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Page added on August 25, 2016
Could A Lithium Shortage De-Rail The Electric Car Boom?
We’ve gone electric, and there’s no going back at this point. Lithium is our new fuel, but like fossil fuels, the reserves we’re currently tapping into are finite – and that’s what investors can take to the bank.
You may think lithium got too popular too fast. You may suspect electric vehicles are too much buzz and not enough real future. You may, in short, be a lithium skeptic, one of many. And yet, despite this skepticism, lithium demand is rising steadily and sharply, and indications that a shortage may be looming are very real.
It won’t be a shortage in terms of ‘peak lithium’; rather, it will be a game of catch-up with the electric car boom, with miners hustling to explore and tap into new reserves.
Consider the number of battery gigafactories that are being built around the world. We have all heard about Tesla’s Nevada facility that will at full capacity produce enough batteries to power 500,000 electric cars per year by 2020.
This, as the carmaker proudly notes, is more than the global total lithium ion battery production for 2013. That’s a pretty impressive rate of demand growth over just three years—but this growth also represents the culmination of a sea change in the way we think.
Lithium is powering pretty much everything upon which our present depends on and our future is being built. It’s a viable alternative to petrol and in consumer electronics market segment alone, there is no sign of contraction—only expansion. Think the Internet of things, or smart houses, or smart cities, eventually. All these fascinating ideas are powered in some way by lithium.
But the real and present coup has been launched by electric vehicles. Forecasts from market research firms seem to be unanimous: EVs are on the rise, EVs are hot, and EVs will be increasingly in demand as people all over the world are eagerly encouraged to cut their carbon footprint. According to Lux Research, the EV market will grow to $10 billion within the next four years. Navigant Research forecasts EV sales will rise from 2.6 million last year to more than 6 million in 2024. So, whether we like it or not, EVs are coming—and in force.
Indeed, says Nevada Energy Metals executive Malcolm Bell, “It may be time to start worrying about a shortage, but it’s not a question of whether we have enough lithium—it’s a question of tapping into new reserves. Those who don’t see the supply wall looming, will hit with a resounding thud. Those who start tapping into new reserves will be extremely well-positioned for the future.”
From where everyone is standing right now, it may seem that the world’s got a fair amount of lithium. According to global estimates by the U.S. Geological Survey, there is enough lithium in the world – 13.5 million metric tons of it – to last us over 350 years in batteries.
What’s missing from this prediction, however, is … the future, and indeed, the present. This calculation takes into account only the current rate of lithium ion battery usage. It does not account for the entrance of EVs into the mainstream. It does not account for Tesla, not to mention the growing ranks of Tesla rivals. And it most certainly doesn’t account for what is by all means a pending energy revolution that sees lithium as its leader.
Already, the present is clear: Demand is growing fast, faster than production, and for now this new demand is coming increasingly from the electric vehicle industry.
Tesla’s is by no means the only battery gigafactory out there. There are others being built around the world (at least 12, according to Benchmark Mineral Intelligence) and these gigafactories will raise the global demand for lithium batteries to some 122 GWh by 2020. That’s up from 35 GWh currently. It’s a phenomenal rise over a very short period of time.
In the U.S., there is already one gigafactory—Tesla’s, in Nevada—operating. A second gigafactory is in the works, courtesy of LG Chem. Brine-based lithium production in the country is concentrated in one place only, at least for now, and this place is Nevada. That’s because it is the only confirmed place with lithium deposits. The biggest actively mined area is the Clayton Valley, with presence from both mining majors like Albermarle (NYSE: ALB) and smaller, pure-play lithium miners such as Nevada Energy Metals. This makes Clayton Valley ground zero for the U.S. lithium rush and everyone wants to be there, but it’s the pure play miners who are set to explode onto this scene from an investors’ perspective.
