‘Mr. Lithium’ Warns There’s Not Enough Battery Metal to Go Around

[TruckElectric]

“One person who’s been warning of a lithium shortage for a while is Joe Lowry, a somewhat cantankerous expert who regularly draws mining bigwigs and analysts to his podcast. Known in mining circles as ‘Mr. Lithium,' the North Carolina resident has been in the business for decades.
Since striking out on his own in 2012, Lowry has been a consultant to mining companies and an investor. He owns shares of companies including Tesla and Lithium Americas.”


‘Mr. Lithium’ Warns There’s Not Enough Battery Metal to Go Around
A mining company consultant with decades of experience doubts the industry will be able to support all the electric car production planned.

Lithium mining in Jujuy Province, Argentina.
Source: Lithium Americas

By
Gabrielle Coppola
April 22, 2022, 6:40 AM CDT
https://www.bloomberg.com/hyperdrive
While there’s been a lot of attention on nickel, especially after Russia’s invasion of Ukraine, another key metal — lithium — is a source of concern for manufacturers dealing with all manner of supply chain challenges.

The cost of the metal — mainly used to produce lithium-ion batteries, but also for pharmaceuticals and industrial lubricants — has been soaring. An index of key prices more than doubled in the first quarter, after surging 280% last year, according to Benchmark Mineral Intelligence.

That jump is worrying government officials in China, my colleague Annie Lee wrote earlier this month. Elon Musk, largely seen as ahead of the pack on scaling electric vehicle production, flagged the lithium shortage several times during Tesla’s earnings call this week.

“I’d certainly encourage entrepreneurs out there who are looking for opportunities to get into the lithium business,” Musk said Wednesday. “We think we’re going to need to help the industry on this front.”

One person who’s been warning of a lithium shortage for a while is Joe Lowry, a somewhat cantankerous expert who regularly draws mining bigwigs and analysts to his podcast. Known in mining circles as “Mr. Lithium,” the North Carolina resident has been in the business for decades.

Since striking out on his own in 2012, Lowry has been a consultant to mining companies and an investor. He owns shares of companies including Tesla and Lithium Americas.

I’ve been talking with Lowry to wrap my head around the EV battery supply chain and have summarized our conversation in Q&A form. Here’s an excerpt, edited for length and clarity.

You wrote a paper at the end of 2019 saying demand for lithium would outstrip supply. It looks like lithium prices have started to reflect that. What do you see?

In the next two years, even though there will be significant growth in supply, it will be less than demand, so the gap will just continue to grow.

It’s simple math. It’s like, the bus in front of me is going 50 miles per hour, I’m going 45 mph, but I’m saying I’m gonna catch it in 2025.


I believe there will be a day in the future when lithium is in oversupply, but it won’t be in this decade.

Why will it take so long?

You can build a battery factory in two years, but it takes up to a decade to bring on a lithium project.

It’s not a commodity; it’s a specialty chemical. Lithium is often compared with iron ore or other major commodities, and it behaves nothing like that. The auto industry is just finally figuring that out. Lithium qualification for an auto company can take over a year.

Why?

It has to go through cycle testing. If you’re going to put something into a car that could ignite if the chemistry is wrong, you kind of want to know.

Is the auto industry prepared for that long lead time?

I take everybody’s gigawatt-hour projections and take them back to the lithium required to do it, and most of them are so far over what the lithium industry can supply. I don’t believe demand is going to be destroyed. Ultimately, I believe it’s just deferred.

The additional production this year will be less than 150,000 tons. So then, it’s who gets the material? Whose EV models don’t get made?

In a 2050 scenario, there’s time for everything to happen that needs to happen. But in 2030, it just isn’t going to happen. Just look at the mess we’re in from a lithium supply standpoint with less than 10% EV penetration.

Lowry’s predictions chime with others assessments. BloombergNEF forecasts prices of lithium carbonate and hydroxide — the main lithium chemicals used in battery production — will be higher still by 2030 as a result of projected supply deficits.

