Lithium Demand Intensifies as Battery Applications Multiply
The range of end-uses for lithium is evolving and with it, so is demand.
Recent data from Benchmark Mineral Intelligence estimates that somewhere around late 2016, batteries crossed the 50%-mark in terms of overall lithium usage – up from 42% earlier that year. In other words, half of the world’s lithium production is going into batteries.
Think about that for a moment. It’s one thing to hear that batteries are driving lithium growth but another to see a statistic like that and of course, I say half of all production but it’s more than that now. In fact, estimates point to batteries demanding 67% of lithium supply by 2020.
If you’re not fully up to speed to with this battery-powered industry revolution yet, you might be tempted to ask: are electric vehicles really going to be that big? The answer is yes, they sure are and bear in mind that recent announcements from Ford, Volkswagen and Toyota do not yet equate to real demand. In other words, the biggest future consumers have yet to enter the real market.
However, the lithium growth story is more than EVs. Drones, robotics, artificial intelligence, nanotechnology, biotechnology, 3D printing… there’s a long list of technology that’s pushing into the mass-market. It’s an exciting time to be in the lithium exploration and development business but the one source of demand that I feel has been consistently and widely underestimated is energy storage.
If you don’t know much about energy storage, I’d like to draw your attention to a couple of landmark projects completed in 2017: the 326-MWh Aliso Canyon project, in California, which was installed and operating in just eight months, and the 129-MWh Tesla installation, that was completed in three months in Hornsdale, South Australia.
The Australian project is particularly interesting in my opinion, because it showcases one of the many reasons that utilities are lining up to install energy storage capabilities. Just one month after it was installed, the Hornsdale Power Reserve had already handled two major grid outages – coming online in just 0.14 seconds, compared to the 30 minutes or so that it would have taken for the neighbouring coal-fired power station to have taken up the slack.
Together, these projects lifted global installed, grid-connected energy capacity by 30%… and this is going to mean even more upstream lithium supplies as the size and number of installations increase.
Overall, it’s important to remember that we’re in a demand cycle for energy metals, amidst a once-in-a-lifetime structural shift, on a macro level, in mobility and energy storage. Within that cycle we are going to see price fluctuations, regional corrections and possible price convergence. However, while we can’t be sure exactly what lithium demand will look like ten years from now, we do know that these sectors are set to drive growth for energy commodities and refined chemicals to unprecedented levels.
Steve Cochrane, CEO of Lithium Chile