Lithium News

Lithium producer Orocobre predicts it will be paid about 25 per cent more for lithium in the June half than in the December half as the demand for electric vehicles accelerates.

The company reported record half year revenue of $US63.1 million for the December half on Friday.

Orocobre remains bullish about the long-term demand for lithium, a key ingredient in electric batteries used in the fast-growing electric vehicle segment.

The company, whose Olaroz facility in Argentina is considered one of the lowest cost producers of lithium carbonate in the world, also reported a significant jump on the prices it received per tonne in the December half, revealing an average price of $US11,145 per tonne, up 24.3 per cent on the first half of fiscal 2017.

The company, which recently signed a deal with the Toyota group’s trading arm Toyota Tsusho Corporation, hopes to cash in on the global rise of electric vehicles.

Under a deal announced in January, Toyota Tsusho will take a 15 per cent stake in the Orocobre business. The agreement will help Orocobre pursue plans to more than double the production capacity of Olaroz, to more than 42,000 tonnes per year.

Orocobre’s managing director, Richard Seville, said Orocobre was expecting to receive prices about 25 per cent higher this half than in the December half.

“There’s a shortage of supply at the moment and security of supply is more important than price. And we’ve actually seen strong price rises over these last two to three years. So this is a continuation of that,” he said.

“We’re expecting, more than likely, a further increase in the second half, but we can’t provide any formal guidance,” he said.

Mr Seville said the fundamentals of the lithium market were sound.

“Customers are concerned about supply. They’re concerned about supply right now, and they’re concerned about supply for their big planned investments in 25 years’ time.

“So we’re getting two levels of nervousness going on at the moment. And when we look forward, in terms of our view of the supply response…we fully understand that nervousness, because the supply is going to struggle to keep up with demand, assuming that the EV (electric vehicles) sector takes off the way that everybody is currently expecting,” he said.

Mr Seville also said recent research reports predicting a strong take up of electric vehicles in the world’s key car markets over the next decade or so were “reasonable”.

In a new report released late last year experts from UBS lifted their forecasts sharply for electric vehicle sales in future years.

UBS predicted that almost one in every six new cars sold around the world in 2025 would be electric vehicles, adding that the EV market share in Europe would be even greater.

In Europe, one in every three cars sold in 2025 would be electric vehicles, UBS forecast.

 

UK crane and access sales and rental company Hird has taken delivery of a 26 metre Hinowa Lightlift 26.14 lithium spider lift.

The 26.14 Performance IIIS has a 230kg platform capacity and up to 13.6 metres of unrestricted outreach. It replaces a 23 metre 23.12 diesel spider lift purchased in 2013, and joins a fleet that includes 14 and 17 metre Hinowa spider lifts. All of the machines have been purchased from Hinowa’s UK distributor Access Platform Sales (APS).

Northern access manager Jason Hellwig said: “We have invested in our first lithium-ion machine due to customer demand. We know this machine is popular with facilities maintenance contractors in particular, because it can pass easily through double doorways and has very low ground pressure.”

“Our FM clients have expressed a preference for a lithium machine rather than a mains-powered boom, as the Hinowa Lithium doesn’t have any trailing cables. It can also be recharged overnight and will work comfortably for a full shift.”

Experienced South American-focused energy minerals junior Latin Resources is looking to fast track into production of hard rock pegmatites in Argentina.

The company has just secured the Condor concessions in the San Luis district, as it adds further scale to its portfolio which already contains the country’s largest lithium hard rock pegmatite holding.

Importantly, Latin is in discussions with the owners and operators of processing plants in the province to enable a spodumene circuit to be added to an existing plant.

The acquisition, coupled with the company’s other lithium projects and the existing processing capacity in San Luis, presents a unique opportunity for Latin to fast track production of spodumene concentrate once they produce a JORC resource, managing director Chris Gale explains.

He said Latin’s aim was to establish a maiden lithium JORC resource mid-year and become a producer in the energy minerals sector, to meet the widely-anticipated growing demand and take advantage of buoyant lithium prices.

