Mining firms advance lithium projects

Mining companies are working to expedite the start-up of lithium projects around the world in response to expectations of rising demand.

Advances in electric vehicle production and rising demand for consumer electronics has seen interest in lithium products increase as spot trade in other minor metals diminished dramatically over the course of 2015.

While the market for indium — another key component of personal electronics products — saw prices drop by close to 70pc last year, fuelled in part by significant oversupply, lithium projects received greater attention and funding from their owners.

UK-Australian metals and mining firm Rio Tinto pointed to increased demand for lithium as a reason for the development of its Jadar lithium-borate project in Serbia. Canada's Glen Eagle Resources announced plans to merge its Authier lithium holdings with RB Energy's shuttered carbonate production plant in Quebec, while strong lithium sales saw US chemical firm Albemarle post profits despite shortfalls in other divisions.

Key to these expectations of rising demand is the market for electric vehicles, many of which use lithium-ion batteries as a power supply. Manufacturers have increasingly focused their attention on mass-market, affordable models, with the Tesla Motors Model 3 due for release in March 2016 and the Chevrolet Bolt unveiled at the Consumer Electronic Show in Las Vegas last week. As electric car sales grow, consequent demand for batteries is projected to rise significantly — Tesla has said that its planned production rate of 500,000 cars a year will require the world's total current output of lithium-ion batteries.

The signing of supply agreements between manufacturer Tesla and Mexico-based lithium miner Bacanora Minerals has seen the rise of a number of projects outside South America, seeking a geographical advantage over projects in lithium-rich Bolivia, Argentina and Chile. Canadian miner Alix Resources' Electra project borders Bacanora's Sonora holdings; while Ardiden seeks to progress its purchase of the Seymour Lake project in Ontario; Pure Energy's Clayton Valley, Daijin Resources' Alkali Lake and Nevada Sunrise's Neptune lithium brine projects are all based in Nevada, the same state as Tesla's battery-manufacturing Gigafactory. None are in production yet, with each at varying stages of advancing feasibility studies.

But they will face competition from South American producers. Bolivia's president Evo Morales announced plans last year to invest around $617.9mn to develop the world's largest lithium deposit at the Uyuni Salt Flats in the southwest of the country. Tesla has entered into discussions with state-controlled copper mining firm Codelco about a proposed lithium exploration joint venture in Chile, while Australian mining firm Galaxy Resources continues to progress its Sal de Vida project in northern Argentina.

Global developer Lithium Australia has announced plans to raise around $6mn in funding to advance the development of its projects in the Czech Republic and Australia.

It remains unclear just how many projects will reach production, particularly in a competitive junior mining sector with little available investment funding. But the prospects for a sustained rise in prices are reliant upon increasing sales of electric vehicles. Without a marked rise in lithium-ion car batteries, supply could outstrip demand.

Lithium products are also used in ceramics, glass, lubricant and aluminium metal manufacture, and in pharmaceutical applications.