Overview

Lithium has a wide variety of uses ranging from bipolar disorder treatments to manufacturing airplanes[i], however it is primarily used in energy storage (i.e. rechargeable batteries), lubricants, and glasses & ceramics[ii].

End Use

Lithium Usage	2007	2017
Energy Storage	24%	59%
Lubricants	14%	8%
Glass	7%	5%
Frits	9%	4%
Air Conditioning	6%	3%
CC Powder	3%	2%
Cements/Adhesives	3%	1%
Other	34%	18%

[iii]

Energy Storage/Batteries

The percentage of lithium used for energy storage grew by 145% from 2007 to 2017. Lithium batteries have a wide use ranging from children’s toys to electric vehicle batteries[iv]. A typical electric vehicle battery contains between 10 and 63 kg of lithium. A Tesla Model S, for reference, contains 51kg of lithium. Hybrid vehicles contain between 0.8 to 2kg of lithium.[v]

Supply

75% of the world’s known lithium reserves can be found at the intersection of Chile, Bolivia, and Argentina. This area is known as the Lithium Triangle. That said, the majority of the world’s lithium production/processing is rooted in Australia[vi].

	2018 Reserves (Tonnes)
Chile	8,000,000
Australia	2,700,000
Argentina	2,000,000
China	1,000,000
Zimbabwe	70,000
Portugal	60,000
Brazil	54,000
USA	35,000
Total (Rounded)	14,000,000

	2017 Production (tonnes)	2018 Production (tonnes)
Australia	40,000	51,000
Chile	14,200	16,000
China	6,800	8,000
Argentina	5,700	6,200
Zimbabwe	800	1,600
Portugal	800	800
Brazil	200	600
Namibia	–	500
Total (rounded)	69,000	85,000

[vii]

Lithium Extraction

Lithium is primarily extracted through underground brine deposits (salars) and mineral ore deposits.

To extract lithium from underground brines producers, drill underground to access brine deposits. The brine is pumped to the surface and into evaporation ponds. The brine remains in the ponds until all the water has evaporated[viii]. Other metals such as potassium are extracted from younger ponds while older ponds contain higher concentrations of lithium[ix]. Due to slow evaporation this process takes anywhere from 18 months to a few years.[x] The standard international lithium extraction price is $12,000 to $20,000[xi]. That said, a report from the Chinese government claims that a new process has been discovered which would drop the extraction cost to $2,180 per ton. However, if the process does exist, it is a “closely guarded business secret”[xii].

Ore deposits annually account for approximately 20 tonnes of lithium. Although lithium is found in over 100 minerals, only five minerals are actively mined for lithium (spodumene, lepidolite, petalite, amblygonite, and eucryptite). Extracting lithium from ores involves heating/pulverizing minerals into powder, and then combining it with chemicals. Next, the mixture is heated and filtered through an evaporation process to extract lithium carbonate. Due to increased costs from energy requirements and chemicals, the process is roughly twice the cost of brine recovery.[xiii]

Other extraction/recovery include extraction from oil field brine (same as conventional brine extraction, just with a different source), extracting lithium from seawater[xiv], and recycling brine from electronics/energy plants[xv].

Lithium Supply in Canada

North America Lithium

In 2012 RB Energy began building a lithium mine and refinery before running out of funds in 2014 during the commissioning stage. North American Lithium (a subsidiary of Contemporary Amperex Technology Co.) acquired the asset in 2016 and restarted operations early 2017. At the end of 2018 the mine, on average, was operating at two-thirds of total capacity. Activating the refinery is the next stage of the operation.[xvi]The mine has 6,910,000 tonnes of measured resources (average Li₂O grade of 0.92%), 26,330,000 tonnes of indicated reserves (average Li₂O grade of 1.4%), and 13,760,000 tonnes of inferred resources (average Li₂O grade of 1.21%)[xvii].

Nemaska Lithium

Construction of Nemaska Lithium’s Whabouchi mine is expected to wrap up 2020. The property has existing infrastructure in place (yearly-maintained roads, a nearby airport, a housing camp, and two electricity transformation plants nearby the property). The project, which is located in north-west Quebec, is expected to have a life between 26 years and 33 years.[xviii][xix]

As per SGS Canadas’ (a company offering inspection, testing, and certification services) geological models, the mine has 16,953,000 tonnes of measured resources (average Li₂O grade of 1.57%), 20,403,000 tonnes of indicated resources (average Li₂O grade of 1.41%), and 6,687,000 tonnes of inferred resources (average Li₂O grade of 1.37%)[xx].

Interesting to note is the project was financed in May 2018 through a $1.1B CAD package which included a streaming deal, bonds, and a $99.1M SoftBank investment[xxi]. That said, the project still requires an additional $375M CAD[xxii]. As of a May 16^th conference call, the company is reviewing financing alternatives, but a decision has not been made[xxiii].

Major Producers

Sociedad Química y Minera

Chile’s Sociedad Química y Minera (SQM) is the world’s second largest lithium carbonate producer[xxiv]. SQM currently has a production capacity of 70,000 tonnes of lithium carbonate. IN march 2019 the company received environmental approvals to expand its lithium carbonate plant resulting in an eventual annual production of 180,000 tonnes of lithium carbonate. SQM is currently on track to produce 120,000 tonnes by 2020[xxv].

Talison Lithium

Talison Lithium operates a premier lithium asset located in the South West region of Western Australia in the Shire of Bridgetown-Greenbushes[xxvi] (simply known as Greenbushes). Pending approval, a previsouly announced expansion[xxvii], Talison should be able to improve their Greenbush mine capacity to 1.95 million tonnes of lithium concentrate[xxviii].

Lithium Pricing

[xxix]

As of July 11^th2019, lithium is traded at $101.69. The metal peaked at a price of $156.80 per in January 2018. Analysts estimate lithium to be trade at $96.70 in July 2020.

[i] https://www.livescience.com/34705-bipolar-disorder-symptoms-diagnosis-and-treatment.html

[ii] http://www.rsc.org/periodic-table/element/3/lithium

[iii] http://s1.q4cdn.com/793210788/files/doc_news/2018/6/Foro-del-Litio-2018-Lithium-Market-Update-20180808-FINAL.pdf

[iv] https://web.archive.org/web/20131224085334/http://www.hardwaresecrets.com/article/81

[v] http://s1.q4cdn.com/793210788/files/doc_news/2018/6/Foro-del-Litio-2018-Lithium-Market-Update-20180808-FINAL.pdf

[vi] https://prd-wret.s3-us-west-2.amazonaws.com/assets/palladium/production/atoms/files/mcs-2019-lithi.pdf