Demand for battery steel lithium is predicted to extend considerably over the approaching years.
“The sheer charge of development is unprecedented in another industrial mineral or chemical that we have now seen in our lifetimes,” Sarah Maryssael, chief technique officer at Livent (NYSE:LTHM), mentioned throughout a keynote presentation at Benchmark Mineral Intelligence’s Battery Gigafactories Europe occasion. Lithium performs an important position in electrical automobile batteries.
“To not point out that lithium is cathode-chemistry agnostic with unknown substitutes immediately. It truly is what underpins your complete vitality storage infrastructure, which can decide how profitable we’re in transitioning to renewable vitality,” she added.
Maryssael, who previously labored at Tesla (NASDAQ:TSLA) as world provide supervisor for battery metals, mentioned investments within the lithium house are as essential as ever and ought to be coming from all actors throughout the availability chain.
Securing steady provide of uncooked supplies, particularly lithium, has been a prime precedence for carmakers and OEMs for a while. However 2023 has seen elevated curiosity in junior miners, with Normal Motors (NYSE:GM) signing a US$650 million cope with Lithium Americas (NYSE:LAC,TSX:LAC) and Tesla amending its settlement with Piedmont Lithium (ASX:PLL,NASDAQ:PLL).
“I feel (OEMs) acknowledge this has develop into no doubt the most important single threat to the survival of the automotive business, and a profitable transition away from the interior combustion engine enterprise,” Maryssael mentioned.
Constructing out regional provide chains
From the US to Europe, the push to construct out regional provide chains has develop into essential. Laws geared toward securing provide of uncooked supplies for batteries and lowering vulnerabilities — such because the US Inflation Discount Act and Europe’s Essential Uncooked Supplies Act — are set to proceed shaping the lithium-ion business going ahead.
“We have now to ask ourselves from a primary precept foundation, what’s essentially probably the most environment friendly provide chain?” Maryssael mentioned. “I would prefer to problem the view that puncturing via refining capability in Europe or North America won’t all the time be the correct factor to do. Despite the fact that a number of western coverage has been predicated on this concept.”
When constructing provide chains, a key issue to contemplate is tips on how to cut back end-to-end prices whereas balancing environmental footprint elements. “We can’t have a look at every step of the availability chain in isolation; we want to consider this complete worth chain, designing from mine to cell,” Maryssael advised the viewers in Budapest.
One other component that the chief believes is essential to contemplate is pace to market.
“How can we get scale? How do get these supplies certified as shortly as doable into the midstream, in addition to the downstream?” she questioned. “We even have to consider sharing the worth created with the international locations that produce most of the minerals we rely on, particularly in locations like Africa and South America.”
The Democratic Republic of Congo is the highest cobalt producer and the third largest copper producer on the earth. Final yr, Chile was the second largest producer of lithium, with neighbor Argentina having the fourth spot and Brazil coming in fifth.
“That is additionally an vital strategic consideration in diversifying refining capability to make sure that we do not find yourself in a scenario like immediately with China’s focus of refining capability,” she mentioned. “How can we guarantee our insurance policies are extra inclusive and fewer protectionist in order that different international locations stand to profit from the vitality transition?”
For Maryssael, provide chains will have to be designed in a different way throughout jurisdictions and throughout completely different metals.
“However the level is, we have to take a holistic view of how we construct them, and do not allow only a handful of gamers to catch all of the monetary upside,” she defined throughout her presentation. “I do not assume that it should be helpful, once more, from a scale to market perspective, to attempt to isolate China — I feel we have to work with them.”
Consolidation within the lithium house
With lithium costs in China falling from all-time highs, now may seem to be alternative for mergers and acquisitions to occur within the house. In actual fact, on the finish of March, Albemarle (NYSE:ALB) made a takeover supply for Australia’s Liontown Sources (ASX:LTR,OTC Pink:LINRF). The bid was rejected, however may sign what’s to come back within the house.
Consolidation might want to occur if the business is to produce battery uncooked supplies in giant volumes and shortly, Maryssael mentioned.
“We have to give attention to what we’re good at, and we have to try this via partnerships,” she added. “So let’s not underestimate the complexity and know-how required to constantly and reliably produce higher graduate chemical substances at scale and get these certified into the availability chain. There isn’t any room for error when supplying certified lithium hydroxide to cathode.”
For the business chief, going ahead it is going to additionally make extra sense for OEMs to qualify supplies from fewer producers.
“While you’re coping with a number of producers producing small volumes, it slows down the qualification course of and introduces extra threat from a provide chain administration perspective,” she mentioned. “Consolidation goes to occur throughout the business — that is going to be obligatory to make sure that we get these supplies into batteries as shortly as doable.”
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Securities Disclosure: I, Priscila Barrera, maintain no direct funding curiosity in any firm talked about on this article.
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