The company’s strategy of developing projects then delivering shareholder value by bringing in joint venture partners and third-party agreements is gathering pace and allowing it to hone its focus on fast tracking its lithium potential, plus adding value to its cobalt and copper projects in Peru.

Latin already has a high-level scoping study underway with Primero Consulting Engineers, to determine a flowsheet to produce spodumene concentrate.

Adding a circuit to an existing plant in San Luis would negate the normal lengthy plant approvals process and offer substantial cost benefits, Gale notes.

The new Condor concessions are in the vicinity of historic lithium mines and some of the pegmatite outcrops are being mined for feldspar and quartz.

The deal follows the finalisation of the sale this month of Latin’s remaining Peruvian copper assets to TSX Venture Exchange-listed Westminster Resources, essentially realising more than US$5 million for assets that were previously not providing any value.

Westminster acquired the projects for total proceeds of A$6.8 million (US$5.3 million) in cash and shares, giving Latin a 40% stake in the Canadian company and allowing it to turn its attention to lithium and cobalt in Argentina.

However Latin continues its exposure to copper through a 2017 joint venture deal with Canadian copper major First Quantum Minerals over Latin’s MT03 copper project in Peru, which is bringing in US$500,000 of staged payments and First Quantum is starting drilling soon as part of its quest to earn an initial 51%.

Latin is also in talks to sell its 1.3 billion tonne mineral sands project in Peru as it moves to advance its lithium projects in Argentina.

In a further strategic partnership, Latin Resources has agreed to fund a lab-scale pilot plant using technology patented by the University of Cuyo (UnCuyo) that obtains lithium carbonate from spodumene.

“We’re a big believer in the renewable energy, electric vehicle, energy storage space,” Gale said at the company’s head office in Perth, “and a I think lot of people are starting to catch on to the fact it is a real business, it’s not going to be a bubble.

“We’d like to think we can offer some lithium material for that sector very soon.”

Given Argentina’s north comprises one-third of the “lithium triangle” renowned for its lithium resources and brine prospectivity, Gale has a ready answer for deliberately seeking out the country’s hard rock lithium potential.

“The bottom line is that a hard rock lithium project has lower capex than brine and less lead time to develop and put into production,” he said.

“We did a fair bit of research to see what was available in the lithium geology in South America and came across a 20-plus year old white paper that had detailed lithium pegmatites in Argentina.

“We sent the team out from our Peru office to do some field work and ultimately secured the concessions in Catamarca and a district called San Luis.”

Latin Resources now has more than 266,000ha in the San Luis, Catamarca and Salta provinces, which it describes as comprising the largest lithium hard rock pegmatite landholding in Argentina.

A 5,000m drilling programme at Catamarca last year intersected high grades, including 3m at 2.98% lithium oxide.

The company is now turning its attention to San Luis where drilling is imminent and Gale said approvals were falling into place.

“Once we assess the drilling results along with the prospectivity, we’ll make a call on which project area we start to develop first,” he said.

Samples from the San Luis area were used by the UnCuyo scientists, who developed the patented process about to be further tested in the lab-scale pilot plant which is currently being built thanks to the funding from Latin.

“It’s the holy grail really that everyone’s looking for, finding a way to turn spodumene into a lithium carbonate more efficiently and therefore cheaper,” Gale said.

“There are quite a few companies developing processing techniques, so we thought for the investment size, it was worth the risk.

“The other thing it offers is giving back to Argentina.”

Under the UnCuyo deal, Latin Resources has secured the first option to acquire an exclusive licence for the commercial use of the technology in Argentina, Australia, China, Canada and the US.

The company raised A$2.5 million towards the end of 2017 and Gale expects the upcoming exploration to be fully funded, with further cash coming in from the company’s joint venture arrangements.

Looking to the months ahead, Gale said there would be a steady newsflow, starting with drilling results from San Luis and more field work at Catamarca including flying a geophysical survey.

