battery improvements are going to happen is in increasing battery efficiency towards the theoretical efficiency of the battery potential - and that will help keeping spodumene prices well above current DFS views for spodumene for a very long time IMO. Currently LCE need in batteries is more than two times theoretical efficiency. Efficiency improvements will bring done the cost of EVs IMO, and that is where high prices may be able to stay. And that is also why early movers like PLS especially, and now LTR are going to benefit very very well long term IMO - on theoretical efficiency refer
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Back to LTR
Been a first mover in this space to take advantage of the supply shortage means LTR is well placed to meet its payback period early obviously IMO, generate significant cash flow and use that to grow and establish itself in the market as a very long term player (and a player that can ride the waves during down and up times). There is always advantages with first movers, and that sets shareholders well. Early movers can ride the waves, and late comers will be the ones whose projects become more heavily scrutinized. My view is prices will stabilise but do so as more suppliers come onstream, but been one of the first new suppliers is what the real benefit is for LTR (just as it has become for PLS). And as the future is NCA and NCM batteries, requiring hydroxide, that puts hard rock players in the best position, as it is a single process from going from mining to hydroxide, compared to two stages for brine producers. And obviously for the immediate future, and this side of 2030 I certainly see 6% grade spodumene prices well above what most companies had in their DFSs. LTR is extremely well placed to make shareholders here quiet happy lon term.
I also agree that most analysts haven't a clue, especially GS.
All IMO IMO
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