Lithium mining investors warn bottlenecks could limit demand
Published: Thursday, 14 December 2017
Battery demand may be booming, but bottlenecks in processing, as well as cobalt and nickel production, could slow the growth in lithium consumption, investors have warned.
Tightness in cobalt and nickel supply, in addition to a
shortage of processing capacity, represent a threat to
lithium demand despite the booming battery market, investors
said at the S&P Global Mining Outlook seminar, held at
the end of October.
The mining industry would "struggle with the ability to
deliver cobalt or nickel", Paul Gait, senior analyst at
Bernstein Investment, told attendees at the mining briefing.
Cobalt and nickel, along with manganese and aluminium, are key
components used alongside lithium in batteries.
With battery demand rising rapidly, due to the shift toward
electronic vehicles, lithium producers are preparing for
increased demand. But, even if lithium demand were to rise as
fast as expected, there is also the need for other battery
materials, Gait said. "The fundamental bottleneck is in cobalt
and nickel," he added.
If these additional materials cannot be provided, then
battery producers will be unable to ramp up production, despite
demand for their products.
Another potential bottleneck may lie in the conversion of
Li2O spodumene into the lithium carbonate min 99.5% that is
needed by battery manufacturers, George Cheverley, portfolio
manager at Investec, warned.
"It’s easy to mine [spodumene]," he said. "The
hard thing is producing lithium carbonate."
Li2O conversion capacity and enhancement in China is
definitely causing problems, a Chinese producer told
"Despite several converters in China being built at the
moment, conversion capacity and enhancement of Li2O spodumene
is problematic," the producer said. "Large amounts of 1.5% Li2O
spodumene are currently being withheld in warehouses while
purchasers wait to finish their enhancement and conversion
If these bottlenecks develop, Li2O lithium spodumene prices
could be less responsive to end-user battery demand than
mining juniors have projected.