Abstract
Over the past century, lithium consumption has grown consistently and strongly as manufacturing firms utilise it in a growing number of important applications. Throughout this period, lithium supply has been obtained from brines and hard rock deposits from a limited number of producers operating initially most prominently in the USA, Canada, and Russia and more recently in Chile, Argentina, Australia, and China. Using a standard microeconomic framework the discussion assesses major factors influencing recent lithium demand and supply. Focusing on issues affecting the height of entry barriers, it then considers some potential developments in lithium supply by new players, some of whom are supported by major users of lithium in batteries and other applications.
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Notes
An alternative way of expressing lithium consumption is in terms of lithium metal equivalent. Approximately 5.32 units of lithium carbonate (Li2CO3) converts to one unit of lithium metal.
It is notable that economic growth in the developed economies averaged only 1.5 per cent annually between 2000 and 2012, while it exceeded 5 per cent in the developing and transition economies (United Nations, 2011, 2013).
Some models currently or soon to be available include the Toyota Prius, Nissan Leaf, Chevy Volt, Ford Fusion, Honda Fit, Mitsubishi iMiev, and Volkswagen e-Golf.
Following several ownership changes, described in part by Ebensperger et al. (2005, p229), these operations are presently operated by Rockwood Lithium.
This mine halted operations in July 2012 because it had a 12-month build up of feedstock for its Jiangsu Lithium Carbonate Plant in China, which was still in the ramp up phase. Subsequently in March, 2013 Galaxy Resources signed three year spodumene feedstock agreement with nearby lower cost producer Talison Lithium to supply Jiangsu. It retained Mount Cattlin on a care and maintenance “to retain security of supply.” (Galaxy Resources, 2013, p9).
For further information in this area see Lagos and Blanco (2010).
The criteria are the country’s economic system, its political system, social issues affecting mining, bureaucratic delays, corruption, currency stability and competitiveness of tax policy.
For a more extensive list of current and proposed projects see Yaksic and Tilton (2009, page 293).
It is possible to appreciate the range of products of established lithium producers by referring to their respective web pages.
In this regard, it is notable that as this paper is written, Lithium Americas (Cauchari-Olaroz) has shareholdings from Mitsubishi Corporation and Magna International, Orocobre (Olaroz) has a partnership with Toyota Tyusho, while Rodinia Lithium (Salar de Diablillos) has a relationship with Shanshan.
In the case of KORES and Bolivia, this seems to illustrate how some nations are willing to assume large sovereign risk in the hope that institutional and political conditions might change in the future.
This strategy has been suggested by Keen (2012).
There has recently, for example, been a promising new discovery, for example, in Sweetwater County, Wyoming in the United States.
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Maxwell, P. Analysing the lithium industry: Demand, supply, and emerging developments. Miner Econ 26, 97–106 (2014). https://doi.org/10.1007/s13563-013-0041-5
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DOI: https://doi.org/10.1007/s13563-013-0041-5