A sharp increase in demand for lithium over the next decade will result in the need for a high level of industry investment, delegates heard today at the Advanced Automotive Battery Conference (AABC) in Strasbourg, France.
Chilean producer SQM estimates that demand will increase by 1mn-1.2mn t of lithium carbonate equivalent (LCE) over the next 10 years, company sales director Bart Vanden Bossche said. That will require investment of $16bn-20bn in a market in which supply from new projects has typically been over-estimated while demand has been under-estimated.
The industry has a poor track record in starting up projects, with delays, lower production rates and budget overruns keeping supply below expectations, Vanden Bossche said. The typical capital expenditure budget for a greenfield project is $13,000-20,000/t of LCE capacity.
Lithium projects have long development times for exploration and construction, while approvals, offtake agreements and financing are challenging to manage to schedule, said lithium developer Savannah Resources' director, Martin Steinbild.
Government support is the most influential factor affecting lithium demand, Steinbild said, along with the availability of charging infrastructure, battery technology development and the marketing efforts of original equipment manufacturers.
Battery applications including mobile devices and electric vehicles (EVs) have jumped to a 65pc share of lithium consumption from 25pc over the past 10 years, Vanden Bossche said, with total demand increasing to 269,000t of LCE t from 91,000t over the same period.
SQM expects EV demand for lithium to increase at a 32-36pc compound annual growth rate (CAGR) to 2022, slowing to a 19-23pc CAGR by 2027.
But "even on the demand side where we are projecting big growth there is no consensus on the exact growth rate", Vanden Bossche said. "Any move in price will affect some investment. It's extremely difficult to predict."
Prices fell sharply in 2018 after a strong rally, with the Argus assessment for lithium carbonate in China falling to an equivalent of $11/kg from a peak of $25/kg and lithium hydroxide falling to $16/kg from $23/kg.
