Lithium & Lithium Market - AMG Lithium

What is Lithium?

Lithium is a reactive metal with a high heat capacity and a low atomic mass. Lithium has become a critical component for battery electrolytes and electrodes due to its high electrode potential and high charge- and power-to-weight ratio. Lithium-ion batteries, in particular, have a high energy density and are rechargeable.

Demand for lithium in recent years has been driven by proliferation of personal technology, including smartphones, tablets, and wearables. While this is expected to continue, future demand will be propelled by two emerging and high-growth applications: electric vehicles (EVs) and grid storage.

Lithium is also used in a wide variety of non-battery applications, including ceramics, specialty chemicals, coolants, and in the life sciences.

The Lithium Battery Value Chain

Lithium is mined from both pegmatites (hard rock-ore) and brine deposits. The most common hard rock mineral source for lithium is spodumene, due to its high lithium content and well defined extraction process.

AMG-Value-chain_v2

 

The Lithium Battery Value Chain

Lithium is mined from both pegmatites (hard rock-ore) and brine deposits. The most common hard rock mineral source for Lithium is spodumene, due to its high lithium content and well defined extraction process.

 

Value-Chain-Tablet-v3

Global Demand

In recent years, demand for lithium has been driven by need for higher-capacity, rechargeable batteries for use in personal electronics. Future demand is expected to grow rapidly driven by the growth of the electric vehicle industry, as well as for storage in renewable energy applications. Demand from these new applications will be supported by the decreasing cost of production of lithium-ion batteries.

key market drivers

Electric Vehicles

Driven by regulations on CO2 emissions, falling battery costs, expanding charging infrastructure and desire for an enhanced driving experience.

Renewable Energy (Grid Storage)

Driven by growth in renewable energy and need for resources to provide system flexibility and balance supply/demand.

Personal Electronics

Robust growth for smart phones, tablets and wearables.

Electric Vehicle Market Forecast

The growth of Electric Vehicles (EVs), including hybrid EVs, is expected to be a primary driver of the global demand for lithium for the foreseeable future. Most leading automakers are committing to developing a wider range of EV models, which are more lithium-intensive than hybrid EVs or plug-in EVs. As a result, EV production is expected to reach almost 10 million units by 2030.

It is estimated that 6,000 MT of the total demand for lithium today is driven directly by the EV market.

Source: Morgan Stanley

 

Key Stats

 

Global lithium demand (2015): 182k MT (LCE)
EV demand doubling each year, accounting for 14% of global demand for lithium
Lithium rechargeable battery demand 2015-2025: 14% CAGR
Global installed base of ~1.1 GW, projected annual installations reaching up to >12 GW by 2025 (Navigant Research)
1% increase in electric vehicle penetration would increase demand by 70k MT (LCE) per year
Forecast Growth in lithium Demand (2012-2025): 6.4% (base case) to 9.5% (high case)

Source: Morgan Stanley

WORLD market for rechargeable lithium batteries by end-use

Source: Roskill 2016 Lithium Market Report

Lithium Demand by Applications(2015 actual)

Source: Citibank Deep Dive | Commodities report, Oct 16, 2015, Figure 2. Lithium Supply Demand Balance, pg. 5

GLOBAL SUPPLY OF LITHIUM

The global supply of lithium minerals has been historically dominated by large-scale lithium brine extraction operations (primarily in South America) with the remainder being hard rock mining operations. The majority of recent and new projects, however, are hard rock operations. Global lithium supply has increased at a 7% compounded annual rate from 1995 to 2015 to meet increased demand for personal electronics. Global lithium supply is around 164k MT LCE and was equally divided between hard-rock mining and brine extraction.

Global production is forecasted to more than double in the coming decade (based upon current capacity and announced expansions), driven by strong demand from both existing and emerging applications.

LITHIUM market balance, through 2025

Source: Roskill 2016 Lithium Market Report
Note: new mine projects include Orocobre, Galaxy Resources, RB Energy, Lithium Americas/SQM, Eramet, Neometals, Nemaska Lithium, and Western Lithium.

LITHIUM SUPPLY BY COUNTRY (2015 ACTUAL)

%

chile

%

Australia

%

Argentina

%

China

%

U.S.A.

%

Zimbabwe

%

Portugal

%

Brazil

Source: Deutsche Bank

Market Price Forecast

With expected strong growth in demand and a continuing shortfall of supply, the market price for lithium concentrate is forecast to increase steadily over the next decade, reaching $500 to $700 per MT in 2025.

Leveraging its existing mining infrastructure in place at Mibra, AMG’s goal is to be the low-cost producer of lithium concentrate globally at $206 per MT.

MARKET PRICE FORECASTS
LITHIUM CONCENTRATE (SPODUMENE)

Source: Roskill 2016 Lithium Market Report