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Lithium Sources For Electric Cars

Lithium is found in trace amounts in various mediums around the world. The main sources of lithium for commercial extraction are hardrock pegmatite (igneous rocks formed from post magmatic fluids) and continental brines (from saltwater aquifers).

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Pegmatite - Lithium containing ores (mainly from pegmatite) are widely distributed and found on every continent of the world. Spodumene is a lithium containing ore found in pegmatite and is the most economically viable source of lithium. Pegmatite is extracted from the ground, crushed and other minerals are extracted using chemicals forming 'spodumene concentrate' which can be used to make glass and ceramics or chemically processed further to produce 'lithium carbonate' or 'lithium hydroxide'. The traditional lithium mining methods are destructive to the environment as rocks need to be taken out of the ground and chemicals are used so this source of lithium can have a negative impact on the environment.

Brine - Brines have become a viable source of lithium as an alternative to spodumene mining and currently 87% of lithium currently comes from brine. Brine is extracted from saltwater aquifers using pumps and evaporated until the concentration of lithium salts is high enough for conversion to lithium carbonate or lithium hydroxide. The evaporation is powered entirely by the sun so it is a very environmentally responsible process and requires little to no chemicals. However, the concentration process can take 12-18 months and it is usually produced in areas far from where it is used leading to high transport costs. It is also less readily available across the world than pegmatite and draining brine from arid, water-scarce areas can actually be damaging to the local environment so there are benefits and drawbacks to each of these major sources of lithium.

Carbonate vs. Hydroxide
• Carbonate is produced first in the manufacturing process
• Carbonate is less efficient than hydroxide
• Hydroxide decomposes at a lower temperature so it accelerates the process, uses less heat, less energy, so you produce more cathode material with less energy, and you can still use the same equipment
• Hydroxide is becoming more popular as the source of lithium in electric car batteries but takes extra steps and is more expensive to produce
• Hydroxide is expected to overtake carbonate in terms of demand growth

Lithium Case Study - Albemarle

Albemarle is a speciality chemicals manufacturing company that produces lithium products, including lithium salts and metals and organo-lithium. Albemarle has lithium processing plants across the world and produces lithium for e-mobility batteries and batteries for electric cars and by 2016 Albemarle was one of the big four lithium mining companies which produced 75% of the world's lithium.

Albemarle in Chile

Salar de Atacama in Chile is home to one of Albemarle's lithium production sites and has the highest lithium concentration and most favourable extraction conditions of any brine resource in the world. Albemarle has intended to expand its production in Chile but has faced resistance from the Chilean government. For the last year Albemarle has been in locked in battle with the Chilean government over pricing issues, production quotas and environmental compliance.

Albemarle aims to invest almost $1 billion to more than triple its production capacity in Chile but has apparently failed to adequately detail its expansion plans and so two Chilean government agencies responsible for providing licenses have refused and a third intended to file for arbitration over a pricing dispute (this arbitration has been delayed). In 2016 Albemarle signed a contract with Corfo that allowed them to mine more lithium and in exchange, Albemarle agreed to give a discount on up to 25 percent of its increased production to companies developing lithium products in Chile but prices are still disputed. Chile's environmental authority, SEA, have turned down Albemarle for a license to build a new plant as they didn't submit a thorough report on the project's environmental impact. Agencies in Chile have also detected that Albemarle have been selling Chilean lithium at a much lower price than the market average to its own subsidiaries in the U.S. and Germany which could be a violation of price parity rules.

Albemarle doesn't appear to have any intention to negotiate with Chilean government anytime soon and they have put Chilean plans on hold to focus on Australia.

Albemarle in Australia

Albemarle has received environmental approval from Australian federal and state government and recently started construction on a Lithium hydroxide (LiOH) conversion site in Kemerton, Australia. The site in Western Australia is a spodumene mine and it is the largest active lithium mine in the world. The lithium from this mine has the highest concentration of Lithium Oxide (Li20) available. The plant will have an initial capacity of 60,000 metric tons of LiOH with the ability to expand to 100,000 metric tons over time. Albemarle's target output is 20,000 tonnes per year in 2020 up to 100,000 per year by 2025.

As part of its environmental management plan it states that the 'tailings' (leftover rock after extraction of lithium) will be transported to a storage cell in licensed landfill.

The Future of Lithium

• Albemarle expects demand for lithium to grow at a compound annual rate of 21% through 2025 due to growth in electric cars and large scale batteries for utilities
• They estimate that demand for lithium in electric cars will rise from 70,000 tonnes of lithium carbonate equivalent to over 650,000 tonnes by 2025
• Due to the issues in Chile and increasing demand for lithium hydroxide over lithium carbonate, it is likely that Albemarle's Western Australia plant will be its most productive

References
Albemarle official website - albemarle.com - 25/2/19
Shares in Albemarle jump by 6 per cent on bullish lithium forecast - ft.com - 21/2/19
Albemarle begins construction on Western Australia's largest lithium plant at Kemerton - miningglobal.com - 8/1/19
Score One for the Flamingos in High-Altitude Fight for Lithium Supplies - bloomberg.com - 22/12/18
Exclusive: Chile to delay arbitration with top lithium producer Albemarle - reuters.com - 27/12/18

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