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Lithium producers needs the backing of major investors as well
as faster permitting and processing capabilities to raise their
production for the world's decarbonization efforts, mining
executives said at a 9 March panel discussion about battery supply
chain disruptions.
Speaking at the CERAWeek 2022 conference by S&P Global in
Houston, Lithium Americas President and CEO Jonathan Evans rued
that the lithium industry doesn't enjoy the same level of financial
support as oil and gas companies or its counterparts in the copper
industry.
Compounds of lithium are crucial to the manufacture of energy
storage batteries in electric vehicles, and other clean energy
technologies, that are deemed essential to decarbonize the global
economy.
With many governments and businesses committing to reducing
emissions, S&P Global Market Intelligence estimates that global
lithium demand will grow to 2 million metric tons (mt) per year by
2030 from 640,000 mt/year in 2022. 84% of all lithium produced is
expected to go into battery making.
Funding is difficult because the global lithium market is
relatively small with a size of roughly $4 billion, compared with
the copper or oil and gas industries, Evans said.
"If you look at the companies involved, there's a limit to what
they can do. They can really do one project or two at the same
time," Evans said. Major investors are needed to be able to absorb
the business risk that smaller companies cannot handle, he
added.
He pointed to the recent announcement by global midstream energy
and petrochemicals firm Phillips 66 to invest in the technology
Novonix has developed to produce synthetic anode material used in
lithium-ion batteries.
Risk profile is complicated
Also participating in the discussion was the CEO of Australian
lithium miner Allkem, Martín Pérez de Solay, who said the risk
profile of lithium projects is different from other mining projects
because of the complexity involved. It's not just about mining the
metal, but also providing the product that can be used in batteries
that will be installed in cars.
"Sometimes investors will not realize the risks involved in the
industry and they think that building a plant is easy," de Solay
said.
Allkem is not facing the constraints as it is in the throes of
expanding a mine in Argentina and firming up plans for a mine in
Japan, according to de Solay.
Evans agreed that processing the mined lithium is vital, but he
said, "you have to have the raw material to process."
Securing permits to produce the raw material can take anywhere
from five to eight years, de Solay said.
However, Evans reminded the audience that Lithium Americas has
spent 13 years securing permits for the Thacker Pass mine in Nevada
that holds the largest known deposit in the US, owing to legal
battles with the local communities over water resources and sacred
lands.
During a question-and-answer session with CERAWeek Chairman
Daniel Yergin on 9 March, US Secretary of Energy Jennifer Granholm
acknowledged the absurdity of permitting delays. "How crazy is
that," Granholm said, as she pledged to address it along with
increasing more processing facilities as a priority to secure
domestic supply chains.
The majority of the world's battery-grade lithium is produced by
one of two means: mining or acid leaching from spodumene ores, such
as those found in North Carolina; concentrating and precipitating
as lithium carbonate from brines via evaporation ponds as is the
case in Nevada. The lithium sulfate solution that is produced from
spodumene ore can be converted to battery-grade lithium carbonate
or hydroxide via electrochemical processes.
Processing woes
Evans acknowledged that the US lacks processing capacity to
handle its own production, and that China is responsible for
processing most of the world's lithium to battery grade
product.
S&P Global Market Intelligence data shows only two operating
lithium refineries in the US owned by Albemarle and Livent,
respectively.
North Carolina-based Piedmont Lithium is expected in 2023 to
begin extracting spodumene ores from its mine in North Carolina
with the goal of producing up to 30,000 mt/year of battery-grade
lithium hydroxide from a conversion plant. Piedmont said it has
completed an economic assessment of a second plant that will double
its processing capacity of 60,000 mt/year.
According to Morgan Bazilian, who heads the Payne Institute for
Public Policy at the Colorado School of Mines, the battery supply
chain disruption is not just limited to mining and processing, but
goes all the way up to the advanced manufacturing stage. At that
point, recycling needs to take place to increase supply
Bazilian faulted the Biden administration for framing the whole
supply chain issue through the prism of competing with China.
"The average homeowner doesn't even know if the [solar] panels
were made in China," he said.
--Contribution from S&P Global Commodity Insight Metals
Editor Henrique Ribeiro.
Posted 09 March 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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