Lithium is a strategic element linked directly to high technology and clean energy. It has been described as the new oil as it is a key component for batteries fueling the electric vehicle revolution.

Lithium (chemical symbol: Li) is the lightest of all metals and the third element in the periodic table. The element lithium does not exist by itself in nature.

Lithium is very likely to remain a core component of batteries due to its key characteristics:

  • lightest metal;
  • highest energy density by weight; and
  • high conductivity and ability to store electrons.

Utilising lithium for batteries has allowed electric vehicles and other weight-sensitive applications such as mobile electronics, power tools and drones to become ubiquitous.

Demand for Lithium

Lithium demand is predicted to grow at circa 20% p.a. as unrivalled technological and regulatory change is accelerating the transition from traditional internal combustion engine vehicles to electric vehicles, as well as the growing use of lithium-ion batteries for energy storage.

 

Lithium use by product type

Source: UBS report published January 2018, utilising Roskill, Benchmark Mineral Intelligence, and company filings.

Lithium-ion Batteries

Lithium-ion batteries are generally much lighter than other types of rechargeable batteries of the same size. In lithium-ion batteries, lithium ions move from the negative electrode (anode) to the positive electrode (cathode) during discharge, and the opposite direction while charging.

The rapid increase in lithium-ion battery demand expressed in gigawatt hours is shown in the chart below.

Automotive demand for lithium-ion batteries is driving a circa 10-fold increase in gigawatt-hour terms by 2026. One gigawatt hour of lithium-ion battery capacity requires approximately 700 tonnes of lithium.

The largest cost item in electric vehicles is lithium-ion battery packs. Electric vehicles are forecast to become more cost competitive with internal combustion vehicles as the cost of these battery packs is reduced. The strongly increasing demand forecast for electric vehicles is shown in the chart below.

Sources of Lithium

Economically accessible sources of lithium are relatively rare and commercial production is currently sourced from two types of deposits:

  • Brines: lithium-rich brines from salt lakes (primarily in Argentina and Chile); and
  • Minerals: pegmatite rock deposits containing lithium-bearing minerals such as spodumene (primarily in Australia).

The only operating lithium mine in the USA is Albermarle's Silver Peak Mine, which is currently producing less than 4,000 tonnes p.a. of lithium carbonate production from brines.

Processing Lithium

Lithium brines and lithium minerals are processed differently into a range of lithium chemicals which are then sold into either the technical or chemical market.

Lithium supply is also forecast to grow rapidly in response to rapidly growing demand. However, there are a range of forecasts for the supply/demand balance is difficult to predict for a sector evolving so quickly. It is worth noting that:

  • Supply from new projects often takes longer and is less than forecast;
  • Demand may accelerate if EV acceptance is faster than anticipated; and
  • Demand for use in energy storage systems also growing strongly due to falling battery costs.

Key Implications for Rhyolite Ridge

With minimal lithium production currently in the USA, Rhyolite Ridge is ideally placed to become a significant domestic producer of this critical mineral.

Importantly, it is likely to produce lithium at a lower cost than the current brine and spodumene lithium mines. 

The PFS projects Rhyolite Ridge to be a very low-cost lithium producer at US$1,796/tonne of lithium carbonate (with boric acid credit) - placing it at the bottom of the industry cost curve.

Materials