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The white gold rush is on

If you’re a bit older than me, you may associate lithium with a sedative used in psychiatric medication, and you wouldn’t be wrong. However, those who’ve been paying attention know lithium is now a key driver in the world’s race to a cleaner future, so much so it’s been dubbed “white gold,” and the rush is on.

The price of lithium is soaring, up 280% since January of last year, and establishing a domestic lithium supply has been likened to the modern-day version of oil security. According to the U.S. Geological Survey, the U.S. is lagging behind, with only 1% of global lithium domestically mined and processed, and only one operating lithium mine, Albemarle’s Silver Peak in Nevada. In response, the administration released a blueprint to jumpstart domestic lithium production and refinement along with battery manufacturing.

By 2030, global demand for lithium is expected to surpass two million metric tons, and growth in the EV sector will account for more than 90% of this demand, according to Benchmark Mineral Intelligence. But global demand for lithium is not just driven by Tesla, Neo, or Rivian, it’s part of a bigger transportation picture that includes buses, trains, and the aerospace sector. It’s an essential ingredient in our personal devices, energy storage systems, ceramics and glass, lubricants, pharmaceuticals, Internet of Things (IoT) infrastructure, and 5G innovation.

As countries scale up their climate change targets, clean energy technologies will become the fastest-growing segment of demand for critical minerals. Though this demand will primarily be dominated by graphite, copper, and nickel, lithium will see the fastest growth rate, with demand spiking by over 40 times. It’s become such a critical element in our daily lives that Lithium Americas CEO Jon Evans likened lithium to the blood in our body, remarking:

It’s the chemistry behind how lithium-ion batteries work. It remains the common denominator in all battery technologies, even what we’re looking at now for next-generation batteries.”

Growth in demand for selected battery-related minerals from clean energy technologies in 2040 relative to 2020 levels by scenario

The electrifying future of transportation

For every 1% surge in EV market penetration, the world’s need for lithium will rise by an estimated 70,000 tonnes per year. And lets’ not forget that many countries including the U.K., Sweden, the Netherlands, France, Norway, and Canada have announced an eventual phase-out of combustion-engine cars, while the Biden administration faces intense pressure from Washington to follow suit.

As EV adoption ramps up, a key concern for manufacturers and countries alike is reducing cobalt content in the cathode and striving for higher energy density, prompting a shift away from cobalt-rich chemistries. This will result in modest growth in the lithium iron phosphate (LFP) battery market for heavy trucks and entry-level car models, and we’re already seeing an increased use of LFP batteries in China. Further gains in energy density and declining battery prices will require breakthrough technology which is expected in the form of lithium metal anode all solid-state batteries (ASSBs) that will hit the market by 2030.

In addition to car manufacturers, all modes of transportation – buses, planes, boats – are shifting to renewable energy, prompting significant demand for lithium batteries because they’re versatile, recyclable, and re-usable. As EVs are on the path to matching combustion-engine cars in terms of price and distance, it might only be a matter of time before most or all transportation is electric. The impact of lithium batteries in transportation also includes aerospace applications from drones to satellites, and Israeli firm Eviation is working on a prototype of a completely electric aircraft that will be able to carry nine passengers for roughly 1,000 kms at 3,000m and 440km/h.

Furthermore, Silicon Valley start-up Cuberg is pursuing advancements in lithium metal battery which could be twice as dense as lithium-ion, and its first customers are in the aviation industry. The company was recently acquired by EV battery giant Northvolt, and if they can scale-up their technology as quickly as they hope, we could see lithium metal batteries powering small planes and EVs in the next decade.

Another lithium-based battery that’s gaining steam is the Li NMC due to its superior energy density, unit weight, and volume. Leveraging this technology, Polish battery supplier BMZ recently launched Magnus+, a next-generation energy supply and storage system dedicated to commercial applications that can reach nearly 700 kWh. It’s envisioned that this system will be used to power everything from electric or hybrid buses, trucks, vans, trains, diggers, dumpsters, and road sweepers. The world is watching as the race for the most efficient lithium-powered transportation solution rages on.

Lithium prices are soaring and the search is on for the next motherlode to meet the needs of battery manufacturers. Graphite is facing a similar shortage – not just for pencils, high-grade graphite is also a critical battery component. Find out where the next supply of graphite will come from.

A critical element in the clean energy storage boom

Along with transportation, the world’s need for lithium is also catapulted by the overarching clean energy storage boom to combat climate change. Energy storage is a key component of the world’s energy transition journey to mitigate the intermittency of renewable energy generation and facilitate smart grid development. According to a recent International Energy Agency (IEA) report, in 2020, energy storage additions rose to a record-high of 5 GW, and overall investment increased by almost 40% to $5.5 billion. In the same year, spending on grid-scale batteries rose by more than 60%, driven by a push for renewables investment.

