Lithium News

A warning from investment bank Morgan Stanley that new supply of lithium will swamp demand for a metal that has been prized for its role in electric car batteries sent shares in its two largest producers tumbling on Monday.

Shares in US-listed Albemarle closed down more than 7 per cent to $110.10, while those of rival SQM dropped more than 8 per cent to $53.71 after analysts at Morgan Stanley cautioned that the lithium price could plunge 45 per cent over the next four years.

Lithium has become one of the world’s hottest commodities, with its price more than doubling over the past two years, as forecasts that electric cars will dominate the auto industry proliferate. Elon Musk’s Tesla Motors, for example, is in talks with Chile’s SQM over a supply deal. A Tesla Model S uses more lithium in its batteries than 10,000 smartphones, according to estimates by Goldman Sachs.

But a debate over how much new lithium supply will arrive on the market — and how quickly — has muddied the outlook for the metal. Morgan Stanley estimates supply from projects in Argentina and Australia, as well expansion by the largest producers in Chile, may add around 500,000 tonnes per year to supply by 2025. The annual supply is currently at about 215,000 tonnes.

“We expect these supply additions to swamp forecast demand growth,” the analysts said, forecasting the price of lithium carbonate will fall from $13,375 a tonne to $7,332 a tonne by 2021 and then towards $7,030 thereafter. Prices for South American lithium are currently trading at $14,500, according to Benchmark Minerals Intelligence.

Carmakers are eager to establish a diverse source of supplies, rather than relying on one or two countries or companies. That is especially the case for China, which is developing its own lithium deposits. From a geological perspective, lithium is abundant and higher prices have encouraged producers to find new reserves.

Electric cars would need to reach 31 per cent of global car sales in 2025 from less than 2 per cent currently to offset the surpluses, according to Morgan Stanley, which downgraded its ratings on Albemarle and SQM to “underweight” from “equal weight”.

Electric cars need to reach 31% of global car sales in 2025 from less than 2% currently to offset surpluses in lithium

The two companies, which will report fourth-quarter earnings on Wednesday, are key to the future of lithium since they are the lowest-cost producers. Over the past year they have both secured an agreement with Chile’s regulator that allows them to expand production.

The speed at which they increase supply will determine lithium’s future. Chile has lost market share to higher-cost mines in Australia over the past two years due to a rapid increase in demand, especially from China, the world’s largest electric car market.

Morgan Stanley estimates Albemarle and SQM will add an additional 200,000 tonnes a year of lithium by 2025, increasing Chile’s share of the market to a third of global supply.

But other analysts say the two companies will not ramp up that fast. Joe Lowry, a lithium consultant, says SQM has little incentive to expand beyond an extra 50,000 tonnes required by its January agreement with the regulator Corfo.

“Morgan Stanley’s predictions of an additional 200,000 tonnes of supply from Chile by 2025 and a steep price decline is another demonstration of the ‘big name’ analysts not understanding lithium supply, demand or the cost curve,” Mr Lowry said.

Mount Dennis station, where the lithium battery facility will be sited, is currently under construction. Image: Eglinton Crosstown via Twitter.

RES (Renewable Energy Systems) has confirmed the expected capacity and output of a photovoltaics-linked energy storage system being developed for a railway in Canada which will use lithium-ion batteries.

Ontario’s Ministry of Transportation announced in mid-February that local company Toronto Hydro has entered into an agreement with RES to design and build a battery energy storage facility for the Eglinton Crosstown light rail transit (LRT) line. The line is new and being built with 25 stops across the heart of Toronto, scheduled for completion by 2021.

The energy storage system will be located at the site of what is to be Mount Dennis Station, which also has maintenance and storage facilities and is being constructed at present. The energy storage system, which representatives of RES and for Toronto Hydro told Energy-Storage.News will be 10MW / 30MWh, using lithium-ion batteries.

As well as providing backup power for the LRT line, the storage system will be charged with cheaper, off-peak electricity during night-time and then use that stored power the following day during peaks in demand. This should have the combined effect of lowering operating costs and reducing emissions, while of course backing up the railway in the event of a power outage.

The project comes as part of a huge investment into public services and infrastructure from the Province of Ontario. Local authorities claim the plans will see more than C$190 billion (US$150 billion) of investments, supporting as many as 125,000 jobs a year, with nearly 5,000 projects already underway.

The battery energy storage system will make savings on peak demand energy costs under Ontario’s policy, the Global Adjustment Charge. Essentially, the policy levies charges onto all electricity customers across the Province, to help pay for grid costs and modernisation, renewables and environmental costs. The Adjustment Charges are much higher for commercial and industrial (C&I) electricity ratepayers and similar to demand charges for C&I users in the US, this has driven the business case forward for C&I energy storage in Canada.

