Date Published: Jun 21, 2017
Transcript: Available

Video Transcript:

I’m Samantha Deutscher for InvestmentPitch Media.
Today we’re looking at what’s behind the global demand for lithium.

Although lithium is used in a wide range of products, including ceramics, specialty chemicals, coolants, and in the life sciences, it is the battery applications that are getting investors excited.

Previously, the battery market was driven by consumer electronics such as smartphones, tablets and laptops.

Now it now driven by other consumer products, grid storage, and transportation.

According to research from Wall Street’s Bernstein, by 2015, approximately one-third of lithium ion batteries were used in the electric vehicle sector.

Beginning in May 2015, this increased demand from the EV market resulted in a significant increase in the price of lithium.

This demand, has been driven in a large part, by Tesla Motors’ announcement of plans to build up to 500,000 electric vehicles per year.

This is just the beginning as Bloomberg predicts that by 2022, battery demand by the electric vehicle industry will surpass consumer applications.

Going further out, Bloomberg estimates that electric vehicles will account for 35% of all new vehicle sales by 2040.

It is estimated that the size of the rechargeable battery market will reach $112 billion in 2025, with lithium ion batteries accounting for 70% of the market or $78 billion, according to estimates from Bernstein.

Lithium exhibits unique characteristics that are difficult to replicate with competing battery materials.

For example, they are up to four times lighter in weight than lead-acid batteries and require no maintenance.

They are also much smaller and have a longer run time, higher power, a reduced charge time and save 10-15 per cent in energy costs when being charged.

In general lithium is derived from two primary sources.

With lithium brine deposits, the brine is typically pumped through a circuit of evaporation ponds to increase the concentration, with other by-products such as potassium removed and sold separately.

Brine deposits generally have better economics as lithium is already isolated and in a solution within the deposit, and brine operations utilise solar evaporation to concentrate the brine within a series of ponds prior to purification.

The downside of brine operations is that they are more capital intensive than hard rock operations, incur technical challenges removing impurities, are often located in remote locations, and require significant lead times to meaningful production.

Whereas with hard rock deposits, spodumene, which occurs in lithium-rich pegmatites, is usually recovered through conventional open pit mining methods, and processed to a concentrate that is often transformed to lithium carbonate with a purity of more than 99.5%.

Although hard-rock mineral operations have higher operating costs, they benefit from lower capital costs, are generally less affected by external factors like weather, which impacts evaporation for brine operations, and can respond more quickly to market conditions.

Other lithium sources including geothermal brines, oilfield brines and hectorite clays, are also being evaluated for future exploitation.

Today, global lithium supply is split roughly 50:50 between hard-rock and brines.

However, as global lithium demand increases over coming years, hard-rock operations have an advantage as they are able to respond to market conditions much faster than their brine counterparts.

In our next video we’ll look at lithium’s potential for energy storage.
This video is sponsored by Far Resources CSE:FAT
I’m Samantha Deutscher for InvestmentPitch Media.