Clayton Valley can hardly contain the lithium rush, and it is already time to look in the surrounding areas to secure future supply for soaring demand predictions. Those with enough foresight are diversifying their Nevada holdings and banking on geological clues that suggest there’s plenty more lithium in Tesla’s backyard, and whoever gets to it first will be far ahead of the game.
“When everyone starts paying attention to Nevada’s geology, we’ll see a land rush that makes the current one pale by comparison,” says Bell, who heads of acquisitions for Nevada Energy Metals, one of the pure play movers in this playing field that sees the wider lithium potential in Nevada.
“Nevada’s geothermal footprints are large and extend well beyond the Clayton Valley. If you put a mirror up to Clayton Valley, there is endless opportunity here. The real race here is to create the next U.S. lithium powerhouse,” says Bell.
How to Play Lithium
Look everywhere, and then look again. Securing an investment in Clayton Valley is a good place to start—but it’s also potentially only a flash in the pan. The best way to secure a foothold in lithium right now is to think outside the box and look for those companies who see the bigger picture but are also smart enough to keep one foot in the proven lithium hunting grounds.
But you also have to understand the supply and demand picture here.
Macquarie Research estimates that in 2015 demand for lithium already exceeded supply, while this year, lithium output will again fall short of demand.
In 2017, thanks to so much new production capacity the metal’s fundamentals will near an equilibrium, which will last for about a year before deficit rears its head once again—but this time the deficit will stick. Despite new efforts to ramp up supply, it will take a while before supply corresponds to the demand.
The future is pretty clear: We’re looking at a period of shortage, and shortage is where the savvy investors make real money. The lithium feeding frenzy has only just begun. Consumer electronics keeps it safe and steady, as always; the electric vehicle boom skews the demand picture dramatically, and the future’s energy storage and powerwall evolutions take it over the edge.
The reserves are there, and there’s geologists estimate there’s plenty of unproven reserves out there as well—it’s just a matter of who finds them first, and who starts extracting first.
Lithium has the purest of fundamentals of any ‘commodity’ out there, and the next oil barons look set to actually be lithium barons. In fact, in this respect, electric vehicles will likely be the cause of the next oil crisis. Demand and supply are simple and shockingly visible, and that means there’s a lot of new money floating around for lithium exploration. If you’re not a believer, the immediate future will sweep you off of your feet.
15 Comments on "Could A Lithium Shortage De-Rail The Electric Car Boom?"
Plantagenet on Thu, 25th Aug 2016 1:37 pm
Peak lithium anybody?
penury on Thu, 25th Aug 2016 2:01 pm
Batteries are NOT power sources they are storage vessels. Yes people will get rich selling EVs but even Lithium is a finite resource. Tell me what will be used to produce the power stored in the batteries? Serious question. Will every house on your block have a re-charging station? Are you eager to pay for the upgrade in infra-structure necessary to accomplish this? (Hint people are not even wiling to upgrade infra-structure to provide clean drinking water to Flint and other communities.) I am not anti electric I am anti hype and lies which will lead the coutry into another dead end and cost lives.
Go Speed Racer on Thu, 25th Aug 2016 7:20 pm
Donald Trump is so crazy, he used up all the lithium pills. No Lithium left for electric cars.
Anonymous on Thu, 25th Aug 2016 7:54 pm
What EV boom is this writer referring to?
Harquebus on Thu, 25th Aug 2016 8:25 pm
Trade depends on transport depends on oil. End of story.
brough on Fri, 26th Aug 2016 4:29 am
For the UK, I’ve sat down and done the maths using the stats. from the office of national statistics (ONS). At most, using lithium ion technology EVs can only replace 20% of road transport vehicle fleet. I suspect for the USA we are looking at a substantialy less percentage, because the distance between places is a lot greater. i.e lower population density. They may turn out to be just a middle class suburban play thing. i.e. Over blown golf-carts.
For electricity to replace oil powered vehicles the human population needs to get a whole lot more urban and then other things come into play such as electric tram-cars.
