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 fuelling 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
- 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.
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 Albemarle's Silver Peak Mine, which is currently producing less than 4,000 tonnes p.a. of lithium carbonate production from brines.
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 DFS projects Rhyolite Ridge to be a very low-cost lithium producer at US$2,510/tonne of LCE (with boric acid credit) - placing it at the bottom of the industry cost curve.
Lithium Supply and Demand
The global lithium market is expanding rapidly due to an increase in the use of lithium-ion batteries for electric vehicle and energy storage applications. In recent years, the compound annual growth rate of lithium for battery applications was over 22% and is projected by Roskill to be more than 20% per year to 2028.
According to analyst Benchmark, the demand for electric vehicles is expected to push demand for lithium-ion batteries above 400 GWh by 2025. In China, the government is pushing for all-electric battery cars and plug-in hybrids to account for at least 20% of its vehicle sales by 2025, and Benchmark predicts that electric vehicles will reach 10% of total sales globally by 2025. China already produces 55% of lithium-ion batteries globally, and its share is forecast to grow to 65%, according to Bloomberg.
The graph below from Roskill shows the forecast for electric vehicle sales to escalate to over 25 million units by 2028, with China dominating production. Benchmark has published similar figures.
Electric Vehicle Sales by Region, 2015-2028 (millions of units)
Countries with the largest lithium reserves worldwide include:
- Chile, who have the largest lithium reserves with an estimated 7.5 million metric tonnes
- China with reserves estimated at 3.2 million metric tonnes
- Australia with more than 2.7 million metric tonnes
- Argentina with more than 2 million metric tonnes.
In the United States, there is a single, small lithium mine operated by Albemarle at Silver Peak in Nevada.
In 2019, 45% of global lithium consumption was in ceramics, glass, polymers, and alloys; however, growth in the technology and energy sectors in recent years has seen consumption in lithium-ion batteries grow at over 20% per year.
In mid-2019, Roskill published its prediction for lithium supply and demand, as did Benchmark in late 2019.
Refined Lithium Forecast Output and Demand Scenarios (000t LCE)
Lithium Market Balance (metric tonnes)
In the U.S. and Europe, there is large demand growth forecasted in key auto markets yet very little domestic supply is in the pipeline. Rhyolite Ridge will be a politically secure Western source of this critical raw material, ready to be sold directly into these global battery supply chains.