Electric cars bring glamour to dull lithium

Lithium-ion batteries are suitable for hybrid vehicles as they carry more energy with less weight

Suddenly, the yawns are being replaced by eurekas. As awareness spreads that lithium is a crucial ingredient for hybrid and electric cars, a global hunt is under way for new supplies of the metal.

Toyota Tsusho, the material supplier for the Japanese automaker, announced a joint venture in January with the Australian miner Orocobre to develop a $100 million lithium project in Argentina. That deal came only days after Magna International, the Canadian car parts company that is helping develop a battery-powered version of the Ford Focus, announced that it was investing $10 million in a small Canadian lithium firm that also has projects in Argentina.

They were the latest in a series of deals and projects announced over the last year, reflecting a new urgency among companies to assure themselves future supplies of the metal.

“There is a sea change under way,” James D Calaway, the chairman of Orocobre, said. “We are at the front end potentially of a very significant increase in the demand for lithium for the emerging electric transportation sector.”

Calaway added, however, that the timing of any increase in lithium supply and demand is difficult to predict in large part because electric cars had yet to take off in any big way.

About 60 mining companies have begun feasibility studies in Argentina, Serbia and Nevada that could potentially lead to more than $1 billion in new lithium projects in the next several years, while dozens of smaller projects are being proposed in China, Finland, Mexico and Canada.

The companies are competing for construction financing, and the future of most of the projects will depend on how popular electric cars eventually become. That is still an open question since batteries remain expensive, recharging stations still need to be developed, and consumer taste for cars that depend on regular stops at electric outlets remains untested.

“It’s moving so fast,” said Edward R Anderson, president of TRU Group, a consultancy firm that specialises in the lithium industry. “There are a lot of people throwing money into this, and a lot of people are going to lose their money.”

Meanwhile, the four biggest current producers, which mine and otherwise gather lithium in Chile, Argentina and Australia, say they are planning to expand long-running projects as future demand warrants.

In Bolivia, which has almost half of the world’s reserves, the leftist government is building a pilot production plant and is drilling exploratory holes. That Bolivia is a remote, unstable country often hostile to foreign investment has helped spur interest in producing lithium in neighbouring Argentina and Chile, in Australia, and in the United States. Several Canadian and American companies are making claims about future production prospects in Nevada, though few analysts foresee large-scale production from that state.

While most experts are skeptical that meaningful amounts of lithium can be produced domestically, they maintain that adequate supplies will be available from sources outside of Bolivia for many years to come and note that the biggest producer, Chile, is a dependable American ally.

Applications

Most of the lithium market serves a variety of industrial applications. About a quarter of all lithium produced is used for energy storage, in everything from cell phones to laptop computers to digital cameras.

That proportion stands to increase drastically if battery-powered cars take off. Lithium-ion batteries are the favoured battery type for electric and hybrid vehicles because they carry more energy with less weight than other materials and because they lose their charge more slowly. They store about three times as much as energy per pound as a nickel-metal hybrid battery.

Lithium is found in trace amounts in many places, but it is being produced commercially mainly by two methods. One is through mining and processing, a relatively expensive method that produces the metal mostly for glass, ceramics and the manufacturing of television tubes.

The more economical and significant method is through evaporation of lithium-containing brines, mostly in salt flats in the highland areas in South America and western China. Lithium reservoirs have been formed over millions of years in highland bowls, after rivers and hot springs washed over lithium-laden rocks and leached the mineral from them. Producers drill wells into the salt flats and pump the brine into evaporation ponds. With the removal of water, the lithium content in the brine increases to a level where it can be collected and shipped to a chemical plant for processing.

The industry leader in this method of production is Sociedad Quica y Minera, a Chilean fertiliser company in which the Potash Corp, a Canadian fertiliser giant, holds a major stake. The other important producers in Latin America include FMC Corp and Chemetall, a subsidiary of Rockwood Holdings, which also operates a small brine reserve in Nevada.

Recycling of lithium from used batteries could become an important source of the metal in the years ahead, in which case “the demand for virgin material would be reduced,” said R Keith Evans, a geologist who serves as a consultant to lithium producers. Up to 50 per cent of the lithium in used batteries may be recycled in the future.

But Evans added, “The big question is the timing of demand. Are you going to build a plant before a market has developed?”

By the standards of traditional gold and copper booms, the increase in interest in lithium is still muted among big mining companies. Supplies of lithium are plentiful for now, and the price of lithium chemicals actually declined at the end of last year because of the economic slowdown.

But with several major auto companies promising to market electric cars around the world over the next few years, demand may be poised to increase. Nissan will introduce the Leaf, a five-passenger electric car, and General Motors will be introduce the Chevrolet Volt, a plug-in hybrid, in the US within the next year.