Growth ahead for lithium demand, but supply should keep pace By:...

Growth ahead for lithium demand, but supply should keep pace

By: Matthew Hill
13th July 2011

TORONTO (miningweekly.com) ? While the electric vehicle industry is set to put the pedal to the metal for lithium demand, it?s unlikely that any supply shortage would persist for long, an analyst said this week.

?If demand starts to grow faster than the market expectations, we might see some tightness in the short term,? Chilean-based signumBOX GM Daniela Desormeaux said.

?However, it is unlikely that this situation persists over time, since new supply is coming on stream, not only from newcomers, but also from current producers.?

Because lithium goes into the batteries of cell phones, laptops and other digital devices for which have grown significantly in popularity over the past decade, demand for the silvery-white metal has soared.

This shift has caught the interest of the mining industry, with around 80 new lithium projects being announced over the past four-to-five years, according to Desormeaux.

?Nevertheless, it takes at least three-to-four years for a project to start producing at a commercial scale.?

There has been a particularly significant flurry of projects in South America?s lithium belt, stretching across the mountains of Chile, Bolivia and Argentina.

In this region, the metal is found in dry salt lakes and is relatively easy to mine.

While there might be some 80 exploration projects on the go for lithium, Desormeaux doesn?t believe more than three-to-four projects will start producing in the next five years.

Australia?s Talison ? on of the top three producers ? in March unveiled a major expansion plan, where it will more than double output of lithium carbonate to 110 000 t/y.

Other companies like Canada Lithium Corp aim on building new mines to meet growing demand.

While the consensus in the industry is that demand will grow at around 5% a year, newly TSX V-listed International Lithium Corp believes a compound yearly growth rate of 8% to 12% is possible.

Where will the bulk of this growth come from?

?Undoubtedly the main driver of the demand is the battery industry, especially batteries for electric cars,? said Desormeaux in an email interview. China, in particular has ambitious plans to grow its electric vehicle industry.

International Lithium Corp forecast there will be 25 lithium-powered car models globally available by next year.

While batteries only accounted for 23% of lithium demand in 2010, with the glass and ceramics industry taking up 31%, this is changing fast.

Some industry watchers have suggested demand for lithium batteries from electric vehicles will that from consumer products by 2013.

While a cell phone typically has 5 g of lithium carbonate in its battery, an electric car can have 24 kg.

A fast-growing solar and wind power industry needs to store energy for when the wind or the sun stops periodically, and this also uses lithium batteries.

Warehouse-sized batteries for grid stabilization can use 800 kg/MW 800, according to Canada Lithium.

Desormeaux estimate that, by 2020, more than 60 000 tons of lithium carbonate would be required for electric cars batteries.

By 2025, this could reach around 150 000 t.

To put this in context, current lithium demand ranges between 125 000 and 140 000 t.

Last month, two of the biggest producers announced a 20% price increase for their customers, mainly as a result of higher raw material costs.

But Desormeaux doesn?t expect that prices will continue to climb as rapidly.

?If demand grows as we expect, we should expect that the market remains balanced, and prices should remain at current levels, in real terms."

http://www.miningweekly.com/article/growth-ahead-for-lithium-demand-but-supply-should-keep-pace-2011-07-13