Growth in “Lithium Consumption” accelerated in 2017, by over 10 per cent on 2016 levels, to reach 211,000t lithium carbonate equivalent (LCE), according to new research.
The lithium-ion battery industry continues to be the main catalyst for the growth of the lithium market; it accounted for close to 50 per cent of consumption in 2017 and is expected to reach over 80 per cent by 2027, according to a study by metals and minerals research firm Roskill.
David Merriman, deputy division manager at Roskill, told Impact4All: “The battery industry is going through a lot of change as the costs of Li-ion batteries are falling, they are more competitive than lead or nickel, they have a much better energy density and they are lightweight.”
The battery industry is going through a lot of change as the costs of Li-ion batteries are falling, they are more competitive than lead or nickel, they have a much better energy density and they are lightweight.
The manager said that burgeoning EV growth in China is driving the boom but ‘lithium growth is increasingly becoming a global story’.
Merriman said that while there is no shortage of lithium in the ground there is currently a 12 to 18-month lag time to process the lithium into useable battery products. He added: “There is a big need for investment in this area.”
Automotive applications were the largest market for Li-ion batteries in 2017, with Chinese sales of plug-in electric vehicles (PEV) increasing by around 20 per cent y-o-y, said the study. This placed strain on the battery supply chain which is likely to continue, with Roskill estimating that Chinese PEV sales could reach around one million units in 2021.
The lead-time between first purchase of lithium compounds and then subsequent use in Li-ion battery applications created by the automotive industry supply chain increased ‘demand’ ahead of consumption by nine per cent in 2017, a trend which is expected to intensify over the coming years. Demand for lithium is expected to approach 1.0Mt LCE in 2027, said the Roskill report.
Forecast strong demand growth has incentivised the expansion of existing assets and the development of new lithium operations. The build-out of new and expanded capacity is expected to continue the oversupply of mined products, and extend to refined products towards 2020.
Price peak expected in 2018
Lithium prices continued to increase in 2017, for both contract prices, and Chinese spot material. Lithium carbonate and hydroxide prices are forecast to peak in 2018, before greater supply availability causes prices to fall back in 2019.
“A price floor of $11,000/t battery-grade lithium carbonate is expected, before continued demand growth for battery grade lithium compounds applies greater demand-side pressure on prices beyond 2021,” the report said.
“The premium for battery-grade lithium hydroxide over lithium carbonate is expected to re-emerge in the short term, but could disappear with more independent lithium hydroxide production from mineral concentrates,” it said.