Lithium Batteries

As the insatiable demand for energy coupled with ever our increasing need for mobility continues at a furious pace, so too grows the demand for lithium compounds. Demand from the lithium battery market from all applications including mobile devices like cell phones and tablets, e-bikes, hybrid and electric vehicles and large scale energy storage is growing at an astounding rate. Deustche Bank believes we are at the dawn of a new automotive era with “unprecedented technological and regulatory change” set to come in the next 5 years.” (Benchmark Intelligence, Q1 2015)

Many analysts, including Jon Hykway of Stormcrow Capital in his May 2015 Lithium Industry Report, acknowledge that batteries use will drive lithium demand in the future. Mr Hykway suggest that overall, lithium demand will more than double from present levels through 2025. In the same report he notes there is insufficient supply due to fewer than expected incumbent producers of lithium. Hykway concludes that lithium prices will rise, particularly, battery grade lithium carbonate and lithium hydroxide should see strong price increases.

“Tesla Motors, LG Chem, Boston Power BYD and Foxconn are building battery supper-plants that will come on-stream in the next three years. The new supply could revolutionise how we source and use energy, creating a once-in-a-century disruptive event. Last year, the world produced 35GWh worth of battery cells. Total new capacity of 87 GWh should require an additional 70,000t to 100,000t of LCE [lithium carbonate equivalent] by 2021, this supply currently does not exist and requires new producers to come on stream.” (Benchmark Intelligence, Q1 2015)

Up until very recently lithium carbonate has been the focus of many producers for battery applications. This is because existing battery designs called for cathodes using this raw material. This is about to change. “Supply of lithium hydroxide, which is also a key battery cathode raw material, is tighter than lithium carbonate at present. It is a more niche product than lithium carbonate, but is also used by major battery producers that are competing with the industrial lubricant industry for the same raw material. Lithium hydroxide is subsequently expected to endure an even tighter supply situation to its carbonate counterpart in 2015.” (Benchmark Intelligence, Q1 2015)

After numerous market studies and working in consultation with industry experts around the world, Nemaska Lithium took the strategic decision to move forward with lithium hydroxide as its main product offering. This decision has proved to be the right one as the industry has woken up to the benefits of using lithium hydroxide in batteries over lithium carbonate.  Key advantages of Lithium Hydroxide Battery Cathodes vs. Other Chemical Compounds include better power density (more battery capacity), longer life cycle and enhanced safety features.

Today battery grade lithium hydroxide prices are in the range of US$8,375/t to US$8,700/t. In Korea and Japan battery grade lithium hydroxide sell from between US$8,800 to US$10,500. (SignumBox Sept 2015). Both Japan and Korea are known to produce high quality lithium batteries. SignumBox forecast the price of lithium hydroxide to steadily increase reaching US$12,000/t by 2031.

Leaders such as Telsa have selected lithium hydroxide batteries for their vehicles. Other auto manufacturers are using designs which can easily switch from lithium carbonate to lithium hydroxide in the future. This is a likely scenario given lithium hydroxide can provide better power density and thereby range.

“The battery chemistry is all about range and energy density.”(…)This is really game-changing technology. If batteries are the holy grail of the EV then energy density is the holy grail of batteries.(…) and this will come down to the raw materials used.” (Benchmark Intelligence, Q1 2015)

Nemaska Lithium is timing its introduction of product to the market perfectly, with lithium hydroxide samples from the Phase 1 Plant scheduled to reach potential customers from 2017. The goal is to sign off-take agreements for the production of the larger mine and chemical plant. There is obviously room in the market for a new entrant but can a new entrant dominate the market? Consider this, after commercializing a new lithium extraction technology, SQM SA has gone from being a new entrant to dominating the global production in just under two decades.

Accordingly, Nemaska Lithium believes it can come to market with much needed supply of the highest quality lithium hydroxide product when the market looks to need it most at a competitive price.