Cobre Montana’s February 2015
investor presentation did not mention them. In
FMC’s 2014 full year earnings report, there was no
trace. Even Chile’s Sociedad Quimica y Minera
(SQM), the world’s largest producer of lithium,
made no specific comment in either its 2014 earnings statement
or accompanying conference call.
Conspicuous by their absence, few are talking
about the role that lithium’s traditional
applications – ceramics, greases and glass –
play in the mineral’s end user markets, and the
focus has turned instead to the impressive growth forecasts for
lithium driven by batteries and energy storage demand.
Yet greases, glass and ceramics have an important
function in bolstering the global lithium industry and will
continue to do so while energy applications are still in their
Consuming around two thirds of lithium production
worldwide, according to Roskill Information Services, these
applications are valuable consumers of globally expanding
lithium capacity. The ongoing usage of lithium in glass and
greases puts a cap on lithium pricing, as end users are
unlikely to spend more than $6,000/tonne on lithium for grease.
Until lithium substitutes are found, the so-called traditional
applications market will keep prices from spiking due to
electric vehicle (EV) and energy storage demand.
"Lithium’s use in other
industries acts as a price absorber for fast-rising prices,"
Jon Hykawy, president of North American consultancy, Stormcrow
Capital, told IM.
Historically, traditional lithium applications
made up around three quarters of the lithium market. In recent
years, this has shifted to two thirds as demand from the
lithium-ion (Li-ion) batteries manufacturing sector has
According to the latest figures from the US
Geological Survey (USGS), the current market share is as
follows: Ceramics and glass consume 35% of the lithium produced
worldwide; lubricating greases account for 8%; continuous
casting mold flux powders, 6%; air treatment, 5%; polymers, 5%;
and primary aluminium production makes up 1% of the market.
Other uses, which include pharmaceutical, collectively account
Lithium batteries make up the balance which,
while not inconsiderable at 31% of the market share, still
skirts under one third of overall market demand.
The arrival of Li-ion
The Li-ion battery was developed in the 1970s,
but it has only been in the past fifteen or so years that its
usage has become widespread.
Between 2002 and 2012, world total production of
lithium grew 116%, according to British Geological Survey and
Natural Environment Research Council data. The uptick coincides
with the mass adoption of lithium batteries in mobile phones.
Even six or seven years ago, it was common to have a removable
battery in a mobile phone but not anymore.
"Smartphones is where the growth has been,"
Stormcrow’s Hykaway said.
To put the 116% growth in context, lithium
production between 1992 and 2002 grew 74%, and from 1982 to
1992, the figure was 81%. In the decade prior to that, the
market shrank by 13%.
"If you go back to the mid-1990s the majority of
lithium was used in ceramics and glass, so the trend is
certainly for batteries to increase and ceramics/glass to
decrease as a proportion of the total," Theresa Brown, mineral
commodity geologist at the British Geological Survey, said.
The smartphone market has gone through its major
growth phase, even though more smartphones will continue to get
made, said Hykawy. The new demand for lithium will come from
EVs and energy grid storage.
Traditional markets trail energy
According to Roskill’s Lithium
Market Outlook to 2017: "Consumption of lithium exceeded
150,000 tonnes lithium carbonate equivalent (LCE) in 2012 and
demand is set to grow at 9.7% per year in the base-case
scenario, with the EV market becoming increasingly important
for growth towards the latter part of the forecast period."
The growth in traditional lithium applications
markets is expected to be far slower.
"[Traditional] lithium applications are not going
to grow faster than GDP," said Hykawy.
Lithium’s texture and chemical
properties have made it an essential component in a number of
non-energy storage usages for many years.
As a mineral concentrate or purified chemical, it
can alter the quality of glass by increasing durability without
affecting the other qualities such as density. In ceramics,
lithium oxide (Li2O), or 'lithia’, is
used to reduce melting temperature and improve brilliance. The
texture of lithium cryolite (chemically named trilithium
hexafluoroaluminate, or Li3AlF6) makes it
suitable for abrasives, welding agents and soldering, while
lithium carbonate’s (Li2CO3)
water and CO2 absorption qualities make it a highly
effective component in greases and lubricants.
