The price of lithium, the lightest conductive metal on the periodic table, has tripled since 2000, said Bloomberg News on Wednesday, with the lithium market now worth approximately $1 billion a year, following increased demand of its use in electronic appliances such as the iPad and in hybrid vehicles.
According to analysts at Dahlman Rose & Co., demand for lithium batteries has been growing at about 25 percent a year and could double by 2020 as more industries explore the use of lithium cells to store and generate electricity.
Rockwood Holdings Chief Executive Officer Seifollah Ghasemi added that there might be a “step change” in the global lithium industry in 2016 or 2017 when electric cars became more commonplace, while conventional car-makers are also switching from older model nickel-cadmium batteries to lithium-ion.
Rockwood, together with Talison Lithium Ltd, Soc. Quimica & Minera de Chile SA and FMC Corp. (FMC) presently produce almost 95 percent of the world’s supply. Rio Tinto, the fourth-largest publicly listed mining company in the world, is also believed to be interested in joining the hunt for lithium, and could join the ranks of top lithium producers if it goes ahead with a mine in Serbia that is said to be capable of producing close to 20 percent of global output of the metal.
“There are some companies now that we think are attractive to get a hold of lithium exposure,” said Evy Hambro, who manages about $13 billion in mining stocks for BlackRock. “We’ve got a small exposure today and we’re looking for some more.”
Peter Oliver, CEO of Talison, noted that the demand for lithium may even exceed current expectations, “if electric vehicles take off in a big way”.
“Anywhere between a doubling and a tripling of demand in the next 10 years is absolutely our view,” said Oliver. “Maybe a doubling is with minimal impact from electric vehicles and if electric vehicles take off in a big way in the next 10 years it could be as much as tripling.”
Presently, just about 0.1 of an ounce of lithium carbonate is needed for a mobile phone while just about 1 ounce is used for a notebook computer’s battery. Batteries for hybrid vehicles though contain about 50 pounds of lithium.
Lithium is “going to be so critical to that future world of electric vehicles and hybrids,” said Tom Albanese, CEO of Rio Tinto, during an interview on April 19. “We’ve got a lot of interest from Japanese companies, from Korean companies that actually want to be in the forefront of hybrid and lithium technologies so I’m actually pretty excited about the project.”
Rockwood on May 14 proposed a price increase of $1,000 a ton, or about 22 percent, for lithium salt sold to customers in the year starting July 1. It said the higher price would allow it to fund expansion of its mines. Talison’s Oliver said he raised prices 15 percent in the first-half and is expects to increase prices again in the second-half.