Known Lithium Deposits Can Cover Electric Car Boom
Author: Mica Rosenberg and Eduardo Garcia - Analysis
MEXICO CITY/LA PAZ - Hopes of an electric car boom are spurring companies to seek new lithium sources, but new finds may be lower quality and costlier to develop than established deposits able to meet demand for years to come.
Lithium is a key component in rechargeable batteries that power laptop computers, digital cameras and cell phones. Demand for the silver-white metal is expected to surge if carmakers start producing electric or hybrid vehicles on a large scale.
Excitement is brewing about new projects in Bolivia -- which could hold the world's largest lithium bounty -- and in Mexico, where a small company says it has a site with up to 800,000 tonnes of the highly reactive and versatile metal.
But all lithium deposits are not created equal and experts say the new finds may be poor quality or expensive to extract.
Some companies are choosing to play it safe with leading lithium suppliers and start-ups in Argentina and Chile, the source of over half of the world's lithium output.
A sister company to Toyota Motor Corp agreed with Australia's Orocobre Ltd in January to jointly develop a $80-$100 million lithium project at Argentina's Olaroz salt lake, for example.
"It seems generally accepted that reserves and resources will be adequate, but it's easy for junior exploration companies to raise money on the strength of the lithium buzz," Keith Evans, one of the world's leading lithium experts, said.
"Exploration activity has exploded. They all hope to find sources that can be competitive, (but) Chile and Argentina have sufficient reserves for billions of years," Evans said.
Across the globe, there are nine pipeline projects in places like Australia, Finland, Canada, Serbia, and the United States and about 60 early-stage exploration projects, Evans said.
Lithium consulting company TRU Group says that existing lithium plants will continue to dominate the market through to 2020 and that pipeline projects will account for less than one-fifth of production by 2017.
CHILE AND ARGENTINA LEAD
Bolivia has a huge lithium deposit at the Uyuni salt lake, but state-run mining company Comibol may struggle to exploit it lacking know-how and capital. A high degree of magnesium and regular flooding may complicate lithium recovery.
To develop the area, the Bolivian government would have to spend $500 million on roads, water and energy infrastructure.
Last year, Mexican company Piero Sutti announced the discovery of a major lithium and potash deposit in the central state of Zacatecas and is ramping up exploration on the property spanning 124,000 acres. But experts still know little about what the source could hold.
"Being spread out over a large area is not a benefit, on the contrary, it makes it much more difficult and costly to extract," William Tahil at Meridian International Research said. "These resources are unlikely to make Mexico a major producer like Chile or even Argentina," he said.
In Chile and Argentina, a flurry of companies are expanding exploration at known sites as automakers race to develop low-emission cars powered by lithium-ion batteries thought to be more friendly to the environment.
Demand for lithium in batteries had been increasing by more than 20 percent annually in recent years but is now flattening on global economic worries, says Roskill Information Services.
The Salar de Atacama, the largest salt flat in Chile, is believed to contain the best quality lithium deposits. Chile is debating whether to allow more private companies to extract lithium or to protect the deposits for national business.
Chile's giant fertilizer producer Soquimich (SQM) and U.S.-based Rockwood operate in the Atacama and experts say they have the potential to surpass many times the some 20,000 tonnes of lithium produced in 2009.
In neighboring Argentina, Canada's Lithium One is exploring the Salar del Hombre Muerto, where top producer FMC Corp already has a lithium plant and more projects are on the way as international companies show increased interest.
Projects in the two countries should be able to fuel the electric car craze for a long time, lithium expert Evans said.
SQM, FMC and Rockwood together control some 8 million tonnes of lithium, said Evans, roughly a quarter of the world's reserves.
Just one million tonnes of lithium is enough to produce 395 million units of Chevrolet's Volt electric car (16kWh) or 250 million units Nissan's Leaf (24 kWh), Evans said.