30
Jun

Lithium demand predicted to almost triple leaving Western Australia well-positioned as global supplier

  • Australia has 30 per cent of the world’s lithium resources
  • Lithium prices are predicted to rise after 2021
  • In 2019, Australia produced 55 per cent of the world’s lithium

The lithium market is expected to triple in the next five years as the world embraces electric vehicles (EVs), according to Pilbara Minerals.

Australia is the largest lithium producer in the world, with many of the significant deposits located in Western Australia.

The Pilgangoora Project, which is located about 120 kilometres south of Port Hedland in the Pilbara region, is listed in the world’s top five biggest lithium ore deposits.

Pilbara Minerals managing director Ken Brinsden said although the mine has been operating at about 50 per cent capacity due to weakening demand, they were well-positioned for the ‘second wave’ of EV production in 2025.

“It is an incredible growth rate as the world starts to adopt the EV and the amount of raw materials that are required,” Mr Brinsden said.

“The market has to grow about three to four times over approximately the next five to seven years.

“The recent announcements are significant for WA as to the support for the European EV industry with big, big subsidies being applied there, depending on the country, to the tune of 25 to 40 per cent cost of the vehicle.

“For the average consumer looking to buy a new car, the EV becomes a real option, because they suddenly become very, very cost-effective.”

Tens of millions of EVs within a decade

The Department of Industry, Science, Energy and Resources in its quarterly report for March indicated that EV sales are expected to increase from 2 million to 28 million by 2030.

This growth is only possible by the uptick in the production of the lithium batteries to meet the demand for EVs.

Mr Brinsden says the preferred feedstock for lithium battery is spodumene.

“There is no doubt in my mind that the combination of spodumene concentrate being chemically converted to lithium hydroxide is in the fact the right subset of chemicals that supports the future of battery technology,” Mr Brinsden said.

The hydroxide allows for the adoption of high nickel cathode material within the battery, which is energy-dense and supports high power, rapid charging and ultimately long-range distances.

The installed capacity at the Pilgangoora Project is about 330,000 tonnes of spodumene concentrate annually.

Global lithium consumption is projected to rise to more than 750,000t by 2025.

Government says the growth is real

In 2018, the lithium industry went through a period of rapid growth based on consumption principally in China, driven by subsidy support for the battery industry.

However, an excess supply of the raw material saw the price decline last year.

The Critical Minerals Facilitation Office is the Federal Government’s central coordination point to help grow Australia as a secure and reliable supplier of critical minerals.

Jessica Robinson heads the office, and said the claims were by no means a method to pump-up struggling lithium producers, and the global adoption of EV is real.

“We expect demand to significantly increase by 2024, where the electrical vehicle supply will start to change, and we will see an uptick in the need for lithium batteries to support that demand,” she said.

“There is a significant policy drive amongst our trading partners, particularly in the EU, India and the US to move towards renewable energy sources and carbon-friendly vehicles.

“That increase is expected to grow across all major economies, and Australia as the biggest global producer of lithium is expected to be the key source for meeting that demand.”

Ms Robinson said the low lithium price would soon change.

“All indications to date are that we are in a fairly short-term suppression of price and that is because the production ramped-up quickly with a slowdown in demand and we are not expecting that to be a long-term issue,” she said.

“We expect prices for lithium to pick-up next year, and lithium concentrate exports more than double by 2024.”

After dipping from $1.6 billion in 2018–19 to $0.6 billion in 2020–21, rising lithium hydroxide production is projected to drive export earnings to $3 billion by 2024–25.

 

Extracted from ABC