Davy on Fri, 26th Aug 2016 7:23 am
We will surely see limits and diminishing returns with EV’s at the macro systematic level of a great turning of our modern civilization to postmodern. As for being a foundational energy sources of transport I seriously doubt it. It is apparent in the testing of scale of size and time that a macro energy transition for the continuation of the status quo of a car culture does not pencil out with EV’s or anything for that matter. We don’t have the time to make all these changes and battle the other decay that is across the board. Maybe 30 years ago if this would have been an offering we may have and that is if we had the foresight to acknowledge limits.
Back 30 years ago we knew limits were a possibility and we rejected the idea and embraced the idea of technology and development without gate keepers or checks and balances. We as a civilization have never second guessed technology. We are all about progress without reflection. It is all about efficiency and increased performance. That said EV’s have a very important niche with taking what we have and offering options and alternatives as we dive into shortages and dysfunction.
We are going to need transport that is clear. We should be organizing our living arrangements around less transport but considering we are completely organized around transport for most everything we must try to maintain and adapt transport to a declining and decaying modern civilization. EV’s represent a niche that will be very effective. They offer alternatives and alternatives make a system more robust and sustainable. We need to work towards powering them with wind and solar. We need to make EV’s battery sources for other uses if we have grid instability which we surely are going to have soon.
One thing we should do with EV’s is make the technology less complex and more robust. Some of the early 20th century technology is an example of highly effective and robust technology built to last. This will not appeal to the marketing side of glitz and its performance focus but what good are they when things stop working? Performance and glitz are the first to fail usually. We want this technology to be maintainable and have more reliability.
I am buying a Chevy volt soon. I am hoping to enhance my solar system to be able to charge the vehicle over a long period of time. I have already reduced my driving needs considerably. I avoid discretionary no essential driving now. I am thinking over a week I can get the Volt charged enough to use it for infrequent travel and for emergency use in a collapse situation. In the meantime of the status quo I have a high mileage personal transport vehicle. BTW, I have a Jetta TDI I have to give back to VW or I would not invest in a new vehicle. This is related to the VW emissions scandal. They gave me a handsome buyback so I am going to get a Volt. I need the hybrid performance because I live in a rural area with distances to travel.
EV’s are worth investing in as a collapse niche. They are not going to solve the problem of continuing the status quo. They definitely are more valuable than a new motor yacht or football stadium to a collapsing civilization. While we have the resources we should be investing in EV’s to mitigate or failing status quo transport sector.
Cloggie on Fri, 26th Aug 2016 7:51 am
I lost my Audi A2, the most fuel efficient car ever produced for the mass market (1 liter over 30 km while driving 90 kmh) in Croatia after the gearbox broke down and I had enough and give it away for free to the guy who happened to live near the road where the car finally broke down and who happened to be a old car renovator. He emailed me last week he had acquired a second had gearbox for 300 euro in Germany and was happily driving in it.lol
The car was never sold in the US and simply was too far ahead of its time (2002) to be a success:
https://youtu.be/5h9K6lzpmHA
Weight merely 600 kg due to aluminium chassis.
Now I am without a car and I don’t miss it at.
Perhaps I buy a new one beginning next year, when it is time again to work a few months for a client again, likely a hybrid one (the car), that is petrol/CNG dual mode, for instance a simple Fiat Panda CNG:
https://youtu.be/A_bLi3V6Kjs
Price 13.5k euro or five weeks IT freelancing, somewhere between the North Cape and Gibraltar.
Kenz300 on Fri, 26th Aug 2016 9:40 am
Electric cars, trucks, bicycles and mass transit are the future…..fossil fuel ICE cars are the past…………..
Think teen agers vs your grand father…………………. cell phones vs land lines…….
