Demand for battery metallic lithium is predicted to extend considerably over the approaching years.
“The sheer price of progress is unprecedented in every other 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 car batteries.
“To not point out that lithium is cathode-chemistry agnostic with unknown substitutes at this time. It truly is what underpins the complete vitality storage infrastructure, which is able to decide how profitable we’re in transitioning to renewable vitality,” she added.
Maryssael, who previously labored at Tesla (NASDAQ:TSLA) as international 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 provision chain.
Securing secure provide of uncooked supplies, particularly lithium, has been a high precedence for carmakers and OEMs for a while. However 2023 has seen increased interest in junior miners, with Basic 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 turn into doubtless the most important single danger to the survival of the automotive trade, and a profitable transition away from the inner combustion engine enterprise,” Maryssael mentioned.
Constructing out regional provide chains
From the US to Europe, the push to construct out regional provide chains has turn 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 Important Uncooked Supplies Act — are set to proceed shaping the lithium-ion trade going ahead.
“Now we have to ask ourselves from a primary precept foundation, what’s basically essentially the most environment friendly provide chain?” Maryssael mentioned. “I would wish to problem the view that puncturing by way of refining capability in Europe or North America may not all the time be the best factor to do. Although a variety of western coverage has been predicated on this concept.”
When constructing provide chains, a key issue to contemplate is methods to scale back end-to-end prices whereas balancing environmental footprint components. “We can’t have a look at every step of the provision chain in isolation; we want to consider this complete worth chain, designing from mine to cell,” Maryssael informed the viewers in Budapest.
One other aspect that the manager believes is essential to contemplate is pace to market.
“How will we get scale? How do get these supplies certified as shortly as potential into the midstream, in addition to the downstream?” she questioned. “We even have to consider sharing the worth created with the nations that produce lots 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 this planet. Final 12 months, Chile was the second largest producer of lithium, with neighbor Argentina having the fourth spot and Brazil coming in fifth.
“That is additionally an essential strategic consideration in diversifying refining capability to make sure that we do not find yourself in a scenario like at this time with China’s focus of refining capability,” she mentioned. “How will we guarantee our insurance policies are extra inclusive and fewer protectionist in order that different nations stand to learn from the vitality transition?”
For Maryssael, provide chains will should be designed otherwise throughout jurisdictions and throughout totally 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’ll 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 would possibly look like a superb alternative for mergers and acquisitions to occur within the house. Actually, on the finish of March, Albemarle (NYSE:ALB) made a takeover offer for Australia’s Liontown Assets (ASX:LTR,OTC Pink:LINRF). The bid was rejected, however might sign what’s to return within the house.
Consolidation might want to occur if the trade is to provide 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 by way of 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 provision chain. There isn’t a room for error when supplying certified lithium hydroxide to cathode.”
For the trade chief, going ahead it’ll additionally make extra sense for OEMs to qualify supplies from fewer producers.
“Once you’re coping with a number of producers producing small volumes, it slows down the qualification course of and introduces extra danger from a provide chain administration viewpoint,” she mentioned. “Consolidation goes to occur throughout the trade — that is going to be needed to make sure that we get these supplies into batteries as shortly as potential.”
Do not forget to observe us @INN_Resource for real-time updates!
Securities Disclosure: I, Priscila Barrera, maintain no direct funding curiosity in any firm talked about on this article.
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