Battery makers lock in Ganfeng lithium hydroxide supply
Published date: 24 September 2018
The development of electric vehicle (EV) batteries with longer driving ranges is lifting demand for lithium hydroxide and prompting lithium-ion battery producers to secure long-term supply.
US-based EV manufacturer Tesla has signed a deal to purchase battery grade lithium hydroxide from Chinese lithium salts producer Jiangxi Ganfeng in a contract that runs to the end of 2020 and can be extended for three years. The deal will account for 20pc of Ganfeng's annual lithium hydroxide output, the company said.
Ganfeng will have 30,000 t/yr of lithium hydroxide capacity by the end of 2018, in addition to 40,000 t/yr of lithium carbonate capacity. It commissioned a new 20,000 t/yr lithium hydroxide plant in the first half of this year. That would indicate around 6,000 t/yr will be allocated to Tesla and not available to the spot market.
Tesla's designated suppliers had previously purchased lithium from Ganfeng, but the volumes amounted to less than 1pc of its output, Ganfeng said.
Japanese battery manufacturer Panasonic produces lithium nickel cobalt aluminium (NCA) batteries for Tesla at the Gigafactory in Nevada. The increased use of nickel in lithium-ion battery cathodes increases the energy density and life cycle, and in turn requires more lithium hydroxide for chemical stability than other chemistries. Lithium iron phosphate (LFP) cathodes, for example, typically use lithium carbonate.
The agreement between Ganfeng and Tesla follows a separate deal signed last week for Ganfeng to increase its supply of lithium carbonate and hydroxide to South Korean battery manufacturer LG Chem by 45,000t to a total of 92,600 t/yr over 2019-25. That would average around 15,400 t/yr of output.
Ganfeng had previously agreed in August to supply LG Chem with 47,600t of lithium hydroxide over 2019-22. The prices for the material will be adjusted in line with the market, Ganfeng said. Hydroxide producers secure raw material supply
Automotive manufacturers have been keen to secure supply of raw materials for EV batteries directly, as they have typically been vertically integrated and concerns about security of supply of lithium and cobalt in particular have added further impetus.
Ganfeng is also moving to secure additional sources of raw material supply. Last month the company acquired Chilean lithium producer SQM's stake in the Cauchari-Olaroz project in Argentina, jointly owned with Canada-based Lithium Americas, which is scheduled to start producing lithium carbonate from brines in 2020.
Ganfeng holds a stake in Canadian exploration company International Lithium and the companies are developing projects in Argentina and Ireland. In Australia, Ganfeng has an offtake agreement with developer Pilbara Minerals for the first stage of its Pilgangoora lithium project in Western Australia (PLS, AJM). And it owns a 43.1pc stake in the Mount Marion lithium project in Western Australia (MIN), where it is the offtake partner.
Chinese lithium salts producer Jiangxi Yun Lithium said today it has signed an initial agreement with Africa-focused Montero Mining and Exploration to develop lithium production in Namibia. Under the agreement, Jiangxi Yun Lithium could a sign long-term offtake agreement with Montero, and provide beneficiation technology, financing support and the opportunity for Montero to invest in lithium carbonate and hydroxide facilities in China.
Jiangxi Yun Lithium has an annual production capacity of 20,000 t/yr of lithium carbonate and is targeting 40,000 t/yr by 2020.
Let's expand on that a little further!
