Lithium’s future supply, demand

SAN DIEGO, CALIF. — With lithium generating so much interest this year, it’s a great time for an overview of the world’s leading lithium deposits and the various plans to mine them.

First off, the global lithium market has two major segments: one for mineral concentrates with a low enough iron content to be suitable for direct use in glasses, glass ceramics, ceramics, enamels and glazes; and another for chemicals, metals and metal derivatives.

The former market is dominated by Talison Lithium (TLH-T) with its large-scale production of spodumene concentrates in Western Australia, with much lower tonnages produced by others in Zimbabwe (petalite) and Portugal (petalite and lepidolite) and China (lepidolite). (Tanco in Manitoba was a former supplier to the market.)

Talison is now expanding its annual capacity from 260,000 tonnes to 480,000 tonnes of a variety of grades, but a high percentage of current and future production will be as feedstock for chemical production.

Lithium chemical production is based exclusively on brines from Nevada, Chile and Argentina, except in China where spodumene dominates as feedstock and in Brazil on a small scale.

Current chemical production capacity approximates to 130,000 tonnes of lithium carbonate equivalents (LCEs) — equivalent to about 24,500 tonnes of elemental (i. e. pure) lithium. Chemical demand in 2008 was 91,500 tonnes of LCEs, then it dropped to 70,000 tonnes the next year as a result of the recession. One major producer estimates that demand this year will be about 94,000 tonnes LCEs, therefore indicating a current excess capacity of about 35,000 tonnes LCEs.

In anticipation of a major increase in lithium demand based mainly on the large-scale electrification of motor vehicles, there has been a rush to develop new sources of supply from continental brines, pegmatites, a geothermal brine, hectorite clay and the unique mineral jadarite found in Serbia.

There are many future demand estimates for lithium, and they vary greatly mainly because it’s difficult to predict the demand for lithium batteries in vehicles. Variables include the rate of market penetration of electric vehicles, the nature of the vehicles (hybrids, plug-ins or fully electric) and battery chemistries.

In September in Seoul, Lucie Bednarova Duesterhoeft of the General Motors Strategic Planning Group presented the most recent lithium-demand estimate. As with most others, she presented two scenarios: “battery sceptical” and “uber green.”

By 2020 she estimates annual electric-car sales will be either 7.5 million or 20 million, growing by 2070 to either 50 million or 170

million. Translating these figures into LCE requirements for 2020, 2050 and 2070, she estimates LCE demand at between 15,000-35,000 tonnes, 150,000-400,000 tonnes and 250,000-750,000 tonnes, respectively.

Companies and projects that seem likely to join the list of producers include (See table opposite): the salars of Olaroz, Rincon and Cauchari (Argentina), Uyuni (Bolivia), Tibet and China; the Salton Sea KGRA; Mt. Catlin and Mt. Marion in Western Australia; Canada Lithium’s (CLQ-T, CLQMFO) CLQMFO) Quebec Lithium near Val d’Or, Que., and from two pegmatites in China and one in Finland; Western Lithium’s (WLC-T, WLCDF-Q) hectorite occurrence at the McDermitt caldera on the Nevada-Oregon border and jadarite in Serbia have announced target tonnages of 228,000 tonnes of LCEs; and Lithium One’s (LI-V, LITHF-O) brine and pegmatite projects. Also, Talison might use a percentage of its spodumene production to produce its own chemicals.

In addition to these potential new sources of supply, the specialty chemicals group Chemetall plans a phased expansion from its current 38,000 tonnes LCE per year to about 65,000 tonnes LCE annually by 2020 based on current market estimates, and FMC Corp. (FMC-N) plans a 30% expansion to 23,000 tonnes LCE annually.

Sociedad Química y Minera de Chile (SQM) (sqm-n) has not, to my knowledge, announced anything more specific than its intention to maintain its market share. However, the volume of brine currently being pumped (grading 2,700 parts per million lithium) by SQM to allow the production of 1.5 million tonnes per year of potash contains such a large volume of lithium in excess of its current production capacity of 40,000 tonnes per year that 400,000 tonnes annually of LCEs are being re-injected into the aquifer. The potential for expansion using these highly concentrated brines is obviously very large.

The tonnages of expanded production, excluding SQM and any major brine increases in China, plus new projects totals 264,000 tonnes LCE annually, or 170,000 tonnes greater than estimated demand in 2010.

Thus, with so many projects racing to come on stream, there could well be a major over-supply problem in the short term.

Future demand

Although they vary greatly, future demand estimates are consistently huge, calling for production levels that dwarf those of today. Matching demand will require an appropriate tonnage of reserves.

In 2006 and 2008, William Tahil of Meridian International Research produced reports arguing against the development of lithium-ion batteries because of the inadequacy of reserves. He claimed that only continental brines could be considered as a source, that production in the Salar de Atacama was possibly illegal and many other comments that I described as alarmist and, in some respects, ludicrous.

More recently Tahil has suggested that battery requirements per kWh of capacity are more than double what they really are (1.4-1.5 kg versus 0.6 kg of LCEs) and that conversion of technical grade carbonate to battery grade involves losses of 70% (in actuality the price difference between the two products is between 5-10%).

After Tahil’s first report, I was approached by several very concerned battery manufacturers asking for a response. I have since written several reports.

My estimates, as was the case in a U.S. National Research Council report published in the mid-1970s, are essentially on the inventory of known lithium resources with published tonnages that, by consideration of grade, could be considered potentially viable in an environment of rapidly increasing demand.

Higher costs may be involved but it is worth noting that in the instance of lithium-ion batteries, projected to be a large future market, the cost of the lithium is only 1-3% of the battery cost.

In 1975 most of the tonnages were in respect of pegmatites and we made deductions to allow for mining and processing losses. Only one major brine was included and, as we did not have a reasonable estimate of what recovery would be realized, an in situ tonnage was included. Apart from the pegmatite tonnages in the 1975 report, all other tonnages are in situ.

Other authors developed similar estimates to my own which currently approximate to 34 million tonnes lithium, including 7.8 million tonnes lithium at current operations and 7.2 million tonnes lithium at fairly advanced projects.

Even the United States Geological Survey (USGS), which is very conservative in its estimates, has now increased its resource estimate to 25.5 million tonnes.

To put these figures in the context of vehicle demand, each 1 million tonnes of lithium is sufficient for 395 million Chevrolet Volts or 250 million Nissan Leafs — the first two mass-market cars scheduled for launch in the United States.

Some listed resources may never become economic reserves, but new occurrences will be discovered and existing occurrences will be enlarged. As lithium is not consumed in the batteries, recycling will be important.

Probably, the most underestimated resource is the Salar de Uyuni in Bolivia, covering an area of 10,000 sq. km. Currently, the resource tonnage is listed by the USGS, myself and others as
9 million tonnes lithium. There are problems, though: the grade is low, the magnesium content is high, the salar floods seasonally and the political environment is discouraging.

On the upside, however, the tonnage is only for the uppermost and thin salt horizon, whereas there are seven salt horizons — all reputedly highly porous with an aggregate thickness of 170 metres and drilling has not reached the base of the salar at 230 metres.

Many press articles have suggested that the future of the electric vehicle depends on the development of the Salar de Uyuni. This is not the case but because of its size, its development seems inevitable at some stage and possibly vital in an “uber green” scenario. This is potentially the world’s largest source.

— Based in San Diego, the author is a geologist who has been involved in the lithium subsector globally since the early 1970s.