Non-battery uses make up 69% of the lithium
market, according to Roskill’s 2014 estimates.
"Substitutions for some non-battery uses could
emerge, said Hykawy. Spodumene, an aluminium silicate
mineral which is presently one of the main commercial sources
of hard rock lithium, could be a starting point for developing
replacement materials. As an example, the
mineral’s properties make it increasingly useful
as a mineral concentrate within abrasive compounds, Hykawy
"It replicates the hard bit of the mineral
in lithium," Hykawy went on.
The concentrate can be lower quality, but
chemical grade spodumene material is also priced far beneath
lithium’s $6,000/tonne selling value, at around
"The only reason to continue using it in greases
is because there is no substitute, either from a performance or
a chemical perspective," said Hykawy.
Greases still make up a significant share
lithium’s end-market demand.
Albemarle to focus on
It is unsurprising that junior lithium companies
looking to fund new projects have homed in on the eye-catching
growth projections of exciting new markets for lithium, such as
EVs and batteries, which make an attractive case for potential
But while even established producers like SQM and
FMC have dropped the mention of traditional markets from their
releases, US-based Albemarle Corp., which recently merged with
Rockwood Holdings Inc. to form a new speciality chemicals
major, has stressed that it is not wholly reliant on growth in
new markets and given existing uses for lithium a high billing
in its future strategy.
In an investor call accompanying
Albemarle’s third quarter earnings statement in
October last year, CEO Luke Kissam said that he remained
assured about the growth prospects for lithium and surface
treatment applications, which would help drive expansion in the
new joint business, even if the predicted expansion in the EV
market failed to materialise.
"I am just as confident, not wavering at all on
the growth aspects, long term, for lithium, as well as for
[the] surface treatment business," he said, adding that the
company anticipated "excellent growth in lithium (...) with or
without the EVs".
Kissam said that Albemarle had been looking to
enter the lithium market for some time and that Rockwood had
been an obvious "strategic fit" for the chemicals manufacturer,
which makes bromine-based flame retardants and catalysts, and
that Albemarle was "undecided" about whether it would continue
with its own lithium carbonate project in Magnolia,
"From a customer standpoint, lithium and bromine
derivatives overlap in serving a number of global end markets,
including consumer electronics, automotive, polymers, Ag and
pharmaceuticals, and the combination will provide increased
customer reach and access," said Kissam.
"Likewise, Albemarle’s aluminium
alkyls and Rockwood’s lithium alkyls serve both
the polyolefin and synthetic rubber markets. [Being one]
company, they can provide both lithium and aluminium alkyls for
production of different polymer types, [which] should result in
increased selling opportunities for the combined entity," he
Robert Zatta, who took over as
Rockwood’s CEO in June 2014, was more effusive
about the potential offered by new lithium markets. He said
that the two firms’ complementary portfolios are
"expected to generate significant growth through the continued
penetration of lithium-based energy storage products."
Even Kissam admitted confidence in a growth spurt
from emerging lithium technologies. "We expect that there will
be an inflection point in lithium around 2017 (...) We remain
excited about this business’ growth potential," he
Lifting the cap on prices
As batteries become a larger part of the market,
the price cap of traditional applications for lithium will act
as a shock absorber for price. However, over time, as the
battery market continues to expand, there is likely to be
upwards pressure on lithium pricing, depending on supply.
"As the buyers for grease shrink down to, say,
25%, they still hold excess capacity, they are still in the
market. However as price rises even more they will become
marginal buyers that cannot pay the market rate. They are out,"
Hykawy told IM.
"The day that demand for batteries exceeds supply
is the day that lithium prices rise dramatically."
Industry checks suggest lithium carbonate pricing
could test $7,000-8,000/tonne in 2020, according to a
presentation by Credit Suisse Equity Research at the American
Region Specialty Chemicals conference in May 2014.
The question for traditional applications of
lithium is how high the price can go before you search for a
substitution. However, the traditional applications of lithium
means that there is a quantity of lithium currently in use that
could be diverted to lithium batteries as the price of the