We’ve all felt the embarrassment of telling a bad joke or using the wrong slang word and watching every eyebrow in the immediate area shoot skyward.
And possibly worse, many have experienced the horror of posting something online and having to swim through the onslaught of angry corrections from the entire Internet.
Case in point: one of Energy and Capital‘s most popular reports has a tagline that touts lithium as the energy source of the future. As soon as it went up, it was clear that people were getting fixated on that one line of text.
It’s not technically wrong. But I also understand why so many people are picking on it.
So I’d like to set the record straight and explain the implications of this misunderstood phrase.
No: Lithium Does Not Make Energy
Keith actually addressed this before when he admitted that calling lithium “metal oil” was a bit much. It’s a pretty common hyperbole now as the EV market continues to grow faster than anyone really expected.
The amount of lithium being produced in North America will not be enough to meet the growing demand for electrical vehicles, but the problem could be alleviated through recycling, a renowned authority on specialty metals said in a recent teaser video for his upcoming presentation at the Mines and Money show in Toronto.
Jack Lifton, senior editor for InvestorIntel Corp. and a consultant, author, and lecturer on technology metals such as cobalt, lithium and graphite, says he is perplexed as to why, when lithium-ion batteries have reached end of life, more are not recycled instead of landfilled. According to an article written by Palladium Energy, the U.S. EPA considers lithium-ion batteries “safe” for disposal in contrast to nickel-cadmium and lead-based battery products.
“We don’t produce enough lithium, cobalt or spherical graphite in North America to make even a fraction of the vehicles Mr. Musk tells us he’s going to be making by 2018”The article notes the low economic gains to be made from lithium battery recycling, with the scrap value of lithium at least one-tenth of the value of lead.
ALBANY, New York, Sep 19, 2016 ALBANY, New York, September 19, 2016 /PRNewswire/ —
Transparency Market Research (TMR) has announced the release of a new report on the global lithium-ion battery market. The report examines the historical trajectory of the global market and presents detailed forecasts regarding the market’s development from 2016 to 2024. The report examines the competitive dynamics, segmentation, and major drivers and restraints of the global lithium-ion battery market in order to provide a complete overview. The report is titled ‘Lithium-ion Battery Market for Consumer Electronics, Automotive and Grid Energy & Industrial Application – Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2016 – 2024’ and is available for sale on the official website of TMR. According to the report, the opportunity in the global lithium-ion battery market is poised to rise from US$29.68 bn in 2015 to US$77.42 bn in 2024, registering a strong CAGR of 11.6% therein.
Application of Lithium-ion Batteries in Automotive Segment to Gain Momentum by 2024
By power capacity, the low power lithium-ion battery (5-25 Wh) segment held the lead in the global market, accounting for a 35% share in 2015. On the other hand, the 18-28 KWh segment is projected to witness significant growth in the coming years, registering a 16.7% CAGR by value from 2016 to 2024. Based on application, the consumer electronics segment accounted for the leading share in the lithium-ion battery market in terms of revenue. However, TMR predicts that market saturation in several countries will enable the automotive segment to gain much momentum, exhibiting the fastest growth during the forecast period.
The electric car market is still small, but manufacturers are ramping up production, and fast; Tesla wants to go from building an estimated 80,000 cars in 2016 to 500,000 by 2018, and are building massive battery “Gigafactories” to make that happen. Some markets have targeted huge rises in ownership, most notably China, which predicts (paywall) there will be five million cars with lithium-based batteries on its roads by 2020.
Lithium, a light, reactive metal found in salt deposits in South America, Australia, and China, is central to the production of lithium-ion batteries. The technology makes smartphones rechargeable and is central to the much larger batteries which power electric cars.
The price of lithium has soared over the past decade from less than 50,000 to over 150,000 renminbi per metric tonne, according to Thomson Reuters’ data. While some attribute the dramatic rise to nothing more than speculation, others are quick to point out that rising demand from electric vehicles and energy storage justifies the increase. The truth may lie somewhere in between, and investors interested in lithium should read beyond the headlines.
In this article, we’ll look at the lithium market and how one exchange-traded fund (ETF) has grown considerably in the face of rising prices.
Potential Lithium Demand
Lithium-ion batteries are commonly used in smartphones, laptops and other electronic devices, but the most significant driver of future demand will come from electric vehicles and energy storage applications. For example, the Tesla Model S requires 10,000 times as much lithium as a smartphone. The rise in renewable energy has also created significant demand for energy storage solutions on the part of both consumers and governments.
Demand for lithium has been difficult to forecast due to the evolving nature of these industries. In March, Tesla CEO Elon Musk told attendees of the Model 3 unveiling that the company would have to “absorb the entire world’s lithium-ion production” in order to produce half a million cars a year. The company expects to reach that mark by 2018 and produce a million vehicles by 2020, following the anticipated release of its $35,000 mass-market Model 3.
Global lithium supply is concentrated in relatively few locations; it is dominated by Australian hard-rock production (Greenbushes), and South American brine deposits in Argentina and Chile.
The market is currently dominated by a small number of companies which control around 50% of supply; Albemarle (ALB US), which owns Rockwood Lithium, SQM (SQM US), FMC (FMC US) and Chengdu Tianqi listed on the Shenzhen Exchange.
South American brine supply has risks of disruption, both geo-political and climatic. Supply in 2015 was disrupted by increased rainfall. Most recently, SQM’s Atacama core operations lease has been under threat from an arbitration case, where the lessor is seeking early termination of the lease.
New supply ramp-up has also experienced challenges and delays, such as at Orocobre’s operations in Argentina.
It is estimated that there is 200ktpa of advanced stage development capacity that could be brought online by 20207. This is far short of the predicted demand growth, which is likely to be favourable for future lithium prices.
Hard rock deposits generally have 12 month construction periods; examples of new hard rock deposits coming on stream include Neometals’ Mt Marion project in Western Australia, expected to commence production in 2016.
Lithium production from other sources, such as clay deposits in Mexico, carry greater developmental risk, but if successful would bring about a welcome addition to supply.
Future supply diversification to bring new projects on stream in safe jurisdictions around the world is critical to the ongoing “green revolution”.
