Lithium Market

Historic

Roskill estimated in their report Lithium: Global Industry, Markets & Outlook to 2025 13th Edition, 2016, that total global demand was 177,000t LCE in 2015 up from 68,000t LCE in 2000 showing an average annual growth rate of 6.8%.

The glass and ceramics industries have historically been the biggest consumers of lithium. Since 2000, rechargeable batteries have been increasingly important, growing from 4% to 37% of total consumption. This has been driven by the adoption of lithium ion technologies in consumer electronics and the emergence of products including tablets and smart phones and, more recently, for electric vehicles.

Present and Future

In their report Roskill forecasted the medium term outlook for lithium consumption as strong with a base case overall growth rate at 6.4% per annum to 2025 resulting in a demand of 328,000tpa LCE.

Furthermore, a high case scenario of surging demand for lithium secondary batteries in electric vehicles and stronger global economic growth could result in an average growth rate of 9.3% per annum and a demand in 2025 of 440,300tpa LCE.

More recent studies by Roskill and Benchmark Minerals Intelligence indicate that a more rapid EV penetration driven by government policy will considerably increase lithium demand over these numbers.

Most of the large car manufacturers are launching models that integrate lithium ion battery technology whilst Tesla is aiming to bring electric vehicles to the mass market by lowering costs and entering into battery manufacture with their ‘Gigfactory’ in Nevada which will initially produce 500,000 units per annum. Volkswagen have publicised their intent to have 30% of vehicle production as EV by 2025.

It will invariably take time for leading car manufacturers and society to adopt electric vehicles to a point which will impact the lithium market. However, there is growing concern by governments to take action to reduce global warming and pollution of cities by use of fossil fuels and the adoption of electric vehicles can play a significant role. The market for lithium ion batteries has grown markedly following the adoption by consumer technologies – and car batteries require substantially more lithium to power electric vehicles.

Increased use of lithium ion batteries for heavy duty power storage particularly linked to sources of renewable energy off-grid was also projected by Roskill. The increasing use of lithium-aluminium alloys in aircraft manufacture to lighten weight and improve fuel efficiency has good growth potential.

“A high case scenario of surging demand for lithium secondary batteries in electric vehicles and stronger global economic growth results in an average growth rate of 9.3% per annum”

Supply

Roskill estimated in their report that in 2015 the total production of lithium was approximately 176,000t (LCE). There are four major lithium producers globally with three being brine producers and one hard rock producer. These “big four” according to Roskill accounted for approximately 87% of world lithium production in 2015.

Since 2015, There has been a noticeable increase in corporate activity in the lithium sector with a number of companies looking to consolidate their supply sources given the favourable forecasts for lithium in the foreseeable future. Also, strategic end users are seeking to secure supply by taking equity positions and arranging offtake agreements with potential producers of lithium.

Price

The pricing of lithium is negotiated off-market and based on customer specifications with price information rarely reported. Higher purity lithium products that include certain battery products carry a premium over technical grade lithium.

According to Roskill, prices for technical grade lithium carbonate increased from US$2,187/tonne in 2004 to US$5,965/tonne in 2015. Roskill expected prices to continue to rise in the foreseeable future as new markets and applications are found for lithium products. Their base case forecasted battery grade lithium carbonate to increase steadily to US$10,240/tonne in 2025. However, the market has rapidly tightened with increased demand such that current prices as published by Industrial Minerals magazine are in the range US$17-20,000/tonne.

To learn more about the lithium market in Europe CLICK HERE

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