A rising world population coupled with an improvement in consumer spending power has pushed consumerism to levels which can no longer be sustained by normal utilization of natural resources. Of particular concern to world governments and other stakeholders is sustainable energy utilization because energy is one of the major drivers of the global economy in fact, most of the crises facing the world now are energy centered. Sustainable energy use is a multi faceted concept dependent mainly on economical utilization of the energy available andor a shift towards renewable energy. Though both of these elements are currently being pursued, the latter has elicited more attention because its adoption is more long term than the former. One of the elements driving the search for sustainable energy is lithium. Its current center position in matters technology is driven by the fact that lithium is a vital component in the manufacture of rechargeable batteries. There are other elements of course that have the same functionality (or potential) as lithium in as far as the manufacture of rechargeable batteries are concerned, but there seems to be a more interest in lithium, which is an indicator that it must possess an inherent advantage over its competitors. So what is lithiums position in this convoluted technological market Does the world have enough lithium to sustain its demand These are the questions the paper will try to answer by studying the mineral from the supply and the demand side.
History of lithium
Lithium was first discovered as a chemical element in 1817, but did not catch the attention of many industrialists then. The first commercial production of lithium was in 1923 by a German company by way of electrolysis, and was mainly used by airline manufacturers. The mineral has evolved in its use, from the days when it was used for medicinal purposes, then aircraft and nuclear enrichment and now its use in lithium ion batteries. In other words, the use of lithium has diversified over the years, and in particular, its use in the manufacture of lithium ion batteries has put its demand on an irreversible growth path.
Presence of lithium
At 65 ppm (parts per million), Lithium is a relatively abundant element, and its availability is in the same neighborhood as that of copper, tin, cerium, tungsten and nickel (Lentech, 2009). Being an alkali metal, lithium cannot exist as a free element due to its reactivity, and therefore, it is always found in combination with other elements. The metal can be found in a number of forms including hard rock pegmatites, clays and in supersaturated brines. Its presence in any environment however does not amount to an economic benefit because most of these deposits do not present lithium in commercially extractable quantities. It is not always necessary to separate the metal from the other compounds depending in its use. As a result, lithium may be sold in a variety of forms including brine or other compounds such as lithium carbonate. The usability of the lithium in these forms reflects its diversity in terms of use, which includes glass industry, ceramics and of course the lithium ion battery segment.
Given lithiums nature of being abundant in less commercially viable deposits, the metals production is severely concentrated in the hands of a few companies confined to a relatively small area. Most of the minerals deposits are to be found in Australia and parts of South America, an indication that even though the metal is abundant, these areas are the only ones that have metal quantities suitable for commercial production.
Dynamics of lithium use
As noted earlier lithium use has evolved over the years from the days when it was confined to medicinal uses only. The current trend is indicative that lithium use is shifting towards more sophisticated uses, although that is not to say that historical uses of the element are disappearing. Nonetheless, the proportional usage of the metal in this industry is reducing in relation to the newer industries. The traditional industry such as glass and ceramics are now giving way to newer and more sophisticated industries such as automotive, pharmaceuticals and electronics. The growth in the traditional sector is mainly driven by gross domestic product (GDP) growth, which means that growth in these sectors has stabilized. On the other hand, the newer sectors are breaking in to new markets that make their growth dependent on both the GDP and increase in consumer awareness and purchasing power. Ultimately, future lithium demand will mainly be driven by the new sectors.
Newer uses of lithium
Lithium use has been evolving over the years with the newer uses gaining an edge over the old uses. One of the most outstanding new uses of the element is in the manufacture of rechargeable batteries. The popularity of the rechargeable batteries lies in its wide applicability. Today, 27 of the lithium market demand is made up of batteries for both the portable gadgets as well as those of the automotives. Any power consuming gadget in use today will most likely have a rechargeable battery for example, laptops, ipods, ipads and cars are just some of the few of the gadgets that make use or have the potential of using the rechargeable batteries. In the case of the automotives, the use of the rechargeable batteries is slowly gaining significance. These two sectors are bound to be the growth drivers for lithium demand because they are consistent with the current world trend of energy consumption. The question however is which of the two is likely to experience more demand. They both have potential, but most of the effort is concentrated on eliminating greenhouse gas emissions, and nothing epitomizes efforts to reduce the emissions more than the attempt to develop automotives that use clean energy. For that reason, it is likely that in the foreseeable future, more efforts will be geared towards developing appropriate technology for greenhouse gas reduction. The small gadgets have their place in terms of lithium usage, but their usage may not be at par with that of the automotive industry for a number of reasons.
Use lithium in the automotive battery
Granted, the demand growth for lithium will be determined by demand for rechargeable batteries, however, most of the demand will be in the automotive sector, and therefore, evaluation of lithiums market dynamics will be incomplete if the market dynamics of the automotive industry are not looked in to. Use of lithium rechargeable batteries is at its infantry stages and has all the potential for growth if the current trends are anything to go by. Initially, the lithium car battery served the traditional car battery, which was to power ancillary features in the car such as car wipers, headlights, power windows and so on. The use of the lithium battery is however evolving to include providing part or the whole driving power for the car. This concept, known as hybrid technology is continually taking root amongst the major vehicle manufacturers, mostly with the support of the respective government. A number of factors will play a pivotal role in driving the demand of lithium for future cars, some of which are looked at below in order to paint a clearer picture regarding the demand lithium for these batteries.