NO EMISSIONS……..climate change is real………
Save money……no stopping at gas stations…..no oil changes……..less overall maintenance……
The Kochs Are Plotting A Multimillion-Dollar Assault On Electric Vehicles
http://www.huffingtonpost.com/entry/koch-electric-vehicles_us_56c4d63ce4b0b40245c8cbf6
Inside the Koch Brothers’ Toxic Empire | Rolling Stone
http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924?page=2
energyskeptic on Fri, 26th Aug 2016 11:55 am
In my book “When Trucks Stop Running”, using the DOE/EPRI handbook, I calculate that a lithium-ion battery that could store ONE DAY of USA electricity generation would cost $11.9 trillion dollars, take up 345 square miles, and weigh 74 million tons.
Utility scale energy batteries are using lithium-ion, for which there isn’t enough on the planet even as resources to scale up according to Charles Barnhardt at Stanford.
http://energyskeptic.com/2016/only-sodium-sulfur-batteries-have-enough-material-on-earth-to-scale-up/
The best paper on lithium reserves / resources: Vikström, H., Davidsson, S., Höök, M. 2013. Lithium availability and future production outlooks. Applied Energy, 110(10): 252-266. 28 pages
is reviewed at
http://energyskeptic.com/2016/not-enough-lithium-for-electric-car-batteries/
Anonymous on Fri, 26th Aug 2016 4:45 pm
As sobering as your assessment is there skeptic, that figure is only for one relatively unimportant tribal group, what about the electrical needs of the other 96% of humanity?
And that doesn’t even get into the problem that right now, and likely for the foreseeable future, most dead Li-on batteries, regardless of size end up..guess where? Yea, the dump. There is some recycling true, but the vast bulk of discarded li-ons are destined for the landfill. Ever figure out what the cost in terms of energy and man-power to go back and dig up all those discarded li-ons we ship to Africa(aka that magical place known as ‘away’) would be? Let alone re-manufacturing them into useful storage devices once we got them dug up.
peakyeast on Fri, 26th Aug 2016 4:53 pm
@energysceptic: And how often did that Li-ion battery have to be scrapped, recycled and rebuilt? Every 10 years?
Anonymous on Fri, 26th Aug 2016 5:23 pm
They don’t even last that long peaky, most li-ons chemistries are quite useless and fully discharged after 5 years. A few, depending on design and quality of manufacture, might make it into the 5-10 year span. For EV’s? I dont know if anyone knows for certain about the longevity, economics of Li-ON EV packs. Not enough data. But I dont expect the chemistry to set any world records for durability and longevity, if their smaller counterparts are anything to go by.
peakyeast on Fri, 26th Aug 2016 6:24 pm
I say 10 years because of the 7-8 year guarantee on Tesla batteries – and that there is some likelihood of them treating a battery of this value nicer than Joe Average would 🙂
But certainly phone batteries are dying somewhat quicker… No ordinary person can handle the upper and lower limits consistently over years…
Kenz300 on Sat, 27th Aug 2016 6:32 am
Walking and biking are inexpensive, non polluting transportation options. Cities need to encourage these options.
Bike to work day should be everyday….. employers need to provide places to park and lock bicycles and encourage employees to ride a bicycle to work.
Every school should encourage children to walk to school or ride a bicycle by providing safe places to lock and store bicycles and by supporting safe walking and biking paths that connect schools, homes and businesses.
Kids would be healthier and get more exercise if parents stop driving them to school and bought them a bicycle.
Cardio needs to be part of your everyday life style to live a healthy life……one easy way to introduce cardio is to ride a bicycle. Riding a bike is fun and good exercise plus you save money on transportation………walking, bicycles, mass transit and electric vehicles will all be part of making cities livable.
Ride to school………ride to work………ride for fun………..
Obesity is a growing problem around the world leading to an increase in heart disease, cancer and high blood pressure. Walking and biking can help improve health.
Buy a child a bicycle……your son, daughter, niece, nephew, grandchild or donate one to a local charity as a fund raiser giveaway. You will change a life…………