Orocobre advances Japanese Li hydroxide plans

Australian lithium producer Orocobre and its Japanese partner Toyota Tsusho are aiming to get a head start through their joint development of Japan's first lithium hydroxide plant to meet electric vehicle and energy storage battery needs.

Expected to cost $60-70mn to develop with output of 10,000 t/yr, the proposed Naraha plant has attracted a $27mn subsidy from the Japanese government. Japan does not have any lithium hydroxide capacity in place and no other companies have announced plans yet to set up production plants in the country.

Orocobre and Toyota Tsusho are targeting the awarding of an engineering, procurement and construction contract for the project by the end of this year, Orocobre said. This will be followed by a final investment decision (FID), which if positive, will result in the plant being commissioned in the second half of 2020.

Lithium hydroxide is increasingly being preferred over lithium carbonate by battery cathode makers because of its energy density and longevity characteristics.

The Naraha plant would process lithium carbonate sourced from the second stage of Orocobre's Olaroz mine and processing facility in Argentina. Operating costs of its lithium hydroxide production are expected to be $1,500/t, down from an earlier forecast of $2,500 t. Output from the plant will be delivered to customers agreed on by Orocobre and Toyota Tsusho, which is Orocobre's largest shareholder.

The first stage of Olaroz has capacity for 17,500 t/yr of lithium carbonate equivalent, while the second stage is expected to be able to produce 25,000 t/yr. A FID is due shortly on the $285mn second stage.

Orocobre said long-term battery grade hydroxide prices out to 2030 are forecast to maintain a $2,500/t premium over battery grade lithium carbonate. A shortfall of around 80,000 t/yr of lithium hydroxide capacity in 2025 is currently estimated. Nickel-based cathodes are expected to account for around 80pc of total cathodes by 2025, up from 33pc in 2017.The size of the nickel-based cathode market is forecast to grow to 816GWh by 2025 from 80GWh in 2017.

Persisting bottlenecks, slower ramp-ups and higher costs will continue to underpin tight supply-demand conditions in the overall lithium market, Orocobre said.