Back to the future - exploiting lithium
False promise of revolutionary changes in technology has led lithium resource development to a dead end. Gerry Clarke examines the efforts of companies worldwide to supply the predicted surge in demand.
In some ways, lithium resources development can be likened to the dot com boom. Over the past three years, sustained promise of revolutionary technology change – particularly by politicians and manufacturers in the high-profi le automotive sector – has accelerated the pace of lithium resource recognition. Prior to that, doubts about the resource industry’s capability to meet this growth in demand boosted expenditure in lithium exploration and development. However, the required growth in demand to support most, if not all, advancing projects has failed to emerge.
If the overblown financial and economic bubble that burst towards the end of 2008 had any halting effect on lithium resources development, it is now hard to discern. For incumbent producers, however, 2009 was a year of sharply reduced demand, with world production down 26% to 100,072 tonnes. Lopped prices led by Chilean chemical company SQM in early 2010 appear to have assisted a 50% mine and brine production rebound to 149,576 tonnes. For 2011, the United States Geological Survey estimates a total mine and brine production reaching 180,982 tonnes, excluding domestic output from Rockwood Lithium’s relatively small Nevada operation. These volumes are in terms of lithium carbonate equivalent (LCE), including technical-grade mineral concentrates.
Such has been the pace of lithium resource exploration and development that well over 100 projects are in various stages of progress, from claim acquisition to emergent production, alongside the four major expansionist producers (SQM, Rockwood Lithium, FMC and Talison) and a handful of minor players. At least 70 organisations are active in lithium resource recognition and development, and more than 12 concerns have multiple projects.
Supply and demand
In 2010, SQM estimated world lithium carbonate supply capability at 137,800 tonnes. This includes lithium mineral conversion capacity, predominantly in China, but excludes direct usage technical-grade lithium mineral concentrates, mainly in glass manufacture.
Today it is easy to foresee oversupply in the near- to medium-term compared with some well-considered demand forecasts, perhaps leading to start dates stretching out in several waves as well as some failures. As the greater part of future lithium demand is expected to be driven by the requirements of revolutionary changes in technology (for example auto batteries, grid electricity storage, solar energy, nuclear power and lightweight alloys), forecasting – in particular, rates of growth – is fraught. Trend lines are yet to be discerned and the overall global economic backdrop has continually deteriorated as the resources industry has continued to respond to shortfall perceptions. Nevertheless, aggregated lithium demand forecasts fall in the range of 138,000– 265,000tpa LCE (average 190,000tpa) for 2015, rising to 175,000–500,000tpa (average 280,000tpa) by 2020. These numbers imply average annual growth rates approaching 10%. Demand inflection is key, but nobody is forecasting when that point will be reached.
The aforementioned four major producers are fulfilling expansion plans that will increase combined production capacity by 70% to 245,800 tonnes LCE well before 2015, compared with 144,900 tonnes in 2011. A dozen emergent and advancing lithium projects based on traditional and novel resources, with announced start dates by 2015, suggest a combined capacity of 227,000tpa LCE. Theoretically this provides a total supply capability by 2015 (excluding China) of 472,800 tonnes LCE. This is three-and-a-half times the 2010-estimated world lithium carbonate supply capability and is geared to lithium chemical production for all resource types. However, some smaller growth may be expected for direct-usage lithium mineral concentrates from mined as opposed to brine sources. As such, the potential scenario for 2015 is for lithium carbonate supply capability, excluding any primary resource capability in China, to substantially overshoot demand in that year.
