Production expansions to rebalance global Li market

Capacity expansions by major lithium producers globally, prompted by higher profit margins amid rising prices for lithium salts and feedstocks, are expected to rebalance the lithium market following supply deficits in the past few years, according to market participants.

The 750,000 t/yr Wodgina spodumene concentrate project in the Pilbara region of Western Australia, in which joint-venture partners US-based Albemarle and Australia's Mineral Resources (MinRes) own 60pc and 40pc respectively, is on track to restart operations in by the third quarter of 2022.

Albemarle is a major lithium producer, with production facilities in Chile, the US, China and Australia. It is investing globally to expand its lithium production to keep pace with growing electric vehicle (EV) demand. The firm is also raising its capacity at the La Negra III and IV projects in Chile, which will have a combined capacity of 40,000 t/yr for lithium carbonate when commercial operations begin in the first half of 2022.

Australia-based Talison Lithium's Greenbushes mine is on target to ramp up its spodumene output to 1.3mn t in 2022 from around 800,000t this year.

Australia's major spodumene supplier Pilbara Minerals earlier this month restarted its Ngungaju plant in Western Australia, expecting first concentrate from the fines circuit in January-March next year. It has raised its spodumene production guidance to 460,000-510,000t for the July 2021-June 2022 fiscal year from 281,088t in the previous year.

Australia-based Core Lithium took a final investment decision in September to proceed with construction of its Finniss lithium project to meet rapidly growing demand for lithium concentrates.

There have been supply shortages in the lithium market since the start of 2021, which have bolstered spodumene prices. Pilbara Minerals drew a winning bid of $2,240/dry metric tonne (dmt) for 8,000dmt of spodumene grading 5.5pc lithium oxide on a fob Port Hedland basis at the second online auction on its new Battery Material Exchange in September compared with $1,250/dmt at the first online auction in July.

Australia- and Argentina-focused lithium producer Orocobre sees continuing strength in the global lithium market, achieving contract pricing of around $1,650/t for October-December spodumene contract sales and around $12,000/t for lithium carbonate contract sales.

Argus last assessed 99.5pc grade carbonate prices at 185,000-195,000 yuan/t ex-works on 21 October, the highest since the assessment was launched in 2016 after having risen by 276pc since the start of 2021. Newly built project and restarts will lift global spodumene capacity by 180,000 t/yr of lithium carbonate equivalent when they come on stream, according to Argus' analysis

.

Several spodumene and brine projects in China are also ramping up capacity, which will help rebalance the market in the coming two years.