Demand for lithium carbonate equivalent (LCE) material is expected to rise to 1.0mn t/yr by 2025, needing 80,0000-90,000 t/yr of new supply over the next seven years.
"This means that four Mt Cattlin mines will be needed to come on stream every year between now and 2025 to meet this demand," Daniel Harangozo, a corporate development analyst at lithium producer Galaxy Resources said, at a battery metals conference in Perth.
Galaxy's Mt Cattlin mine in Western Australia produced 156,000 t/yr of lithium concentrate last year, all of which was shipped to China for beneficiation. It takes 8t of spodumene concentrate to produce 1t of LCE that is used to make lithium-ion batteries for electric vehicles and energy storage.
About $12bn will need to be invested in conversion and beneficiation infrastructure to meet LCE demand in 2025. This is on top of $2.5bn that has been invested to date mainly in China and South America.
This investment needs to start happening soon as construction lead times and ramping up to full production can take several years, he said.
While China is driving demand for lithium concentrate and LCE, demand is expected to grow in other parts of the world as all major vehicle manufacturers move to electric vehicle production.
"China produced 794,000 electric vehicles last year and is expected to reach 1.0mn vehicles this year and 2.1mn by 2020. German automaker VW wants to build 16 facilities around the world to produce electric vehicles and components for electric vehicles," Harangozo said.
"The core risk is raw materials. We need to provide the raw material. End users are concerned about security of supply. This is resulting in original equipment manufacturers (OEMs) cooperating with raw material producers to ensure supply," he said.
Galaxy Resources is developing the Sal de Vida lithium brine project in Argentina. which is estimated to have a mine life of 40 years with a resource containing 1.1mn t of LCE, and the high grade James Bay hard rock lithium project in Quebec, Canada.