Any of the current suppliers can increase output if demand warrants it necessary and there is a lot stockpiled at the minegate. Follow the money! Wesfarmers, Albemarle have delayed projects and Tianqi has postponed one of their hydroxide facilities all while they have the ability to double output at Greenbushes. And yet Tianqi is suffering with a huge debt load. Ganfeng share price has gone bullish recently, why? Cause they have their finger in so many pies right now. Ganfeng agreements with PLS - The Stage 1 (2Mtpa) off-take agreement comprises 160,000tpa of chemical grade spodumene concentrate (SC6.0 basis) over an initial 10-year term, with two five year options to extend for up to a further 10 years. The A$50M equity placement is in lieu of a debt or pre-payment facility for Ganfeng to secure an additional 75,000tpa of spodumene concentrate under its Stage 2 offtake agreement (for a total of 150,000tpa under the Stage 2 offtake agreement). AJM - Minimum of 70,000 dry metric tonnes (dmt) per annum of 6% grade spodumene concentrate (SC6.0) with minimum 8,000 dmt commitment in 2018; Minimum price of US$550 dmt (FOB equivalent) based on Li20 content per dmt on 6% Li20 until end of 2020; BOA further diversifies GFL’s existing supplier base and provides the option to increase supply through access to 50% of the Stage 2 expansion production from the Altura Lithium operations. MIN - 43.1pc stake in the Mount Marion lithium project in Western Australia (MIN), where it is the offtake partner. LAC - Chinese firm Ganfeng Lithium has closed a previously announced transaction to increase its interest in the Caucharí-Olaroz lithium brine project in Jujuy, Argentina from 37.5% to 50%. Lithium Americas president and CEO Jon Evans said: “We are delighted to complete the project investment with our 50/50 joint venture partner, Ganfeng Lithium, building on our long history of working together. Bacanora- In May, Chinese Ganfeng invested at 25p per share for a 29.9% stake in Bacanora, but also took a 22.5% direct stake in the Sonora lithium project in Mexico that can rise to 50%. Ganfeng can also acquire 50% of all Sonora’s lithium production during phase 1, with an option to increase this offtake to 75% in phase 2 when production will rise to 35,000tpa.
Tesla - US-based EV manufacturer Tesla has signed a deal to purchase battery grade lithium hydroxide from Chinese lithium salts producer Jiangxi Ganfeng in a contract that runs to the end of 2020 and can be extended for three years. The deal will account for 20pc of Ganfeng's annual lithium hydroxide output, the company said. Ganfeng will have 30,000 t/yr of lithium hydroxide capacity by the end of 2018, in addition to 40,000 t/yr of lithium carbonate capacity. It commissioned a new 20,000 t/yr lithium hydroxide plant in the first half of this year. That would indicate around 6,000 t/yr will be allocated to Tesla and not available to the spot market. Tesla's designated suppliers had previously purchased lithium from Ganfeng, but the volumes amounted to less than 1pc of its output, Ganfeng said. LG Chem - Ganfeng had previously agreed in August to supply LG Chem with 47,600t of lithium hydroxide over 2019-22. The prices for the material will be adjusted in line with the market, Ganfeng said. The agreement between Ganfeng and Tesla follows a separate deal signed last week for Ganfeng to increase its supply of lithium carbonate and hydroxide to South Korean battery manufacturer LG Chem by 45,000t to a total of 92,600 t/yr over 2019-25. That would average around 15,400 t/yr of output. https://www.mining-technology.com/news/ganfeng-lithium-increases-stake-in-cauchari-olaroz-project/ Ganfeng is also moving to secure additional sources of raw material supply. Last month the company acquired Chilean lithium producer SQM's stake in the Cauchari-Olaroz project in Argentina, jointly owned with Canada-based Lithium Americas, which is scheduled to start producing lithium carbonate from brines in 2020. Ganfeng holds a stake in Canadian exploration company International Lithium and the companies are developing projects in Argentina and Ireland. Explorex - Explorex Announces $1 Million Strategic Investment Commitment by Ganfeng Lithium Co. Ltd. and Increases Financing. Vancouver, British Columbia-(Newsfile Corp. - October 4, 2017) - Explorex Resources Inc. (CSE: EX) (the "Company" or "Explorex") is pleased to announce it has signed a Letter of Intent ("LOI") with Ganfeng Lithium Co. Ltd.("Ganfeng") for a $1 million strategic investment in the Company. Who does that leave then in the lithium world? Not many…. SQM
Orocobre
Livent (FMC)
ALB - 50% Wodgina MRL asset, Kings Mountain, NC, Silver Peak Salar de Atacama in the desert of Northern Chile
Tianqi – Talison/Greenbushes
So this is why Ganfeng has been so bullish. They have sewed up the lithium carbonate / hydroxide market to take a commanding stake in ownerships and offtake agreements! Who makes all the margin now?
PLS Price at posting:
33.5¢ Sentiment: None Disclosure: Not Held
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