The global market for battery chemical lithium is likely to remain “fairly balanced” for the next four to five years with supply rising to meet increased demand from electric vehicles, according to Albemarle, one of the biggest producers.
Demand for lithium is likely to rise by 20,000 tonnes a year until 2021, Luke Kissam, chief executive of the US-listed company said on Monday. But that can be met from additional expansion from the largest global producers, he added.
“We want to have the capacity to build it [production] up to be able to meet market demand but we don’t want to flood the market,” he said at the Mines and Money conference in London.
Lithium is emerging as a key material in the battery supply chain as global carmakers focus on launching electric cars and the world’s largest car market China tightens regulations on petrol and diesel engines. Demand is expected to be further boosted by the growing use of large batteries for home and power grid electrical storage
But raw lithium extraction is geographically concentrated in South America and Australia and dominated by four companies: Chile’s Sociedad Química y Minera de Chile, or SQM, Albemarle, FMC and China’s Tianqi Lithium.
That has raised fears about supply as electric vehicles come down in cost, driving up demand for batteries. Chile’s largest producer SQM has been unable to expand production in the country amid a dispute with the government over its payments.
“Lithium, a key input into batteries, is the obvious beneficiary of the move to EVs [electric vehicles] as the mining industry currently appears unlikely to be able to satisfy demand,” analysts at Investec said in a report on Monday. “Especially given the simultaneous rise of power storage batteries.”
Mr Kissam said he is confident new supply will come on to the market in time. Chile will resolve political issues that have held back expansion of lithium capacity, he predicted. Albemarle expects to sign an agreement with the industry’s regulator Corfo to expand production by the end of the year.
Albemarle is also assessing whether to reopen the Kings Mountain lithium mine in North Carolina, which was one of the largest in the world. It is also exploring for lithium in Argentina, where it hopes to begin production after 2024.
Altogether Mr Kissam, who became chief executive in 2011, said the company has capacity to produce around 165,000 tonnes of lithium annually by 2021. The global lithium market is currently around 185,000 tonnes per year.
The company takes a conservative view of penetration of electric vehicles. It predicts plug-ins and electric vehicles will make up 2 per cent of annual sales by 2021, up from 1 per cent currently.
Mr Kissam said batteries for energy storage will be a “huge opportunity” after 2020. It could account for an additional 10,000 tonnes of annual lithium demand, he said.
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