Politics and technology steer global lithium market

By Albert Li
Published: Wednesday, 22 July 2015

Chilean policy to dictate output from leading supplier; new players will shake up market in next few years; energy storage predicted to be key demand driver.

Political and technological developments are expected to shape the evolution of the global lithium industry until the end of the decade, delegates at IM’s 7th Lithium Supply and Markets Conference heard in Shanghai, China, in June.

Daniela Desormeaux, general manager of Chile-based market intelligence firm, SignumBox, told the conference that Chile is eager to retain its position as the world’s leading lithium supplier with the help of government support.

The country supplies 60-65% of the global lithium carbonate market and its lithium resources have been officially protected for 40 years, after the Chilean government declared it a strategic mineral in 1975.

This was followed by a raft of policies designed to foster the sector’s maturation, including auctions for contracts to exploit lithium brines in the country’s salars and the establishment of the National Lithium Commission in 2014.

The implementation of progressive policies has not always been plain sailing, however, with the September 2012 lithium tender becoming mired in controversy after the winner, Sociedad Quimica y Minera (SQM), was stripped of the contract less than a month after the auction, owing to outstanding legal issues between the company and the Chilean state.

In January this year, a number of fresh measures were proposed to the Chilean president, Michelle Bachelet, and Desormeaux said that a new lithium policy is likely to be announced in the near future.

David Merriman, senior analyst at UK-based Roskill Information Service, discussed how, thanks to government backing and the richness of Chile’s lithium resources, the global lithium industry is presently dominated by Chile-operating heavyweights, but said that challengers to the established market players are looking to shake up the lithium supply chain.

Energy storage

According Qiang Chen, general manager of China Energy Lithium Co., growth in demand for lithium is likely to come from the energy storage sector, as there is currently insufficient capacity to retain generated energy for use on tap.

Chen said that the next generation of energy storage batteries could be made of lithium metal or lithium-sulphur, which could lead to a doubling of lithium demand. According to his calculations, 3,000 tonnes of lithium metal produced last year required 20,000 tonnes of lithium compounds.

China Energy Lithium is working with institutes both within and outside of China to develop new types of energy storage batteries. Chen pointed out that lead batteries have been used for 150 years and while 95% of the volume of these batteries can be recycled, lithium-based materials cannot currently be reused.

As the technology develops, lithium battery recycling may be realised in the future, he said.