This exponential growth was largely driven by China and the U.S. In 2020, capacity additions in China more than doubled and the following year, the country announced plans to install over 30 GW of energy storage by 2025, representing a nearly ten-fold increase in installed capacity. In the U.S., capacity additions from utility-scale projects more than quadrupled and over U.S.$1 billion was authorized to support the research and development of a range of storage technologies over a five-year period. The White House also issued an executive order pledging to achieve a carbon-free electricity sector by 2035.

New policies and projects in key markets have facilitated growth in global energy storage deployment, but even faster acceleration is required to align with the IEA’s Net Zero Emissions by 2050 targets which will require nearly 600 GW of battery storage capacity installed by 2030. As the power sector faces increased pressure to decarbonize electricity generation, energy storage systems will be heavily leaned on to address the hour-to-hour variability of renewables like wind and solar.

The energy transition is likely to fuel a sustained increase in demand over the next two decades for metals such as lithium. (Credit: Shutterstock/Ksenia Ragozina)

In China, LFP batteries are increasingly favoured for grid-scale installations because they’re safer, more durable, and lower cost than their nickel-manganese-cobalt counterparts. They also have the capacity to maximize on-site generation by storing energy for use at different times, and buffering large loads so they can be more easily and inexpensively connected, turning power sites into smart microgrids.  

As the world’s demand for lithium heats up, will there be enough supply? In 2019, global lithium production stood at 77,000 tonnes but analysts expect worldwide demand will more than double by 2024, and the World Bank predicts five times more lithium than is currently mined will be needed to meet global climate targets by 2050.

Innovation is the key to sustainable lithium mining

Many companies are eagerly searching for the next motherlode of lithium, but there’s a couple of problems – namely, that it’s in short supply and lithium mining can carry a heavy environmental price tag. There’s a reason why lithium is often referred to as white petroleum: in 2020, data analytics specialist Roskill produced a Sustainability Monitor to analyze energy consumption and CO2 emissions of the lithium supply chain, finding that on average, nine tonnes of CO2 is emitted for every tonne of refined lithium carbonate equivalent (LCE) produced.

High-emission intensity is also associated with transporting lithium, particularly from Australia to China for refining, not to mention the refining process itself, in part due to China’s power grid mix and reliance on coal. With demand for lithium set to skyrocket and ESG becoming central to a company’s investment appeal, scrutiny of lithium sectors will continue to intensify.

Luckily, there are solutions. For example, lithium is traditionally produced from hard rock mining but a shift to producing lithium from brines can greatly lower the carbon footprint. Brines are underground reservoirs that contain high concentrations of dissolved salts – lithium, potassium, sodium – and it’s a more carbon-friendly option for sourcing the white gold. Alex Keyes, a clean vehicles manager at Brussels-based Transport and Environment, was quoted as saying: “Given the enormous demand we’re likely to see over the coming years, it’s going to mean we need extraction, and recovering lithium from geothermal brine looks very promising.”

A snapshot from Roskill’s Sustainability Monitor.

Many people are also looking towards recycling technology to take the pressure off. Minimizing our dependence on cobalt, introducing battery collection and recycling schemes, and exploring uses for second-hand batteries can lower the environmental impact and minimize waste.

Continuous innovation is making this possible like what’s coming out of clean technology firm Aceleron who realized battery waste would become a serious problem as demand for energy storage continued to rise. The company’s mission is to enable the battery industry to extract more value before batteries reach material recovery stage. This led to the discovery that most lithium-ion cells were assembled using permanent assembly methods, and the company developed their own assembly technology that allows batteries to be easily disassembled for repair, reuse, and recycling.

As more and more innovation comes to life, extracting additional value before the recycling phase will become the new reality. Touching on this topic, co-founder of Tesla and battery recycling company Redwood Materials, J.B. Straubel said: “We need to basically fill the pipeline. Once we have the fleets built, we don’t need to keep mining very many materials in order to keep sustaining it, renewing it. So every single year that goes by, from now until we end up in a closed loop system, the recycled material content will get higher and higher.”

Ramping up a domestic lithium supply chain

Another key issue is the lack of domestic lithium supply on U.S. soil. Last year, Australia produced more than half of the world’s lithium followed by Chile and China. The U.S. only has one operating lithium mine, Albemarle’s Silver Peak in Nevada, and the company has not yet released production numbers, but reports say the project produces roughly 5,000 metric tons of lithium, about 1% of the world’s total.

