The Great Lithium Rush of 2023

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In a canyon, in a cavern,

Prospecting for a find,

A rock hunter, a real punter,

Lithium is on his mind.

Lithium (chemical symbol LI): Third element on the Periodic Table of the Elements, after Hydrogen (1) and Helium (2), and the first solid element, as well as the first of the alkali family of metals, the least dense metal and the least dense solid element. As Wikipedia observes, “Like all alkali metals, lithium is highly reactive and flammable, and must be stored in vacuum, inert atmosphere, or inert liquid such as purified kerosene or mineral oil.” Lithium has several important industrial applications, including heat-resistant glass and ceramics, lithium grease lubricants, flux additives for iron, steel and aluminum production, lithium metal batteries, and lithium-ion batteries. All these constitute more than 75% of LI production.

Until a few years ago and the advent of electric vehicles, lithium was seldom in the news, despite those wide uses. When it was in the news, the context was most often medical. Lithium salts are used for treatment of depression and bipolar disease.

Recently, lithium has been a common word in headlines and news stories. The context is LI as the key component in the powerful batteries that are powering all the current generation of electric vehicles, and likely a key element in the next generation of the volts-wagons. Stories abound around new mine developments, news of existing lithium suppliers, environmental concerns about lithium extraction, and new sources of lithium.

In a posting about electric cars, Volkswagen said, “The global market for the alkali metal lithium is growing rapidly. Between 2008 and 2018 alone, annual production in the major producing countries rose from 25,400 to 85,000 tons. An important growth driver is its use in the batteries of electric vehicles. However, lithium is also used in the batteries of laptops and cell phones, as well as in the glass and ceramics industry.”

Unlike the tales of the California gold rush and the 1950s uranium boom, today’s coverage tends to balance the lust for new or upgraded sources of lithium, which appears to be relatively rare (as gold and uranium also appeared to be, but weren’t necessarily, scarce), with potential down sides. A recent National Public Radio story summarized the current situation well: “Demand for electric cars is soaring and, in turn, straining supplies of lithium, which is used in the vehicles’ massive batteries. Proposals for new mines abound, accompanied by controversies.”

Classic economics are driving the lithium boom: rising demand and constrained supply equals increasing prices. Rising prices induce more supply. Seeking Alpha summarizes prices for chemical lithium derived from briny, mineral-laden water and spodumene, an important solid lithium ore:

  • Lithium chemical and spodumene prices were higher again in the past month. JPMorgan upgrades spodumene prices to $6,500/$5,700/t in 2023/24 (+44% & 66%, respectively), 3yrs of deficit (until 2026).
  • Lithium market news – Joe Lowry: Lithium prices rising into 2027 hitting highs of US$97,000/t, base just below US$80,000/t. Macquarie expects the lithium market to remain in deficit to 2030.
Susan Zou, an energy metals analyst with Rystad Energy, told NPR, “Actually, in the past six months, we have been already quite surprised to see how fast those existing projects have responded to the lithium price hikes.”

The lithium rush is an international story, driven by existing players. Here are a few of current new lithium plays, along with some of the warnings about what could sideline them.

Here are the five largest US lithium producers, in no particular order, as identified by Investing News.

Piedmont Lithium (NASDAQ:PLL)

In the U.S., Piedmont Lithium is the most aggressive US firm in the Great Lithium Rush. Headquartered in Belmont, N.C., in what the company describes as “the renowned Carolina Tin Spodumene Belt of North Carolina, the cradle of the lithium industry,” Piedmont is looking to build a new mine and processing operation on 1,500 about 30 miles west of Charlotte, near its headquarters in Gaston County. During the 20th Century, small mines in the area supplied most of the world’s medical lithium. Then came lithium-ion batteries (first for use in cell phones and later EVs), and cheaper production from hard-rock spodumene mines in western Australia and brines and salt pans in the large deserts in Chile, Argentina, and Bolivia, known as the “Lithium Triangle.”

spodumene crystal

Piedmont says its new Carolina Lithium open-pit project will “consist of a proposed mine, spodumene concentrator, and lithium hydroxide conversion plant. It is expected to produce 30,000 MT of lithium hydroxide per year when fully operational. Our goal is to obtain necessary permits and approvals in 2023, commence construction in 2024, and begin production of spodumene concentrate and lithium hydroxide in 2026.” But the project faces local opposition. Warren Snowden, leader of Stop Piedmont Lithium, says, “Our issue is on every front: It’s water. It’s air. It’s light pollution. It’s noise. It’s traffic. Get us a solar farm. Get us a wind farm.”

Piedmont has also landed a $141.7 million grant from the U.S. Department of Energy for a new $600 million spodumene mining project in Tennessee, aimed at supplying the EV boom. In a press release, Piedmont said the mine and facilities in McMinn County, “aims to expand the U.S. supply of lithium hydroxide by 30,000 metric tons per year (“tpy”). Lithium hydroxide is a key component of high energy density, long-range, EV batteries.” Final details of the project depend on the outcome of negotiations among Piedmont, DOE, and any other private partners who may join the project.

Piedmont is also pursuing foreign lithium ventures in Africa and Canada, with projects in coastal Ghana and Quebec province. In 2021, Piedmont bought 50% of Atlantic Lithium. Together, they are working toward a goal of having the African Ewoyaa Lithium Project licensed and permitted in 2023. Construction should follow shortly thereafter, and production of spodumene concentrate is planned to start by the end of 2024.