The company also plans to start work at its greenfields La Rioja cobalt project, three concessions that surround the historic King Tut cobalt-gold mine that operated more than 100 years ago.

Gale indicated the company would also further increase its hard rock landholdings and see results emerge from the Primero study, resource definition drilling, First Quantum drilling, Westminster exploration and UnCuyo testwork.

“We’ve got a lot coming over next three to six months,” Gale said.

“After 10 years of operating in Latin America and building a solid foundation, I think we’re nearly in a position where we can move to the next stage, the development of our projects into production.

“We’re moving strongly into the renewable energy space and we want to become a producer, whether that’s on our own or with a partner to help develop the project.”

Comparing the company’s market capitalisation to fellow ASX-listed lithium companies, Gale pointed out the value differential between explorers, companies with a JORC resource such as Altura, Tawana and developers including Pilbara Minerals (around A$1.4 billion) and producers such as Galaxy Resources (A$1.3 billion).

“There are some great lithium companies here in Australia like Pilbara, Altura Mining and Tawana Resources – they’ve done a terrific job of developing a JORC resource and moving to production,” he said.

“Once you hit that JORC resource, you get market caps anywhere between A$200-500 million – and it doesn’t have to be 1 billion tonnes, just look at emerging miner Altura with about 40Mt and a market cap of A$600 million.

“We’re a company that’s about to start drilling and establish a JORC resource, with a A$25 million market cap – I think we’ll certainly be a lot higher by the time we establish a resource in June.”

The World Economic Forum has found electric vehicles could slash travel costs and emissions in cities — but only if policymakers heed certain guidelines.

Current moves to foster EV adoption risk stressing the grid because charging infrastructure is not being deployed ahead of vehicle ownership, said the WEF in a study released this month in collaboration with Bain & Company, the management consulting firm.

Without a multi-stakeholder, market-specific approach, priority for high-use vehicles and rapid rollout of charging infrastructure, “EV charging could create local constraints and stability problems on power networks and reduce the environmental benefits of electrification,” the report states.

Policies and EV charging business models are also being made up “based largely on current patterns of mobility and vehicle ownership,” the WEF warns.

“The uptake of privately owned EVs is encouraged, while business models for charging stations vary, as they are deployed or operated by a range of players — public agencies, car manufacturers, energy companies and pure players.”

To complicate matters, there is only limited interoperability between today’s charging infrastructures, and the level of integration of mobility with the electricity system is low, said the study.

To address these challenges, the WEF and Bain said city-based mobility programs should involve a range of stakeholders, including policymakers, regulators, urban planners and energy, transport and infrastructure companies.

The programs should also focus on electrifying high-use vehicles such as taxis, buses and fleet cars, since these account for most of the mileage seen in cities. Private vehicles are only on the road about 5 percent of the time, the study claimed.

Finally, the research called for planners to think about future EV use when deciding how to go about deploying charging infrastructure.

Today, “charging infrastructure is needed,” said the study, “especially along highways, at destination points, and close to public transport hubs.” But “some current charging locations may not be needed in the future.”

The WEF and Bain also recommended that charging infrastructure should be deployed alongside grid edge technologies such as distributed generation, storage and microgrids.

Can self-driving EVs bring additional benefits?

Assuming policymakers and city planners take note of these points, the WEF predicts vehicle electrification could yield up to $635 billion in value for the U.S. by 2030, through new jobs and improvements in air quality.

And if the electric vehicles being deployed happen to be autonomous, too, city-based travel costs could be reduced by 40 percent and marginal carbon-dioxide emissions could drop to zero.

“The convergence of mobility and energy strategies can magnify the economic and social benefits of electric mobility in cities, and ensure increased sustainability, reliability and customer choice,” said Roberto Bocca, the WEF’s head of energy and basic industries.

A WEF press release identified 10 cities said to be “leading the charge” in EV adoption: Berlin, Buenos Aires, Dortmund, Guangzhou, Hong Kong, Los Angeles, London, Oslo, Paris and San Francisco.

