How much lithium does the world need and how much does it have to offer?

As the saying goes, it’s difficult to make predictions, especially about the future. Nonetheless, scientists and analysts have become very good at producing forecasts in their specific areas of expertise that businesses and investors can then work with. In the area of battery minerals (currently primarily lithium and cobalt), a number of studies offer very different figures when it comes to our future needs, first and foremost because the figures vary greatly regarding the success of electromobility and the pace of change. In its Electric Vehicle Outlook 2018 report, for example, Bloomberg New Energy Finance (BNEF) forecasts the following global sales figures for electric vehicles: 11 million in 2025, 30 million in 2030 and 60 million in 2040 – primarily because the production costs will fall below those for vehicles with internal combustion engines. A study conducted by the Fraunhofer Institute for Systems and Innovation Research in Germany predicted back in 2016 that demand for lithium would increase twofold or even more than threefold by 2025, depending on different scenarios. One thing’s for certain: we can expect to see very high growth rates in the years to come.

The lithium market is likewise dependent on supply and demand

China is the global player here, and it has a major influence on developments due to various factors. On the demand side, the country is focusing its future on electromobility, is planning to manufacture two million electric vehicles a year by 2020 and intends to have completely banned internal combustion engines by 2040. Other countries have set themselves even more ambitious goals: Denmark, Sweden and the Netherlands are planning bans starting in 2030, while Norway is ahead of the curve with a ban planned from 2025. And on the supply side, China has the largest cell production capacities, accounting for approximately 25% of the global market volume (McKinsey Electric Vehicle Index), while Asia as a whole represents almost 90% of lithium-ion cell production. Global lithium resources are estimated at more than 40 million tonnes, but the deposits that are known of and which can be mined economically with the means currently available amount to around only 14 million tonnes. Without going into too much detail (more information can be found here, for example), these deposits alone would be sufficient for the manufacture of more than two billion electric cars. And when demand and the price increase, these resources will be re-evaluated. A comparison is helpful in order to understand this market development. Let’s take the metal aluminium. This was once more valuable than gold because the production process was incredibly elaborate and costly. This changed in 1888 when Carl Josef Bayer discovered and patented a new and less expensive process that allowed aluminium to be used on an industrial scale for the first time. It nevertheless remained a symbol of affluence. Aluminium foil was first used as a packaging material in 1911 – among other things, because it allowed the renowned Toblerone to be positioned as a luxury product. In 1915, the German aircraft pioneer Hugo Junkers built the first all-metal aircraft, naturally opting for aluminium. In art deco, the material was used for luxurious furniture and interior design, and the Empire State Building and the Chrysler Building impress with their lavish use of this valuable material. And with the outbreak of the Second World War, aluminium became a strategically valuable resource, which sent the prices soaring.

It could be said that we have now arrived at this point with lithium – in principle, there is enough of it around, and the forecasts of rising demand are making mining areas that were once considered uneconomical now look a lot more lucrative. There is, however, a natural upper limit, because if the price goes too high, attempts will be made to reduce the costs again, be it by improving the production processes, increasing yields, reducing the amount of material needed per battery or developing recycling options. The pivotal question is this: how high is too high?

Lara Smith, Managing Director at CORE CONSULTANTS, on her e-bike in Tel Aviv

The focus should currently first and foremost be on using resources efficiently, and this applies both to the extraction of lithium from salt flats, as is primarily the case in South America, and to conventional hard rock mining in, for example, Australia and Canada. And efficiency begins with knowing what you have in the ground. A good example here is the Georgia Lake project in Canada. Spodumene-bearing pegmatites were discovered there back in 1955, but it only became apparent in the past few years that mining them might be financially viable. On behalf of Rock Tech Lithium Inc., the engineering service provider DMT reassessed the lithium content of these deposits using drilling, measurement and analysis. This resulted in the resources in the ‘measured and indicated’ category increasing twofold, while the estimation made in accordance with the recognised Canadian standard NI (National Instrument) 43-101 increased by 40 per cent compared with the previous assumptions.

And this is where we at CORE CONSULTANTS come in – we contribute our market view to these feasibility studies, in other words our forecast as to whether extraction is not only technical feasible, but also economically realisable. If both of these are the case, you have a project – and are therefore supporting the future of mobility and the fight against climate change. And that’s a hugely satisfying feeling.


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