Investing in Lithium
There are generally two ways to invest in this metal. One could directly buy stocks in companies involved in lithium mining or in Li-ion battery production. Or one could get involved in funds that invest in companies of this type. The success of the investment will depend on the sustained popularity of mobile devices and the increased popularity of electric cars. All these devices need Li-ion batteries, and as such the demand for the metal will skyrocket. The global market for these batteries was $11.7 billion back in 2012. By the end of 2016, that’s expected to double to $22.5 billion. Also in 2012, the automotive sector accounted for 14% of the Li-ion battery market. By the end of 2016, this will grow to as much as 25% by the end of 2016.
Price History of Lithium
Two factors determine the price of lithium, and first we need to consider abundance.
There’s only as limited supply of this element, because it only makes up 0.0007 percent of the Earth’s crust. Chile produces most of the element for the world market, with Australia coming in second. In the US you can only find a single mine in the whole country. It doesn’t occur naturally in elemental form, either.
With such a limited supply, any increase in demand can truly boost the price of the metal in the world market. And that’s happening right now because of the current success of the Tesla car company. The electric car industry is rising like a phoenix, with Apple and Google poised to launch their own versions soon. Even the Chinese, with the billionaire Jia Yueting leading the way, will also enter the scene with a billion-dollar factory set for car production by 2017.
What these things all mean is that the demand for lithium-ion batteries will rise even further. The price of lithium carbonate is up by 47% from 2015 and the year 2017 will see increased sales of pure electric cars.
Add the fact that Li-ion batteries are also used for mobile devices such as smartphones, tablets, laptops, and other wearable devices, and the demand for the commodity will surely increase as well.
From 2015 to 2024, the market supply of Li-ion batteries for light vehicles is forecasted to total
around $US221 billion, according to market intelligence. Current price predictions indicate that LCE (Lithium Carbonate Equivalent) may rise to over US$25,000 in 2017. The forecasted price for lithium carbonate will continue to rise through to 2017 on supply availability concerns, while demand is likely to soar 64 percent by 2020 from 2015 levels.
The price for lithium concentrate has undergone substantial growth caused by the demand for electric vehicles. In the first quarter of 2016 the industrial grade lithium carbonate prices rose to more than US$7,000 per tonne with battery grade reported to be around US$7,800 per tonne, an increase of about 20% from the 2014 price. Recently the world's largest Lithium brine producer in the Atacama region of northern Chile was affected by a flood disaster, the SQM plant and lithium production was suspended, a transportation blockade was enforced, leading to an increase in raw material prices.
It is generally known to be true that battery use will drive lithium demand in the future. Even using a conservative and proven battery forecast does not alter this point, although some may be surprised to see the growth in some other areas of lithium use, such as glass and ceramics. We would suggest that overall lithium demand will more than double from present levels through 2025.
Today’s lithium rush is powered by the rise of mobile technology, which has led to a run-up in prices and, in turn, lured mining companies to finding and exploit new deposits. The rush was set off in part by Tesla, which in 2013 announced plans to build a lithium-ion-battery “Giga-factory” in Nevada. In a few years, the company has said, the facility will produce as much battery power as the entire world did in 2013. A parade of car companies and technology makers have followed, heralding “Giga-factories” of their own.
Lithium refining depends on gargantuan amounts of water. Concentrating the brine, which contains only traces of lithium, requires burning off lots of water, and even more is needed to wash the finished product. A ton of lithium generally requires as much as 1,900 tonnes of water.
Lithium has been described by some analysts as “white petroleum”, a resource that could help the world move away from its dependence on fossil fuels and into a new era of battery powered energy.
Global climate agreements, tightening fuel economy standards and China’s attempts to tackle its pollution crisis all point towards a future in which batteries — and their component parts — will play an increasingly important role.
Lithium-based batteries are lighter, charge faster and are able to store more energy than traditional ones, making them a strong contender to “replace gasoline as the primary source of transportation fuel” according to analysts at Goldman Sachs and Deutsche Bank, which published a report in December 2015 predicting that the size of the global lithium market could triple by 2025. The market is still relatively small — worth about $1bn a year — and not everyone agrees on the scale of growth to come. The raw material is time-consuming to extract development. But even sceptics admit the material will probably become increasingly important as electric vehicles move towards mass-market adoption. China, where the government has set an ownership target of five million battery-electric and hybrid-electric vehicles on the road by 2020, could alone reshape the demand curve.
As the lithium-ion battery has become almost ubiquitous in consumer devices, the average price of the commodity has risen. But the amount needed to power a handheld camera or phone is still small: about five to seven grams of lithium carbonate equivalent (LCE) per phone. A mass market in electric vehicles could, however, significantly lift global demand; Goldman Sachs estimates that the Model S sedan, made by the US electric carmaker Tesla, uses 63kg of LCE in its battery — the equivalent content of about 10,000 mobile phones. Although there is no standardised price for lithium, research groups are estimating that prices for the most commonly used variety of lithium, lithium carbonate, have risen more than 100 per cent since 2005, and will continue to rise until 2018, when new supply is expected to stabilise the market.
While early hybrid vehicles used nickel-metal hydride batteries, lithium-ion is now the dominant technology in electric cars and the usefulness of lithium batteries will last longer than our lifetimes. Although the price of lithium has risen in recent years, greater efficiencies in the manufacturing process have pulled down the cost of lithium-ion battery packs from $1,000 per kilowatt-hour in 2010, to about $350/kWh, according to Bloomberg New Energy Finance (BNEF). The prototype Model 3 that Tesla unveiled in March, which is due for delivery in 2017, has a battery cost of just $200/kWh according to estimates from Bernstein Research.
BNEF predicts that the unsubsidised total cost of ownership of an electric vehicle will fall below that of its petrol-fuelled rivals by 2022.
It’s no secret that the lithium sector continues to grow rapidly, and that’s largely because the metal is a key component of lithium-ion batteries.
Lithium-ion batteries are used in portable electronic devices, electric tools and more, but today they’re best known for being an energy source for electric vehicles. Electric vehicles are becoming increasingly common, spurred on by the work of Tesla Motors and other car companies, and demand for lithium is increasing in tandem. The latest data from the US Geological Survey (USGS) shows that the world’s top lithium-producing countries are doing their best to meet that growing demand. Worldwide lithium production rose 12 percent from 2015 to 2016, coming in at 35,000 metric tonnes (MT) last year.
The AMX Mining Opportunity
Lithium is critical for the current global paradigm-shift to electrification of transport, stationary storage and renewable energy.
Lithium in the form of salt lake brine which can be easily processed using off-the-shelf, commercially proven technologies to produce lithium carbonate.