Marina Lombardi, WEF’s grid edge transformation project lead, said the study purposefully steered clear of alternative transportation fuels, such as hydrogen.

“Our focus was on electrification and how to deploy it combining the new trends in the energy and mobility systems, so that benefits for cities and citizens would be maximized,” she said, but “policy intervention is needed to set the proper conditions for the market forces to work.”

The research comes amid a growing debate around the extent to which EVs and autonomous vehicles (AVs) can contribute to emissions reductions.

The U.S. Congress has drafted AV legislation that covers areas including safety and cybersecurity, but groups such as the Center for American Progress have noted there is no allowance for research into emissions. They argue the emissions impact of AVs won’t be fully understood until there’s a comprehensive body of work on the subject.

“Even in the early stages of AV regulatory policymaking, vehicle emissions should not be ignored or treated as an afterthought,” wrote Myriam Alexander-Kearns, an energy and environment policy analyst at the Center for American Progress, last September.

Oil and gas giant BP, at least, believes the emergence of autonomous and electric cars will drive down fuel use and, subsequently, emissions. Meanwhile, research from Bloomberg New Energy Finance suggests EVs on their own have a net positive impact on emissions compared to internal combustion engines (ICEs).

In its “Electric Vehicle Emissions to 2040” forecast, published last August, the analyst firm said that even in markets where electricity is predominantly produced with fossil fuels, “EVs emit less CO₂ than ICEs, and always will.”

Bloomberg New Energy Finance’s head of advanced transport, Colin McKerracher, said AVs might improve the picture further if they were programmed to charge at times of high renewable energy production.

“I think there are some segments where electrification will already be well suited to soaking up some of the extra renewable capacity that’s coming,” he said.

“Municipal buses, for example, are used much more heavily during commuting hours, and some of these can be charged during the middle of the day when there is a surplus of solar generation,” McKerracher added.

Autonomy could make this easier, he said, “but additional constraints on charging times or locations could also be expensive for these vehicles.”

German solar battery maker sonnen is giving away electric car charging plugs to new household customers, seeking to attract drivers frustrated by the slow roll-out of shared charging points and link them up to better manage power demand.

The venture capital-backed start-up unveiled its 22-kilowatt sonnenCharger on Thursday for ordering by members of its online energy sharing platform in Germany, with first deliveries expected by the end of June.

Philipp Schroeder, one of its managing directors, told Reuters the company hoped to create a network of EV owners to help manage the charging process and minimize disruption for power grids.

“Automotive and power network companies will have to solve these problems anyway and we are hoping for partners,” he said.

“There will have to be solutions for mass charging, otherwise the move to EVs will not work,” he added.

Worldwide, sonnen has sold 30,000 batteries for storing solar power, mostly to rooftop solar panel owners. Its customers have the capacity to generate a combined 210 megawatts of solar power.

In its core German market, some 80 to 90 percent of customers are signed up to the sonnenCommunity, which shares power production, consumption and storage via data apps.

Customers that opt for a flat tariff get a guaranteed 8,000-kilowatt hours (kWh) of power per year – more than enough for a typical four-person household, which uses around 5,000 kWh per year. That potentially leaves them with around 3,000 kWh to charge an EV, equating to a driving range of 15,000 to 17,000 km (9,320 to 10,563 miles).

With the EV plug, customers can choose between slow and fast charging and adjust the required volume, helping to reduce the potential run on power during peak loading times that developers of EV infrastructure say could be a problem.

Sonnen also aims to market unused electricity from community members’ panels to the national power grid to help stabilize supply, and to market their battery capacity to absorb wind power whenever grids are unable to transport it to consumers.

“Access to car batteries would give us additional storage capacity,” Schroeder said, adding this would cut down on the amount of wind power currently left unused at times of grid bottlenecks.

Sonnen, which sells to foreign markets including Italy, the U.S. and Australia, saw a 24 million euro increase in turnover last year to around 65 million euros ($80 million), Schroeder said.

