Why Six Companies Are Salivating For An Impending Lithium Boom

Lithium is a relatively unknown mineral that nonetheless enjoys widespread use in many different applications. From aerospace coatings to ceramic glazes, lithium products have been in use for decades. It also acts as an additive in the manufacturing process of industrial materials like glass, enamel, and aluminum. The element can even be used medicinally in order to treat bipolar disorder.

More recently, however, the biggest use of lithium has come thanks to the global demand for lithium-ion batteries. Lithium-ion batteries have the highest energy density of all currently available battery technologies, making them ideal candidates for anything that requires a mobile energy source. Due also to their comparatively light weight and proven longevity, lithium-ion batteries are ideal in all manner of electronics, from calculators to iPhones to laptops.

Naturally, lithium use has increased slightly along with the worldwide proliferation of portable electronics, although the amounts involved are fairly insignificant. With current global lithium production around 200,000 tonnes per year, the small battery market has little impact on the fortunes of lithium miners.  However, demand is now rapidly expanding for the much larger batteries needed for hybrid-electric vehicles, plug-in hybrid vehicles, and pure electric cars (EVs). The sheer size of the battery packs required for fully electric and plug-in hybrid vehicles represent a major growth opportunity for the lithium mining industry.

For example, the fully electric Nissan Leaf uses about 15 kg of battery grade lithium carbonate, compared with only about 30g for a laptop battery.  The more powerful Tesla Model S needs a whopping 51kg for its battery pack. As the first step in the supply chain for these pricey battery packs, the lithium mining industry is poised to experience rapid growth concurrent with skyrocketing demand for electric vehicles over the course of this decade.

Electric And Hybrid Electric Vehicles

Alone, the production of the widely acclaimed Tesla Model S in 2013 required the combined use of more than 140 million individual lithium-ion battery cells. Each car houses 7000 individual cells about the size of a conventional AA battery in its battery pack, giving the Model S its renowned performance and range.

If production increases according to Tesla’s plan to hit 35,000 units by the end of this year, battery consumption for the manufacturing of just this one vehicle will rise to close to 50% of current global lithium-ion cell output. By 2017, if Tesla’s plan for introducing more affordable models is realized, lithium-ion battery production will easily run into the billions. And that’s just for one comparatively tiny car company. In fact, Tesla plans to build its own “giga-factory” dedicated to Li-ion battery production to prevent future supply bottlenecks.  In addition, lithium is also used in the smelting process of aluminum, one of the Model S’s primary body materials.

But Tesla is not the only car company producing electric cars.  From the Nissan Leaf to the Chevy Volt, the Cadillac ELR and the BMW i3, global car companies are lining up to capture their share of the exploding electric and hybrid electric vehicle market.  Toyota has been very successful in the hybrid sector with its Prius models, selling more than three million, and counting.

Although automotive batteries present a significant opportunity for lithium producers, perhaps the biggest boom may come from the enormous potential of lithium-ion battery packs for bulk energy storage. These utility-scale installations would store several MW of power and gobble up more than half a ton of lithium carbonate for each MW of storage capacity.

At present, this requires such massive investment that utilities are generally uninterested except in special circumstances (such as the 12 MW Los Andes facility in Chile). With the price of lithium-ion batteries expected to fall considerably in the coming years, however, bulk energy storage of this kind could soon become a mainstream strategy for future electricity grids.

Renewable Energy Storage

One of the biggest disadvantages of wind and solar electricity generation is the inherent intermittency of these power sources. The sun only shines during the day, and wind is far from constant. As these energy sources take up an increasing share of the global energy mix, the problem of storage becomes more acute. Some countries with significant wind and solar sectors often produce surplus electricity on days where the sun shines and the wind blows – energy that is essentially wasted because of a lack of storage capacity.

Since industries and businesses require a reliable and steady power source, massive battery storage facilities can keep the excess electricity produced on a sunny day and release it the next day when it’s raining. Although currently still very expensive, the falling price of batteries as global demand skyrockets will make industrial scale storage options more viable.

Increasing battery storage makes renewable energy development projects more attractive and allows them to compete more effectively with traditional base-load providing nuclear and coal power plants. Energy storage is undeniably one of the biggest challenges of the 21st century’s gradual move away from relying on the burning of fossil fuels to power the global economy.

Mining Lithium

Unfortunately, the process for mining lithium and refining it into battery-grade lithium carbonate is quite energy intensive and complex.  Since lithium is only found bound to other elements in nature, the mining process has to find ways to separate the lithium in order to recombine it with other minerals to achieve the desired compounds necessary for industrial and consumer applications. Obtaining lithium carbonate from raw mining materials involves several stages of filtering, cooking and chemical adjustments. But with battery grade lithium carbonate fetching around $6000/ton, it is easy to see why companies are lining up to grab a share of this expanding multi billion dollar market.

Take at look at six of the biggest global players in the lithium business:

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6 #6.  Western Lithium Corp.  - Canada/USA

This young start-up company operates solely in Nevada, sitting on an 11 million ton lithium deposit in Kings Valley that is not expected to commence production until 2015. The company is banking on the proliferation of electric vehicles to drive demand for its open-pit mined lithium carbonate.

5 #5. RB Energy Inc. – Canada

This Canadian company holds a major project in northern Quebec with 20,000 ton/year production of lithium carbonate expected for 2014. The company is also looking to develop projects in Chile, a top global producer of lithium.

4 #4. Galaxy Resources Ltd.  - Australia

With lithium projects in Argentina, Australia, Canada, and China, Galaxy Resources is expanding rapidly into exploiting mainly brine deposits. It also operates a large lithium carbonate refining plant in Jiangsu, capable of producing 17,000 tonnes of battery-grade lithium carbonate.

3 #3. Rockwood Holdings - USA

With mines in Chile, the US, and India, this company also refines a significant amount of battery-grade lithium carbonate at its facilities in Nevada.  With another plant coming online in Chile this year Rockwood will be able to produce 50,000 tonnes of lithium carbonate per annum.

2 #2. Talison Lithium Corp.  - China

China produces a large share of the global lithium output and one of its primary players is Talison Lithium Corp., part of the larger Tianqi Group. With investments in Sichuan and Guangxi provinces, in locations in northern Chile, as well as in the Canadian province of Quebec and in Australia, Talison is poised for steady growth over the next few years with a strong internationally developed base. 

1 #1. Sociedad Quimica y Minera (SQM) - Chile

The world’s largest single lithium producer, SQM is a Chilean mining company that produces lithium mainly out of the Salar del Carmen salt flats in the Atacama Desert. Although its core business is actually Potash (lithium is also a by-product of potash production), the company is increasingly realizing the potential of lithium as a resource in its own right.

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