The following Interview was conducted in the week ended June 26. I, Peter Epstein, CFA, MBA have no prior or existing relationship with Simon Moores or his company Benchmark Mineral Intelligence.
Benchmark’s goal is to become the world’s most trusted source of information in this space by offering:
- Accurate market prices collected and set by us for the industry
- Original, accurate supply and demand data
- Impartial, independent, expert analysis
- Forecasting of supply, demand and prices
Rather than simply reporting on what the industry is saying, we want to explain to the industry how we see developments from our independent, global perspective. Our in-house experts not only collect the data but also analyze and forecast for our global customer base.
Please provide readers with an overview of the supply side of the lithium market including possible risks to supply.
The lithium market is now in a period of short supply for both lithium carbonate and hydroxide. Leading producers – especially Chile and Argentina – have not increased capacity of either product over the past number of years while demand from lithium-ion batteries has been steadily increasing.
2015 is the pinch point for this and has now pushed the industry into a shortage.
The main risk is one of supply availability for the growing battery industry. With lithium-ion mega-factories under construction and planned to come on stream from 2017 onwards, new lithium capacity will be needed. But installing new capacity could take time, up to two years to be fully ramped up.
Most new lithium projects are publicly listed companies which can be problematic as funding fortunes are usually linked to the wider investment community. This means funding to get new capacity on stream is very hard to come by so lithium buyers have to turn to the major producers for new supply. This hasn’t come in the last three years so we now face a shortage.
The next logical question is, what are your thoughts on demand? Are there wild cards that could challenge the conventional wisdom that demand will come largely from EV and grid storage batteries?
There are some bright spots for demand outside of batteries including advanced light weight metals such as aluminum lithium alloys.
However, such is the expansion that is happening with lithium-ion batteries at the moment, we expect this market to continue to strengthen and dominate as the number one end use for lithium chemicals.
How important is the growing use of lithium for alloys such as lithium/aluminum for key components of airplanes, cars, etc?
Expanding on the above comment, I think aluminum lithium alloys will play a crucial role in transport. There is a great need to become more fuel and energy efficient and at the moment the most effective way is to make the materials lighter while not compromising on strength.
This is where I see a bright future for aluminium lithium alloys and plastics, especially for automotive, aeroplanes and aerospace. I also think new engineered materials like graphene will also play a key role in this advanced materials market.
How important on a global scale is lithium? Is it listed as a, “critical metal” in any countries? Is anyone stockpiling lithium?
Yes, for sure. The European Commission gave lithium a critical status as did the British Geological Survey in 2013.
Lithium carbonate can be stockpiled but from what we see at Benchmark Mineral Intelligence these stockpiles are low. Buyers have been consuming from the previous stockpiling phase just after 2009-2010 price spike.
Lithium hydroxide can’t be stored for very long so customers tend not to keep significant stocks as there is a risk of the product going past its use by date.
Regarding the lithium triangle of Argentina, Chile and Bolivia do you have any comments on the risk of disruption of supply due to politics or other factors?
Politics is a major factor in disrupting or helping lithium supply in all of these countries. A major reason why we are in a lithium shortage is because everything in Chile had been on hold in recent times because of the change of government. This included any potential expansion plans companies in Chile may have had and new exploration. Argentina has been more favorable in recent years which has resulted in the start up of Orocobre, the world’s newest lithium mine. Bolivia has used lithium as a political tool for years. It hosts the world’s largest deposit, the Salar de Uyuni but is one the world’s poorest countries. This promise of a new economy based on lithium is more powerful as a promise than reality so commercialization is yet to happen.
COMIBOL, the state owned company, has established a pilot plant on the site but little progress has been made.
How important is grade? In sectors such as graphite, grade is widely considered of paramount importance
Grade is important in most sectors. The higher the concentration of an element in the ground, generally the more you get for your money.
New extraction techniques – like we are seeing in lithium – can shake up this principal however. For example in the magnesia industry, sea water is a source. I think when you also look at what companies like Simbol Materials are trying to do with geothermal sources are also challenge the traditional ways of mining where grade is king.
What are the main differences between hard rock mining and sourcing lithium through brines? Does each approach end up with roughly the same ending product?
The principals are the same; trying to isolate the lithium. But the processing routes are very different.
In brine processing, lithium rich salt water is extracted from subsurface sources, mostly in South America. These then undergo months of evaporation in progressively smaller ponds to concentrate lithium in the solution. Once the liquid is around 6% it’s sent to a processing plant to be turned into the starting raw material lithium carbonate.
In hard rock processing, this is more familiar mining, crushing, grinding. At first, much like with brines, you need to get a concentrate. This is then processed through an acid leaching method to extract the lithium, which is then crystallised out to create the final lithium carbonate.