Metal supply scarcity poses a more immediate challenge to automakers. Battery prices are expected to rise slightly this year, ending a long run of declines. That will delay the point at which EVs achieve price parity with combustion engine cars, potentially by as much as two years, to 2026, according to BNEF.

https://www.bloomberg.com/news/arti...there-s-not-enough-battery-metal-to-go-around

Sponsored

 

[TruckElectric]

‘The lithium is ours:’ Senate approves AMLO’s mining reform, nationalizing the metal

The state will have a virtual monopoly on lithium extraction

A reform to the federal Mining Law that nationalizes lithium will take effect this week after it was approved by the Senate on Tuesday.

The law declares that lithium “is an asset of the nation and its exploration, exploitation, extraction and use is reserved in favor of the people of Mexico.”

No new concessions for the mining of the metal – a key component of lithium-ion batteries used in electronic devices and for green energy storage – will be issued to foreign or private companies as a result of the reform, allowing López Obrador to fulfill his pledge to create a state-owned lithium company.

The lower house of Congress approved the reform on Monday, a day after López Obrador’s constitutional bill that would have overhauled the electricity market in favor of the state and nationalized lithium failed to attract support from the required two-thirds of lawmakers.

The Mining Law reform only needed support from a simple majority to pass Congress, which was easily achieved. Eighty-seven senators voted in favor in general terms, 20 voted against it and 16 abstained. López Obrador announced last week that he would send the proposal to Congress if his electricity bill wasn’t approved.

“The lithium is ours,” López Obrador declared at his news conference on Tuesday, recalling “the oil is ours” refrain from the country’s 1938 expropriation of the oil industry from foreign companies. That act is still seen as a landmark expression of sovereignty by Mexican nationalists.

“It was a very good decision yesterday. Let’s see if it acts as a scolding to those who didn’t finish the job,” he added in reference to opposition lawmakers who “thought by blocking the constitutional reform that it was resolved — no, no, no.”

Senator Napoleón Gómez Urrutia, a mining union boss who represents the ruling Morena party, said the nationalization of lithium allows the wellbeing of the Mexican people to be prioritized.

“What we’re doing is preventing the concentration of large national and foreign monopolies,” he said.

Instead, the state will have a virtual monopoly on lithium extraction, although companies with existing concessions, such as China’s Ganfeng Lithium, are expected to be allowed to remain in the country to mine the metal. However, when asked about the private lithium investment on Tuesday, López Obrador responded: “These contracts have to be reviewed.”

Gustavo Madero, a National Action Party-affiliated senator who is part of an independent “plural group” of upper house lawmakers, questioned why the reform was needed given that the constitution already establishes that the state controls lithium.

‘We’re preventing the concentration of large national and foreign monopolies:’ Morena Senator Gómez.

“What the constitution says is that concessions for lithium [extraction] can’t be issued,” he said, even though close to a dozen companies have existing contracts to explore potential lithium deposits, according to Reuters.

Madero, who voted against the reform, described it as a “consolation prize” for the president given he was unable to get his electricity bill through Congress.

Institutional Revolutionary Party Senator Mario Zamora rebuked Morena lawmakers for seeking to nationalize something that is already the property of the state. “Sunday’s defeat was tough and they want to put something on the table,” he said.

Juan Manuel Fócil, a Democratic Revolution Party senator, warned that a state company for lithium could become like the Federal Electricity Commission and state oil company Pemex – firms “with too much bureaucracy and too much debt.”

“[They’re] inefficient companies that have lost money,” he said.

Analysts expressed bewilderment with the president’s high hopes for lithium, describing his hasty nationalization as more about saving face after the failed energy reform than promoting prosperity. “The lithium initiative is a response to the fact that the electricity reform was not approved. It could be seen as a political gesture to say they didn’t lose,” said Gabriela Siller, head of financial and economic research at Banco Base.

Mexico has large potential reserves of lithium in Sonora and smaller potential deposits in states such as Baja California, San Luis Potosí and Zacatecas. However, most of Mexico’s potential reserves are in clay deposits that are technically difficult and expensive to mine, leading to doubts about the state’s capacity to exploit them.

https://mexiconewsdaily.com/news/senate-approves-nationalizing-lithium/