RES’ partner, Toronto Hydro, confirmed to Energy-Storage.News that the Eglinton LRT system would work along these lines.

“This project will be dispatched jointly by Toronto Hydro and (rail operator) Metrolinx to shift demand off-peak, which is expected to reduce the Global Adjustment Charge,” A representative said.

Asked what the project’s partners expect the biggest challenges to be in successful execution, Toronto Hydro referred to the logistical complexity of the system’s design and installation.

“Technical challenges are expected to include coordination on a large worksite, commissioning of complex equipment, integration with other Eglinton Crosstown LRT systems and optimising the battery storage assets for maximum life,” the representative said.

“We have assembled a capable team who will address these challenges and complete this innovative project.”

RES meanwhile confirmed that the batteries will be linked to a modest photovoltaic installation, a 90kW rooftop array on the building housing the energy storage system.

There have been other innovative energy storage systems deployed for railway use in the recent past. German flywheel manufacturer Stornetic has marketed its devices to the rail transport sector, offering fast-responding short-term storage from braking trains, while a 2016 project involving ABB and SAFT stores energy from regenerative braking with a system that could reduce energy use by 30%.

“A strong partner in the province is needed to realize the goal of making Mount Dennis the city’s first net zero neighbourhood,” local councillor Frances Nunziata said about Toronto Hydro-Ontario-RES’ project.

“The move away from a gas generator to a battery energy storage facility shows our provincial government’s commitment to helping achieve this goal. Further, it demonstrates a willingness for ongoing collaboration with the city and the local community so that together, we can make strides on neighbourhood scale climate action.”

A team of researchers has developed a new plating technology that can curb some of the potential dangers posed by lithium ion batteries.

Repeated lithium deposition/dissolution during charge/discharge can cause serious accidents due to the deposition of lithium dendrites that penetrate the separator and induce internal short-circuiting, the researchers said in their study published in Physical Chemistry Chemical Physics.

The team, led by Susumu Arai from Shinshu University, said that this new development could help society realise a low-carbon future.

“Lithium metal is inherently unsuitable for use in rechargeable batteries due to posing certain safety risks,” said Arai.

Dendrites, named after their biological brethren, branch off a main source and send electrical impulses at locations that may not be secured.

“A number of approaches have been developed to prevent the growth of lithium dendrites… which are complicated and have some problems,” said Masahrio Shimizu, an assistant professor and the paper’s first author.

“In contrast, our strategy of adding magnesium salt is extremely simple.”
The researchers introduced a type of magnesium salt capable of combining with lithium, to stop lithium’s continued dendritic branching.

It worked, but they found it difficult to reverse, which is necessary in rechargable batteries.

Now, the researchers are studying the benefits of other types of magnesium salts, as well as working to improve the electrochemical stability of the salt combined with lithium to make reversal easier.

Lithium ion batteries, typically used in electric vehicles and smart grids, are key to a low-carbon future, according the authors. The problem is that while lithium could theoretically conduct electricity at high capacity, it also results in what is known as thermal runaway during the charge and discharge cycle.

“Lithium metal is inherently unsuitable for use in rechargeable batteries due to posing certain safety risks,” said Arai. “Repeated lithium deposition/dissolution during charge/discharge can cause serious accidents due to the deposition of lithium dendrites that penetrate the separator and induce internal short-circuiting.”

As the need for batteries capable of more energy capacity increases, the need for more secure storage within the battery also becomes critical. Lithium dendrites, named after their biological brethren, branch from a main source and send electrical impulses at locations that may not be secured.

“A number of approaches have been developed to prevent the growth of lithium dendrites that are complicated and have some problems,” said Masahrio Shimizu, an assistant professor and the paper’s first author “In contrast, our strategy of adding magnesium salt is extremely simple.”

The researchers introduced a type of magnesium salt capable of combining with lithium to stop dendritic branching. It worked, but they found it difficult to reverse, which is necessary in rechargable batteries. Now, the researchers are studying the benefits of other types of magnesium salts, as well as working to improve the electrochemical stability of the salt combined with lithium to make reversal easier. The researchers hope to solve the issues with this plating technology and eventually achieve a compact and high-capacity battery.

“We aim to show the significantly improved reversibility of lithium deposition/dissolution and to realize stable operation for at least 1,000 cycles,” said Arai. “The ultimate goal is to create batteries to run for 500 kilometers with full charge in electric vehicles.”