This graph from Statista shows who is producing lithium and what this means as far as production, supply chain, and logistics. Shipping costs have increased dramatically along with everything else as inflation soars. It will take major investments in mining projects to lock in prices and meet the hunger of clean tech companies.

Also in the U.S., there’s Lithium Americas open-pit Thacker Pass project 200 miles north of Reno, which is getting a lot of attention but won’t begin production for at least two years and won’t ramp up for a while after. It’s been stalled by lawsuits and permitting delays, as well as opposition from environmentalists and local communities. If the project proceeds, it’s expected to produce about 60,000 tons of lithium a year, 12% of global lithium production.

There’s also a lithium project that’s being eyed in Elko County, and Surge Battery Metals has the Northern Nevada Lithium project about 45 miles northeast of Wells and 21 miles southeast of Jackpot. The search is underway for more lithium, and the Nevada Division of Minerals has 17,928 inferred lithium placer claim point listings as of January.

California is another state with impressive lithium-producing potential. East of San Diego, the Salton Sea is known as “Lithium Valley,” and Berkshire Hathaway has 10 geothermal plants in the area under subsidiary Cal Energy. They’re looking at ways to extract lithium from the underground brines, and have predicted they could potentially produce 90,000 metric tons of lithium a year by 2027.

The development of sustainable techniques to extract lithium from brines is currently being led by Controlled Thermal Resources, a company that’s operated geothermal power plants in the region for decades. They’re working to combine lithium extraction with their geothermal production, and will leverage geothermal power plants to power the extraction process.

Let’s hope these projects come to fruition and allow the U.S. to join the ranks in major lithium producing countries! On that note, I’ve recapped the world’s five largest lithium mining companies in operation today.

The worlds’ largest lithium mining players 

1. Jiangxi Ganfeng Lithium

Founded in 2000, this company is the world’s largest lithium mining player with a market cap of $27.38 billion, and $767.5 million in 2019 revenues. Headquartered in Xinyu, China, the firm also holds lithium resources in Australia, Argentina and Mexico. It’s the largest lithium metal producer in the world, while its lithium compound capacity ranks third worldwide and first in China. The company claims to be the only one in the industry that has the commercial-scale technologies required to extract lithium from brine, ore, and recycled materials.

2. Albemarle

Albemarle is a fine chemical manufacturing company based in North Carolina that operates three divisions – lithium, bromine specialties, and catalysts. Founded in 1994, the firm has grown to establish itself as the second-largest lithium miner in the world with a market cap of $16.73 billion, and $3.59 billion in 2019 revenues.

3) Tianqi Lithium

Founded in 1995, this is the third-largest lithium miner in the world with a market cap of $11.79 billion and 2019 revenues of $748 million. Based in Chengdu, China, the firm claims to hold “world-leading positions” in its major businesses of lithium resource investment, lithium concentrates extraction, and the production of advanced lithium speciality compounds.

4. Sociedad Química y Minera

With a market cap of $6.38 billion and 2019 revenues of $1.86 million, this Chile-based chemical company is the fourth-largest lithium miner in the world. Founded in 1968, SQM supplies iodine, lithium, and other industrial chemicals, and produces lithium carbonate from its Salar del Carmen plant, close to Antofagasta, Chile. 

5. Mineral Resources Limited

Founded in 1993, this company is the fifth-largest lithium mining company in the world with a market cap of $5.66 billion and $1.16 billion in 2019 revenues. The West Australian-headquartered firm’s operations include open-pit mining of iron ore and lithium, as well as lithium hydroxide processing. The company produces lithium in Australia from the Mt. Marion project located in the Goldfields, and Wodgina, in the Pilbara region.

People tend to focus on the end product and for good reason, it’s more interesting and often something we as retail investors might use. However, the real investment is not in who can develop the better battery right now, but in who will sell them the critical materials needed and where they’re being mined.

Could lithium supply eventually outpace demand? Not according to Benchmark Mineral Intelligence who graphed out the climbing supply of lithium and predicted that the world will supply about three million metric tons by 2040 but will need seven million metric tons. Commenting on the subject, a Tianqi Lithium spokesperson told S&P Global Platts:

“Due to its strategic significance, lithium resources will be more difficult to obtain and control. Therefore, lithium resources will become a key factor restricting the development of the industry in the medium- and long-term.”

The white gold rush is on, and investors and industry experts alike will be watching closely to see how this scenario plays out in the years ahead.


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