Lithium stood practically alone in 2015 as a good news story
in the world of industrial minerals.
Continued excitement surrounding a predicted demand surge in
the electric vehicle (EV) market has revived interest in
lithium exploration, with prices continuing to climb.
The year started with a bang as Albemarle Corp. completed
its merger with Rockwood Holdings Inc. The takeover gave
Albemarle control of Rockwood’s Chilean brine
production in the Salar de Atacama.
In July, Albemarle said it would expand its lithium
carbonate production with the commissioning of a 20,000 tpa
facility in La Negra, Chile. However, the
company’s CEO, Luke Kissam, has since said that he
expects "no material revenues" from the plant until
Keeping its options open, Albemarle later indicated it would
also construct a 50,000 tpa lithium hydroxide (to be changed to
carbonate, should the market demand it) facility to process
spodumene mined via its joint venture (JV) ownership of Talison
Lithium Ltd at Greenbushes, Western Australia. This is not
expected to come online before 2020.
Scandal and meteorological storms plagued rival Sociedad de
Quimica y Minera SA (SQM), which also produces lithium from
brines in the Salar de Atacama, though the company insisted
that supply was not effected by either.
In April, SQM’s CEO, Partricio Contesse, was
sacked amid allegations of tax discrepancies and a political
contributions scandal and, despite Chile being generally less
vulnerable to weather extremities than its Argentinian
neighbours, violent storms in April and August wreaked havoc
with local miners.
At the end of 2015, SQM was considering whether to proceed
with an 18-month repair work project to bring a port rail
network back online, though trucking operations have been
implemented to pick up the slack.
Separately, SQM’s stand-off with state-owned
Corporacion de Formento de Produccion (CORFO) over lease
payments at the Salar de Atacama continued, with CORFO pushing
for the repeal of SQM’s extraction rights at the
salt flat. A decision on the arbitration process is expected in
Across the border in Argentina, FMC Corp. had relatively a
quiet year. The election of centre-right president Mauricio
Macri in November, however, will make the country a brighter
prospect for investment in the coming years, with a devaluation
of the peso expected.
Elsewhere in Argentina, Orocobre Ltd struggled to ramp up
commercial production at its Olaroz facility. Various
bottlenecks delayed the company from reaching a monthly
nameplate capacity of 1,450 tonnes, which it now hopes to
achieve in early 2016.
In Australia, Talison, owned jointly by Albemarle and
Sichuan Tianqi Lithium Industries Inc., continued its
Greenbushes operations, with a production rate of around
350,000 tpa lithium products.
Galaxy Resources Ltd hopes to join the supply chain next
year as it relaunches its Mount Cattlin project. The mine and
processing plant are to be operated by General Mining Corp. and
is scheduled to produce material for an initial offtake in
March 2016 at a rate of 100,000 tpa lithium
Lithium supply deals struck by Tesla Motors Inc., the
undisputed poster child of the EV movement, captured headlines
The company signed two separate supply agreements with
lithium producers to secure raw material for its Reno, Nevada,
US-based Gigafactory, scheduled to be brought online in 2016.
One was with the Sonora lithium project in Mexico, owned
jointly by Bacanora Minerals Ltd and Rare Earth Minerals Plc,
which aims to produce lithium from hectorite and polylithionite
clays. The other was with Pure Energy Minerals Ltd for supply
from its Clayton Valley brine project in Nevada, US. Both deals
were for prices below market levels and are subject to a number
Separately, talks in late 2015 between Tesla and Chilean
government officials have led to speculation regarding a supply
deal between the EV producer and the world’s
largest copper producer, Chilean state owned Codelco. However,
Codelco currently has no involvement in lithium extraction.
As the lithium market grows, fears that supply may struggle
to keep pace with demand, have caused prices to continue to
FMC announced price hikes of 15% in Q3 2015, while Albemarle
increased its carbonate prices by 6% in October. In a
conference call in late 2015, SQM indicated that its prices had
risen by about 9% over the first nine months of the year.
China’s Jiangxi Ganfeng Lithium Co. Ltd
increased the price of its lithium carbonate twice in October,
bringing prices to Rmb 70,000/tonne ($10,875/tonne*), a 67%
jump on what they were at the beginning of 2015.
Local rivals, Sichuan Xingsheng Lithium Industry Co. Ltd and
Sichuan State Lithium Material Co. later followed suit, raising
their prices to Rmb 68,000/tonne ($10,564/tonne).
Demand for lithium in traditional applications is expected
to continue to climb gradually, but lithium-ion (Li-ion)
technology has become something of a promised land for
Stormcrow Capital Ltd predicted that demand for lithium in
Li-ion batteries will almost triple from around 69,000 tonnes
lithium carbonate equivalent (LCE) in 2015 to around 200,000
tonnes LCE by 2025, moving from 38% to 49% of the total
Goldman Sachs, meanwhile, has suggested that a significant
uptick in EV demand will lead hybrid and EVs to grow from
accounting for 1% of the automotive market in 2010 and 3% in
2015, to 7% in 2020 and 22% by 2025 – or 25m
Of this, hybrids are expected to account for the majority,
but grid-connected vehicles – plug-in hybrid electric
vehicles (PHEVs) and pure EVs – are expected to grow
at a compound annual growth rate (CAGR) of 37%, accounting for
8m vehicles by 2025.
A number of battery producers intend to bring online major
new production facilities in 2016 and over the coming years,
resulting in an increase in lithium demand.
In 2016 alone, the Panasonic-Tesla Gigafactory will become
operational, bringing online 35 gigawatt hours (GWh) of
capacity; LG Chem plans to start production at a 7 GWh plant in
Nanjing, China; and Foxconn should complete a 15 GWh facility
in Anhui, China. Meanwhile, BYD and Boston Power will bring
online a further 20 GWh and 10 GWh, respectively, by 2020, at
various sites in China.
On the supply side, juniors are likely to continue to buy up
lithium prospects in Nevada, but in terms of new production,
many eyes will be on Orocobre as it attempts to overcome its
bottleneck issues and on Galaxy’s Mount Cattlin,
which aims to come online in Q1 2016.
As demand continues to rise apace and supply plays catch up,
prices are likely to continue to rise.
*Conversions made December 2015