Bright outlook for lithium: report

Demand for lithium metals and chemicals is expected to reach 11,250 tonnes in 2006, according to a report by London-based Roskill Information Services. That’s the equivalent of 60,000 tonnes of lithium carbonate and works out to a growth rate of 2-4% a year between now and then.

The report, titled The Economics of Lithium, says the lithium market has grown by 2-5% per year in recent years. In 2001, world demand was 13,000-14,000 tonnes. The outlook for consumption of lithium is relatively bright, as the diverse nature of its uses tends to insulate it against changes in end-use sectors.

The forecast also calls for continued high demand for lithium chemicals for secondary batteries and a decline in demand for lithium carbonate by the aluminum smelting industry.

World production of lithium minerals increased steadily from 6,300 tonnes lithium in 1994 to 11,900 tonnes in 2000. The main growth in output has come from Chile, where production of lithium carbonate increased from just over 10,000 tonnes in 1993 to 35,000 tonnes in 2001, an average annual growth rate of 16.5%.

Production capacity of lithium minerals was more than 50% higher than sales levels in 2001, while the Chilean lithium carbonate producers had a 20% surplus in the same year. Given the relatively modest growth in demand for lithium, it appears there is sufficient capacity in the industry for the foreseeable future.

Some highlights of the report are as follows:

— The lithium market is characterized by a high degree of consolidation. Three major producers — Sons of Gwalia in Australia, Canadian-based Tanco, and Bikita Minerals in Zimbabwe — represent a large part of lithium mineral output.

— In 2001, the value of the lithium metal and chemicals sector was US$450 million, while the estimated value of the lithium mineral sector was roughly US$30-40 million. The value of the lithium metal and chemicals sector is forecast to increase to US$600 million by 2006.

— While the lithium primary battery market is more mature, the lithium ion secondary battery sector has shown high rates of growth (20-30% per year in the late 1990s), based on its use in cell phones and laptop computers. Further double-digit growth is expected until 2006-2007.