Supply Of The Metal Used For EV Batteries Has A Lock On By Australia

Work is accelerating to deliver the world’s next major mines to feed soaring demand from electric vehicle battery makers, at a small patch of northern Australia’s iron-ore rich outback – the Ground Zero in the global scramble for lithium.

According to CRU Group, the top supplier of lithium will be able to cement its grip on the market as almost 60 percent of supply from planned large projects through about the next five years will be added in Australia. Located at about 120 kilometers (75 miles) from Port Hedland, the gateway to markets in China, are both the biggest mines due to enter production next year.

Pilbara Minerals Ltd. is advancing work on a potential expansion and is targeting shipments to start in the second quarter of 2018 from its Pilgangoora project. And also preparing to rapidly boost output is Altura Mining Ltd. which says it’s on schedule to start output in the first quarter.

According to both Altura and Pilbara, these and other projects form an emerging cluster of global production along with nearby Mineral Resources Ltd.’s Wodgina mine — the biggest known hard rock lithium deposit.

Pilbara Chief Executive Officer Ken Brinsden said Thursday in an interview in Port Hedland that if project expansions advance as planned, the region “would be the largest production center in the world”. “In my mind, that could be the case by the early to mid-2020s.”

Brinsden said, including from South Korea and Europe, also scouting for supply deals, there’s been a rise in interest in recent weeks from consumers outside China.

Significant price gains are being driven by rising Chinese demand for lithium-ion batteries needed for electric vehicles and energy storage. Bloomberg New Energy Finance said in a July report that by 2040, a third of the total global light-duty vehicle fleet and more than half of all new car sales will be electric.

“Australia’s importance has been cemented by offtake deals and equity investments in mines,” Alice Yu, a Hong Kong-based consultant at CRU, said. she added that the country could add processing facilities to develop exports of higher-value lithium chemicals by backing from major battery manufacturers and auto producers.

While Jiangxi Special Electric Motor Co. this month agreed to invest in Australian developer Tawana Resources NL, Perth-based Pilbara Minerals has attracted supply deals and investments, including from Jiangxi Ganfeng Lithium Co. and Great Wall Motor Co., China’s biggest maker of sport utility vehicles.

Managing Director James Brown said in an interview that Altura may seek to add further partners for a mine expansion. The Pilbara “does lend itself to becoming a hub, probably the size of which the world hasn’t seen,” he said.

According to Melbourne-based UBS Group AG analyst Lachlan Shaw, the lithium market is likely to remain tight with a stronger demand outlook than anticipated even with a wave of new supply, including from Australia. “We have had increased supply this year, and all the while lithium prices have kept going up,” he said. “The market is probably underestimating demand.”

(Adapted from Bloomberg)

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