It is no secret that speculation in the mineral exploration is currently being driven by optimistic forecasts about the market penetration of electric vehicles and the future impact on demand for lithium ion batteries. That, in turn, is driving investor interest key battery ingredients, including lithium, cobalt and nickel.

But in a new report, BMO Capital Markets says battery costs may not come down as fast as many analysts have predicted. As a result, it says that although it is difficult to accurately predict the pace of transition from fossil fuel-powered ICEs (internal combustion engines) to EVs (electric vehicles), BMO believes its best case estimate of a 10% penetration rate by 2025 (a 30% compounded annual growth rate) is reasonable.

It is a view that is based on the challenges associated with advancing lithium battery chemistry in order to achieve cost parity with the internal combustion engine and increase the energy necessary to reduce consumer range anxiety.

BMO believes these challenges are not well understood by the market.

“Based on our detailed work on battery chemistry, we believe the consensus view that the next generation of lithium ion battery formulation NMC811 (8 parts nickel, 1 part manganese, 1 part cobalt) is readily achievable is optimistic,’’ the investment firm said.

“We believe it will be more technically challenging to develop, which impacts some of the more optimistic lithium ion powered EV adoption forecasts,” it warned.

BMO’s definition of electric vehicles includes BEVs (battery electric vehicle) and PHEVs (plug-in hybrids).

Its forecasts do not include straight hybrids (HEVs) such as Toyota Prius of Kia’s Niro.

This is because HEVs do not use lithium-ion battery technology at this time.

The growth of the global electric vehicle market is led by China

With progressive subsidies, penetration targets, investment, and the number of manufacturers, China has been leading the charge. Tesla Inc.  might have the highest brand recognition, but Chinese manufacturers BYD (8.25%-owned by Berkshire Hathaway Inc.  is the world’s largest EV company and battery manufacturer.

China’s lead can be attributed mainly to the following factors:

 

• China has 40% of the world’s EV car stock and 30% of global sales.
• Over 600,000 units (BEVs, PHEVs and straight hybrids) were sold in 2017, up 71% from 2016.

Lithium Price

BMO says it expects lithium prices to rise further over the next year before falling back slightly as the current supply shortfalls abate.

The investment firm said it expects the blended realized lithium carbonate/hydroxide price to rise slightly from the current $13,000 to $14,000 per tonne for large volumes (with hydroxide trading at premiums to carbonate) before falling in 2019-2021 an stabilizing at $10,000 per tonne in 2021.

Cobalt price

BMO says a doubling of the cobalt spot price over the coming years is not out of the question.

Around 55% of cobalt is already going into rechargeable batteries, compared to lithium’s 40% and nickel’s 5%, which has resulted in an industry-leading trend demand growth of 6.1% (compounded annual growth rate) since 2010.

Cobalt demand has grown from 40,000 tonnes in 2000 to exceed 100,000 tonnes for the first time in our estimates this year.

However, BMO says it expects car companies to lean on battery makers to spend more R&D dollars to accelerate reductions in cobalt content or replace it altogether. This is partly due to the fact that 60% of the world’s cobalt supply is mined in the Democratic Republic of Congo.

“No purchasing manager wants to be so reliant on supply of a critical raw material from a single supply source, particularly one [like DRC] with a poor human rights track record and the threat of political instability,” BMO said.

However, the investment firm concedes that this may be difficult to achieve, as cobalt is produced as a by-product of nickel and copper, and there are no new cobalt projects that could come to market in the short term.

Outlook for Nickel

BMO says it expects nickel to underperform base metal peers again in 2018.

“The resurgence of nickel pig iron output, based on increased volume of Indonesian ore, marks a major deflationary element in the market,” BMO says.

However, it is more bullish on the long term outlook. Batteries will lead the way and EV cathode chemistry must and will shift to higher nickel content over time, BMO says

Nickel prices have always cycled around with stainless steel trends. Partly owning to the nature of the surcharge mechanisms, stainless producers rush to buy nickel when demand is good and prices rising, and vice versa.

However, looking past the cycles, the longer-term trend for global stainless output growth is +5%.