In Canada, Sayona Quebec, a joint venture between Australian lithium producer Sayona Mining and Piedmont, is set to restart operations at its North American Lithium mining project, shuttered since 2019, when the developers ran out of funds. in 2021, Piedmont bought 25% of the Aussie company. There is skepticism about this project. Canada’s CBC commented, “In the past 10 years, the lithium mine has changed owners four times, has been responsible for serious and damaging spills, and filed for creditor protection twice — despite a $110-million investment from the provincial government.”

Sigma Lithium (NASDAQ:SGML)

Based in Vancouver, B.C., Sigma Lithium‘s play is focused on Brazil, which it describes as “the largest hard rock lithium deposits in the Americas, located in its wholly-owned Grota do Cirilo Project in Brazil with the goal of participating in the rapidly expanding global supply chain of electric vehicles.” Since 2018, Sigma has been running an on-site pilot project producing “low carbon high purity lithium concentrate” to ship samples to potential customers.

Construction of Sigma’s first production phase, aimed at 220,000 tonnes annually of battery grade lithium concentrate from spodumene, is about 75% complete, according to the Proactive Investors website, with completion by the end of this year. The company hopes to begin commercial production in April. Sigma says that it could double production to 440,000 tons in a second phase, if business conditions warrant.

Sigma says, “Our mission is to enable electric vehicle industry growth by becoming one of the largest, lowest cost and lowest carbon producers of environmentally sustainable lithium products in the world.”

Sociedad Química y Minera (NYSE:SQM)

Chilean SQM is among the world’s largest lithium producers, with its production located in northern Chile’s Atacama Desert. It was a government-owned company from 1968 to 1983, when it was spun off into the private sector during the government of the right-wing dictator Augusto Pinochet. The company produces lithium carbonate and hydroxide from brine located in one of the driest deserts on earth. 2021 lithium revenues totaled about $1 billion. The company also produces iodine, potassium, and a variety of industrial chemicals. Describing its lithium operations, the company says, “We are one of the world’s largest lithium producers operating in the Salar de Atacama in Chile, where vast reserves of lithium-containing brines are located. Lithium plays a crucial role in different applications: energy storage in electric cars, special mirrors for advanced telescopes, lubricating greases and health, among others.”

According to Volkswagen, “With 8 million tons, Chile has the world’s largest known lithium reserves. This puts the South American country ahead of Australia (2.7 million tons), Argentina (2 million tons) and China (1 million tons). Within Europe, Portugal has smaller quantities of the valuable raw material. The total global reserves are estimated at 14 million tons. This corresponds to 165 times the production volume in 2018.”

The German car maker also raises concerns about the environmental impact of lithium production from the Chilean brines: “There are always critical reports on the extraction of lithium from salars: In some areas, locals complain about increasing droughts, which for example threatens livestock farming or leads to vegetation drying out. From the point of view of experts, it is still unclear to what extent the drought is actually related to lithium mining. It is undisputed that no drinking water is needed for the lithium production itself. What is disputed, on the other hand, is the extent to which the extraction of saltwater leads to an influx of fresh water and thus influences the groundwater at the edge of the salars. In order to assess this, the underground water flows in the Atacama Desert in Chile, for example, have not yet been sufficiently researched. In addition to lithium mining, possible influencing factors include copper mining, tourism, agriculture and climate change.”

Livent (NYSE:LTHM)

Philadelphia’s Livent operates in North America, South America, Europe and Asia, making products serving markets such as energy storage and battery systems, polymers, aerospace and pharmaceuticals. The company produces lithium carbonate from brine resources in Argentina. It also has downstream lithium hydroxide conversion plants in the US and China and 50% stake of an integrated Canadian lithium project. The company has annual revenues in the range of $1 billion, based on third-quarter 2022 revenue of 231.6 million.

In the 1940s, Lithium Corporation of America worked with the US government on lithium applications. FMC Corp. bought the lithium business in 1985. It was named Livent in 2018.

In its third-quarter earnings statement, Livent said it “continues to champion U.S. based lithium production and its leading domestic footprint positions the company to take advantage of incremental long-term growth opportunities available under the recently enacted Inflation Reduction Act (IRA), which amongst other features, provides incentives to invest in localized supply chains for energy storage.” The company added that it plans to expand its brine operation producing lithium carbonate in Argentina in the first quarter of 2023, add 15,000 metric tons of lithium hydroxide capacity from China, and start production at its 50% owned Nemaska project, “a fully integrated hydroxide project located in Québec, Canada….Nemaska is expected to have 34,000 metric tons of nameplate capacity of battery-grade lithium hydroxide and over 30 years of mine-life.  Mechanical completion remains on track for the end of 2025, with the first meaningful production expected in 2026.”

Albemarle (NYSE:ALB)

Based in Charlotte, N.C., Albemarle is a specialty chemicals company focused on lithium, bromine, and several refining catalysts. Founded in 1887, the company has major lithium production in Chile and Australia. It also owns and operates the only US lithium production facility, Nevada’s Silver Peak in the Mojave Desert, a small mine that pumps brine from beneath an inactive volcano and spreads it into drying ponds, eventually producing lithium carbonate. Current capacity is 5,000 annual tons, but Albemarle plans to double the production. The company is also developing a new project in Australia. Albemarle says, “Currently, we’re constructing what is expected to be one of the world’s largest lithium production facilities in Kemerton, Western Australia. Once completed, the assets of the construction will form the basis of a joint venture with our partners, Mineral Resources Limited.
Through this work, we are expanding the lithium refining industry in Western Australia, as well as our conversion capabilities.”

“We’re doing everything in our power to keep up with our customers’ demand, and I know most of our competitors are, too,” says Meredith Bandy, Albemarle’s vice president of investor relations and sustainability, The company reported third quarter 2022 sales of $2.1 billion, a152% increase, and net earnings per share of $7.50, a stunning increase of 614%.

–Kennedy Maize