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The Lithium Market

Lithium price drivers

An introduction to lithium

Lithium demand and end-uses

Lithium is a well-established industrial metal with uses diversified across sectors including materials for glass and ceramics production, as a component in performance greases and lubricants and as a metallurgical powder. More recently, it has come to the fore as a battery material for electric vehicles, as well as portable electronics.

Lithium is the lightest solid element and the lightest alkali metal. Lithium’s advantages are its high electrochemical potential, while it also has the lowest density and highest specific heat capacity of all metals. It is found in the Earth’s crust, but never in its pure metallic form as it exhibits similar properties to other alkali metals, such as high reactivity and flammability. 

Lithium’s end-uses can be broadly split into three categories: automotive battery, other battery, and non-battery. Major end-uses for lithium comprise lithium-ion batteries (LiBs) for electric vehicles (EVs), energy storage and other electronic devices, such as mobile phones, laptops, tablets and power tools, primary (non-rechargeable) batteries for electronic devices, and non-battery applications, including glass and ceramics, greases and lubricants, air treatment, aluminium smelting, metallurgical casting powders, pharmaceutical drugs (medical) and rubber tyre manufacturing (polymers). End-use applications for each salt vary, although there is some overlap, especially between lithium carbonate (Li2CO3) and lithium hydroxide (LiOH).

Since the early 2010s, lithium chemistries have started to play a leading role in automotive battery technologies, alongside several others as manufacturers have experimented with different chemistries to optimise all aspects of performance and, of course, price. Consequently, lithium consumption in automotive batteries started to rise significantly as EV production expanded rapidly.

Lithium supply and resources

Lithium occurs in over 100 different mineral compounds, although only a handful are currently economic to extract, with spodumene (highest grades) being the most commercially viable hard rock source and hence the most commonly mined. Spodumene is typically found in pegmatites which are igneous rocks similar to granites but with very coarse grain sizes. Pegmatites provide the greatest abundance of lithium-bearing materials, also commonly containing petalite, lepidolite, amblygonite and eucryptite. Some of these minerals are also currently extracted for lithium, while the others have been mined in the past. Other notable minerals include hectorite (clay), jadarite and zinnwaldite, deposits of which are currently being evaluated as potentially economic sources of lithium.

Aside from rock-based sources, lithium is also commonly found in brine water, particularly in sub-surface continental (closed-basin) brines (160-2,000 ppm), which are typically found in arid climates under salt pans (also known as salars). These shallow deposits are accumulations of saline groundwater within closed basins that are enriched with dissolved lithium leached from local lithium-rich source rocks. Lithium is also found in seawater (0.14-0.25 ppm), with higher concentrations found near hydrothermal vents (up to 7 ppm), as well as in leachates of geothermal wells (geothermal brines). Brines containing lithium (petrobrines; up to 700 ppm) are also extracted from oilfields as a waste product from underground formations, along with oil and gas.

Thus, lithium deposits that are economically viable to exploit fall into two broad categories: hard rock and brine. Hard rock mineral deposits (including clay) are exploited by open-pit or underground mining methods. Mined ore is then typically concentrated into a more mineral-rich product, such as spodumene concentrate, for further processing into lithium compounds at conversion plants around the world. Significant hard rock resources are located in Australia, the US, China, sub-Saharan Africa, Europe, Canada, Mexico and Russia. Continental brine deposits are pumped to the surface and then concentrated in a series of large solar evaporation ponds. As the water is evaporated by the Sun it creates an increasingly concentrated brine which, once sufficiently enriched in lithium (~5,000 ppm), is processed at a chemical plant and converted into lithium compounds, primarily lithium chloride (LiCl), Li2CO3 and LiOH. Substantial brine resources are located in the Lithium Triangle of South America (Chile-Argentina-Bolivia), China and the US.

Owing to its high reactivity, lithium is sold commercially as various lithium compounds, particularly Li2CO3 and LiOH, as well as LiCl, lithium fluoride (LiF), and butyllithium.

Lithium supply and demand are reported in lithium carbonate equivalent (LCE) tonnes as an industry standard, rather than in tonnes of pure lithium metal. LiOH readily absorbs water from the air, forming lithium hydroxide monohydrate (LiOH.H2O), and is often sold in this form.

Lithium carbonate equivalent (LCE) market balance

 

 LCE tonnes     2015 2016 2017 2018 2019 2020 2021f
Primary lithium supply                
Regional                  
 Australia                  
 Chile                  
 China                  
 Argentina                  
 North America                  
 Brazil                  
 Rest of World                  
 Total primary LCE supply 158,695 196,725 316,915 398,755 429,425 397,005 454,865
                   
Lithium demand and recycling
 Lithium-ion battery demand              
  Battery electric vehicles (BEV)              
  Plug-in hybrid electric vehicles (PHEV)              
  Full hybrid electric vehicles (FHEV)              
  Mild hybrid electric vehicles (MHEV)              
  Full cell electric vehicles (FCEV)              
  Heavy-duty electric vehicles (HDEV)              
  E-bikes                  
  Total LCE battery demand for transport 13,530 22,865 33,155 68,570 94,335 134,225 202,305
                   
 Other battery demand              
  Laptops and tablets                
  Mobile phones                
  Energy storage                
  Other battery (incl. non lithium-ion)              
  Total other LCE battery demand 36,865 36,015 37,090 37,305 38,080 40,480 47,135
                 
 Non-battery lithium demand              
  Glass & ceramics                
  Greases & lubricants                
  Other non-battery                
  Total non-battery LCE demand 116,645 119,365 123,700 127,805 130,865 129,910 136,065
                   
Gross LCE demand   167,010 178,245 195,950 233,685 263,280 304,615 385,505
                   
Lithium recycling   0 0 0 0 0 5 35
                   
Net LCE demand   167,010 178,245 195,950 233,680 262,280 304,610 385,470
                   
Lithium market balance (LCE)   -8,315 18,480 120,965 165,075 166,145 92,395 69,390
                 
Lithium price history                
 Lithium carbonate price (99% China, $/tonne)   18,871 19,307 16,191 8,552  5,400 12,750
 Lithium carbonate price (battery grade, 99.5% China, $/tonne) 22,255 21,822 17,974 9,940 6,383 14,000
 Spodumene 5% min (China, $/tonne)       869 615 429 650
               

Source: SFA (Oxford). Updated July 2021.

Lithium hydroxide (LiOH.H20) market balance

 

 LiOH.H2O tonnes       2017 2018 2019 2020 2021f
Lithium hydroxide supply              
Regional                  
 China                  
 Chile                  
 USA                  
 Australia                  
 Rest of World                  
 Total LiOH supply     40,500 60,980 82,270 97,025 121,005
                   
Lithium hydroxide demand and recycling
 Lithium hydroxide battery demand              
  Battery electric vehicles (BEV)              
  Plug-in hybrid electric vehicles (PHEV)              
  Full hybrid electric vehicles (FHEV)              
  Mild hybrid electric vehicles (MHEV)              
  Full cell electric vehicles (FCEV)              
  Heavy-duty electric vehicles (HDEV)              
  E-bikes                  
  Total LiOH battery demand   16,355 39,455 61,185 90,460 178,810
                   
Gross lithium hydroxide demand     16,355 39,455 61,185 90,460 178,810
                   
Lithium hydroxide market balance     24,145 21,525 21,085 6,565 -52,805
               
Lithium hydroxide price history              
 LiOH price (56.5% China, $/tonne)   22,024 20,794 11,811 7,297 13,550
                   

Source: SFA (Oxford). Updated July 2021.

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