As with most mineral commodities these days, China is hugely significant. But despite having huge lithium mineral and brine resources, the country relies on imports to support its requirements. There are nine hard rock mines – five in Sichuan, two in Jiangxi, one in Hunan and another in Xinjiang (although the latter is thought to be almost depleted), and at least three more are under development. However, 10 Chinese companies have a combined capacity of around 52,500tpa LCE, based on chemical conversion of mineral concentrates mainly derived from Australia, although some domestic sources are also used. These are led by Sichuan Tianqi Lithium Industry Co Ltd in Shehong and Ya’an, Sichuan Province (18,500tpa LCE), and Ganfeng Lithium Co Ltd in Xinyu, Jiangxi (7,000tpa LCE). Earlier this year, Australia’s Galaxy Resources opened its 17,000tpa lithium carbonate plant at Zhangjiagang, Jiangsu near Shanghai, based on concentrates imported from its Mount Cattlin mine in Western Australia. This is the world’s first continuous in-line lithium mineral conversion production facility as distinct to batch processes used by the Chinese companies.
So far as China’s lithium brine resources are concerned, these are in the more remote west and led by Tibet Zhabuye Lithium Industry High Technology Co Ltd, which began operations in 2004, and a further three in Qinghai. Remote location, processing challenges, greater focus on potash and, perhaps, easily available high-quality mineral concentrate imports have hindered development progress to date. Production levels are relatively small, but towards 2020 this could escalate to 70,000tpa LCE.
In the pipeline
The so-called lithium pipeline projects are led by five continental brines-based operations in Argentina, four hard-rock projects in Canada and Western Australia, and a further three novel resources ventures in the western USA.
The longest running is Rincon Lithium Ltd’s Salar del Rincón in Salta, Argentina, which started production in late 2010 with an initial 1,200tpa capacity, with a view to ramp up to 16,000tpa. The project, initiated by Equity-1 Resources NL (which became Admiralty Resources in 2004), was subsequently sold to Sentient Group in 2008. Orocobre initiated exploration at Salar de Olaroz, Jujuy, in 2008 and is expecting to start operations for 15,000tpa capacity this year. Lithium Americas, which recently completed its Definitive Feasibility Study, expects first-phase 20,000tpa operations to start in 2014 at Salar de Cauchari, with a second phase planned for 2018. Lithium One, now merging with Galaxy Resources, is looking to 2015 to initiate its 25,000tpa project at Sal de Vida, close to FMC’s operation at Salar de Hombre Muerto. Rodinia Lithium, at Salar de Diablillos, is also looking to start up 15,000tpa in 2015.
Galaxy Resources has now emerged as a fifth major player with its 137,000tpa spodumene concentrates mine at Mount Cattlin, the opening of its 17,000tpa lithium carbonate plant near Shanghai and its merger with Lithium One. Reed Resources is advancing the Mount Marion, WA project towards 25,000tpa LCE, with start-up imminent. Canada Lithium is on target to initiate its 19,300tpa LCE operation at Val d’Or, Quebec, in early 2013, while Nemaska Lithium is following closely with its 25,000tpa LCE Whabouchi, Quebec project. The USA plays host to three novel resources. First is the Western Lithium Corps reduced 13,500tpa LCE project, based on near-surface hectorite deposits in Kings Valley, Nevada, where start-up is planned for 2014. Simbol Materials is currently initiating 500tpa production ahead of its fi rst 16,000tpa LCE unit, based on the known geothermal resource area of the Salton Sea in California. Lithium, along with zinc and manganese, is to be won from the brines pumped for geothermal power using a process based on osmosis. Only last year the world’s largest bromine producer, Albemarle Corp, based on brines pumped from the Smackover Formation at its Magnolia plant in Arkansas, announced capability to produce lithium carbonate from bromine tailings and a capacity of 20,000tpa lithium carbonate by 2014. Many more projects are also being advanced, and these include:
- Rio Tinto at Jadar Valley, Serbia
- Talison Lithium/Salares Lithium at Atacama, Chile
- International Lithium at Salar de Mariana, Argentina
- Li3 Energy at Salar de Maricunga, Chile
- Rock Tech Lithium in Canada
- Global Strategic Metals in Austria
The bottom line
The resources industry continues to respond to changes in technology, and is well-placed to meet further demand stimulus. The debate about lithium resources recognition and sufficiency has largely waned, albeit that new project resource quality might be tested in some cases in the coming years, with more emphasis towards processing capability, operating costs, and price sustainability through 2020.