Demand for battery steel lithium is anticipated to extend considerably over the approaching years.
“The sheer price of progress is unprecedented in another industrial mineral or chemical that we’ve seen in our lifetimes,” Sarah Maryssael, chief technique officer at Livent (NYSE:LTHM), stated throughout a keynote presentation at Benchmark Mineral Intelligence’s Battery Gigafactories Europe occasion. Lithium performs a vital position in electrical car batteries.
“To not point out that lithium is cathode-chemistry agnostic with unknown substitutes at present. It truly is what underpins the whole power storage infrastructure, which is able to decide how profitable we’re in transitioning to renewable power,” she added.
Maryssael, who previously labored at Tesla (NASDAQ:TSLA) as international provide supervisor for battery metals, stated investments within the lithium house are as important as ever and needs to be coming from all actors throughout the provision chain.
Securing secure provide of uncooked supplies, particularly lithium, has been a prime precedence for carmakers and OEMs for a while. However 2023 has seen increased interest in junior miners, with Basic Motors (NYSE:GM) signing a US$650 million take care of Lithium Americas (NYSE:LAC,TSX:LAC) and Tesla amending its settlement with Piedmont Lithium (ASX:PLL,NASDAQ:PLL).
“I feel (OEMs) acknowledge this has develop into no doubt the most important single threat to the survival of the automotive business, and a profitable transition away from the inner combustion engine enterprise,” Maryssael stated.
Constructing out regional provide chains
From the US to Europe, the push to construct out regional provide chains has develop into important. Laws geared toward securing provide of uncooked supplies for batteries and decreasing vulnerabilities — such because the US Inflation Discount Act and Europe’s Crucial Uncooked Supplies Act — are set to proceed shaping the lithium-ion business going ahead.
“We now have to ask ourselves from a primary precept foundation, what’s basically probably the most environment friendly provide chain?” Maryssael stated. “I might wish to problem the view that puncturing via refining capability in Europe or North America won’t at all times be the appropriate factor to do. Although quite a lot of western coverage has been predicated on this concept.”
When constructing provide chains, a key issue to contemplate is find out how to scale back end-to-end prices whereas balancing environmental footprint elements. “We can’t take a look at every step of the provision chain in isolation; we want to consider this complete worth chain, designing from mine to cell,” Maryssael instructed the viewers in Budapest.
One other component that the manager believes is important to contemplate is velocity to market.
“How will we get scale? How do get these supplies certified as shortly as potential into the midstream, in addition to the downstream?” she questioned. “We even have to consider sharing the worth created with the international locations that produce most of the minerals we rely on, particularly in locations like Africa and South America.”
The Democratic Republic of Congo is the highest cobalt producer and the third largest copper producer on this planet. Final yr, Chile was the second largest producer of lithium, with neighbor Argentina having the fourth spot and Brazil coming in fifth.
“That is additionally an essential strategic consideration in diversifying refining capability to make sure that we do not find yourself in a scenario like at present with China’s focus of refining capability,” she stated. “How will we guarantee our insurance policies are extra inclusive and fewer protectionist in order that different international locations stand to profit from the power transition?”
For Maryssael, provide chains will should be designed in a different way throughout jurisdictions and throughout completely different metals.
“However the level is, we have to take a holistic view of how we construct them, and do not allow only a handful of gamers to catch all of the monetary upside,” she defined throughout her presentation. “I do not suppose that it should be helpful, once more, from a scale to market perspective, to try to isolate China — I feel we have to work with them.”
Consolidation within the lithium house
With lithium costs in China falling from all-time highs, now may look like an excellent alternative for mergers and acquisitions to occur within the house. In truth, on the finish of March, Albemarle (NYSE:ALB) made a takeover offer for Australia’s Liontown Assets (ASX:LTR,OTC Pink:LINRF). The bid was rejected, however may sign what’s to come back within the house.
Consolidation might want to occur if the business is to produce battery uncooked supplies in massive volumes and shortly, Maryssael stated.
“We have to give attention to what we’re good at, and we have to try this via partnerships,” she added. “So let’s not underestimate the complexity and know-how required to constantly and reliably produce higher graduate chemical substances at scale and get these certified into the provision chain. There is no such thing as a room for error when supplying certified lithium hydroxide to cathode.”
For the business chief, going ahead it’s going to additionally make extra sense for OEMs to qualify supplies from fewer producers.
“If you’re coping with a number of producers producing small volumes, it slows down the qualification course of and introduces extra threat from a provide chain administration perspective,” she stated. “Consolidation goes to occur throughout the business — that is going to be mandatory to make sure that we get these supplies into batteries as shortly as potential.”
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Securities Disclosure: I, Priscila Barrera, maintain no direct funding curiosity in any firm talked about on this article.
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