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Telegraph – Lithium rush: electric car boom drives race for rare metals

Bolivia’s salt plains are home to some of the richest reserves of lithium. CREDIT: IGNACIO PALACIOS /GETTY IMAGES CONTRIBUTOR

Article by the Telegraph

More than 11,000 feet up in the Andes mountains of southwest Bolivia lies Salar de Uyuni, a remote salt flat that is home to some of the world’s largest reserves of lithium.

Largely untapped, the seemingly endless expanse of bright white salt plains are on the verge of a frenzy of activity as a global scramble erupts to extract the metal and secure supplies for lithium-ion batteries – a basic building material for the electric vehicle industry.

Last month, Germany struck a deal with Bolivia under which YLB, a state-owned chemicals firm, will work alongside German industrial company ACI Systems to produce 40,000 tons of lithium per year in Salar de Uyuni once operations begin in 2022.

With the International Energy Agency predicting the number of electric vehicles on the road globally to hit 125m by 2030, the rush for lithium and other battery metals like cobalt is attracting players old and new. Established player Albemarle is bringing new lithium mines online in Western Australia, while Erik Prince, the founder of US private military contractor Blackwater, has plans to launch a $500m (£392m) fund focused on battery metals.

But valuing resources like lithium, which suddenly grab the attention of global investors, is never easy. Prices have proved extraordinarily volatile, plunging 29pc last year from $158 to $111 per kilogram and prompting many to ask: has the lithium bubble already burst?

Brian Menell, chief executive of mining specialist TechMet, says it remains a sound long-term bet.

“Last year there was a degree of over exuberance in some of these markets including lithium and cobalt that resulted in a bit of speculative hype, and the price ran further than the short term fundamentals justified,” he says.

Either way, Menell, who has worked in the mining industry for 25 years, thinks the price correction has been overdone. Since founding TechMet in 2017, he has made battery and technology metals such as lithium, cobalt and nickel his sole focus. They will be “the key ingredients of the tech revolution”, he says.

Lithium brine manufacturing in Chile

He claims the industry is at a nascent stage but demand for a consistent flow of battery metals in future is inevitable. Demand is set to climb as the car industry and governments globally take action to curb emissions to tackle climate change and poor air quality.

Adding an extra geopolitical twist has been China, which has worked doggedly over the past 15 years to secure control over the best resources and the processing of battery metals “while everybody else was sleeping”, according to Menell.

The need for Western nations to secure a central role has grown more urgent, he says.

“The drive to counter or balance China’s control is one that is in the minds of government agencies in the US and Japan and to an extent in Europe.”

 Dr Benjamin Jones, managing consultant at CRU Group says: “Lithium demand is set to double between 2017 and 2023, driven predominantly by growth in EV production and sales. Demand for battery-grade lithium is forecast to triple over this period.”

By comparison, demand for a metal like copper is expected to increase 2-3pc per year.

Despite the difficulty extracting lithium from locations such as the Bolivian salt plateau, where heavy rainfall can cause flooding, Menell’s predicts strong demand.

“There will be a massive dislocation over the next five, 10 and 15 years between the demand for these metals and the supply  which will result in [them] outperforming other commodities by many multiples over that time horizon,” he says.

Electric vehicle manufacturers like Tesla rely on lithium as a key resource.

Lithium comes from two chief sources: either the mining of a hard rock called spodumene found in places such as Western Australia, or as brine that forms beneath the high altitude salt flats of Chile, Argentina and Bolivia – a trio of countries collectively known as the lithium triangle.

Though downward pressure on price is likely to endure for a few years as the market enters a phase of “oversupply”, the metal remains in a favourable position, Jones added.

TechMet is looking at hard-rock lithium projects in Africa, rather than brine-based ones such as those in South America.

With a current glut of supply, lithium-based batteries look to be the mainstay for the future of the electric vehicle industry. However, not everyone is convinced.

Earlier this week, a lawsuit was filed against Elon Musk’s car company Tesla after the death of an 18-year-old passenger in Florida last year was alleged to have been the result of a defective battery, calling into question the safety of lithium-ion technology, which is highly flammable.

New technologies are being experimented with too. Flow batteries, which use a metal called vanadium, have emerged as a contender with significant backing from China. Solid state batteries, another alternative, carry reduced risk and have been of particular interest to Sir James Dyson, who is building his own electric vehicle fleet.

However, Menell predicts flow batteries being directed more towards grid storage, and attempts to bring new technology to the transportation industry could prove to be very expensive.

“In my view, in the next 10-15 years lithium ion batteries will in roughly their present configuration and chemistry dominate for electric vehicles,” he says.

“At the moment, it’s probably $30, $40bn going into lithium-ion battery manufacturing capacity in China and elsewhere in the world and every car company in the world has a program for their fleet to be dominated by li-ion battery driven vehicles.”

And with China keen to clean up its air pollution, output and focus on battery metals and technologies will be greater than ever from the Far East.

“Although policy targets have been reined in, Chinese regulators still require rapid improvements in the energy density of EV batteries. This will significantly impact the competitive landscape for different battery technologies in the years ahead,” says Jones.

Lithium and other battery metals may struggle on price in the short-term, but over the mid to long-term, one thing is clear: the world will eventually need a lot of lithium.

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