Reduction in carbon emissions
Worldwide, the noose is tightening on polluters as governments try to deal with the effects of climate change. One of the most effective ways for most governments has been in the legislation of emission standards. The US, for example, is looking to cap emissions at 250 grams per mile by 2016. This is obviously a far cry from the current averages of 400 grams per mile for the conventional vehicles and 294grams per mile for the hybrid. The hybrid vehicles present the best opportunity for reaching the targets because of its potential for improvements. It is envisaged that future hybrid vehicles will be able to get alternative power from nuclear and other forms of renewable energy, and thereby have the capability of reducing the emissions to 150 grams per mile. Of course, that will mean that development of lithium ion batteries is matched by development by other forms of energy supplies such as nuclear, but nevertheless, it is an indication of the potential of the lithium ion battery. There is no telling how far the war against emission will go, it would not be surprising in future to have zero emission as the standard.
Improvements in fuel economy
Besides compliance with emission regulations, automakers are keen to brand themselves as suppliers of economical vehicles. This is both marketing as well as a regulatory strategy. For a long time, auto manufacturers did not pay attention to matters of fuel efficiency, especially for the mature markets such as Europe and North America. With the 200708 economic crisis, all these changed as the previously upper market segment vehicles such as the hummer faced a severe dip in sales. A reduction of engine capacity is one of the strategies that have been used for a long time by companies, but reducing engine capacity is limited as far as fuel economy is concerned. There is room for improvement of course in this sector, but companies are now looking towards alternative power sources. The electric hybrid car is at the center of all this with leading companies such as General Motors and Toyota accelerating resource allocation towards the production of hybrid vehicles. Lithium
Government support
In recognition of the potential of hybrid technology to increase fuel economy and reduce greenhouse gas emissions, governments are now encouraging companies to move in this direction. A variety of ways are used by different governments to hasten the shift towards hybrid technology. For instance, to spur demand for this type of vehicles, the US government is offering tax credits for purchases of electric hybrid vehicles in line with the America recovery and reinvestment Act of 2009.
Future trends in automotive industry
So what is the future like for the lithium market So far the driving factors that have spurred the demand of the hybrids have been enumerated, although it is even better to say that demand for hybrid would grow at its own potential, given the many advantages that come with it. Figures are encouraging for lithium producers because sales for the first quarter of 2009 have surpassed all the sales for 2008. With this kind of growth, it is obvious that the world is just waking up to the reality of hybrid, and therefore its growth potential is still unlimited.
Forecast in vehicle demand
Demand for hybrids will largely be determined by the levels of car demand. From the foregoing, it is obvious that the hybrid is the car for the future. Consequently, the rise in demand for electric hybrid cars is directly proportional to the rise in auto sales. The state of the economy is the main driving factor in determining demand for vehicles. A good illustration of this is the world economic crisis of 2008, which saw auto sales plummet to an extent that hitherto market giants such GM and Ssang Yong motors (South Korea) had to file for bankruptcy to survive an onslaught from creditors.
Looking at historic trends, one can easily see that growth in auto demand is and will be driven (at least in the near future) by the Asian market, and in particular, the demand in the Chinese market. The Asian markets have in the recent past showed strong growth figures averaging 4 per annum compared to the European and American markets that have lower growth rates averaging 1 percent. This are year on year growth rates, but the bottom line is that companies serious about their future have to pay close attention to the Asian markets because that is where is the future of the auto industry is.
Global hybrid electric car demand
A rise in vehicle demand will definitely be matched by a growth in the demand for hybrid cars. Evidently, most manufacturers are substituting the traditional gasoline engines for hybrid cars in tandem with objectives of a cleaner environment and better fuel efficiency. Most of the growth in this industry will be in the direction of hybrid electric vehicles as most companies will continually eschew from production of the gasoline vehicles. The market and demand for hybrid vehicles is still a wild card at the moment going by the historical trends. For example, the sales figures for the hybrid in the first quarter of 2009 have surpassed all the sales for 2008. That trend is indicative of a somewhat runaway growth. The market demand is convoluted for two reasons one is that economic growth may slow down demand, while the same economic slowdown may lead to new opportunities for development and growth of better technologies, in this case hybrid and electric cars.
There are two types of electric vehicles in the world market namely hybrid electric vehicle, and secondly, pure electric cars. The electric cars still have a very small market share compared to the hybrid because its developmental stage is still infantile. However, both bring the same advantages only that one has not been fully developed. The table below draws a comparison between the electric, hybrid and other fossil fuel powered vehicles.
From the table, it is notable that most of the problems in the electric car can easily be attributed to insufficient research, which is a result of the car model being in its developmental stages. The problems aside, these car models are showing the best results in terms of fuel efficiency and gas emissions. For that reason, the electric car seems to be the car for the future if these shortcomings can be addressed. Nevertheless, given the amount of research needed to do that optimization, growth focus for the electric car model will be on the hybrid car in the short term.
(Allbusiness, 2005 ) projects that by 2013 the demand for hybrid vehicles will hit 4.5 million units representing 6 of the total market share. Of these, the US is expected to account for half the quantity while the Asian countries will be expected to have a higher demand than Europe. On the other hand, given the operational disadvantages still being faced by the pure electric car, its potential is not yet fully recognizable, and any projections on future demand will not be based on fair judgment. There are a number of projections regarding the growth of demand for electric vehicles. Nissan Corp. boss predicts that the electric vehicles will constitute 10 of all vehicle sales, while a credit Suisse report predicts that electric vehicles will have 1.1 of the total car sales market by the year 2015 (GM-volt, 2009). Although the predictions may not be precise, one thing is sure the demand for electric cars is bound to grow.
Lithium demand
Having looked at the growth of demand for electric vehicles, the question is whether this demand will translate to a higher demand for lithium. Other gadgets such as laptops and mobile phones have an influence on the demand because they also utilize the same lithium ion technology in their rechargeable batteries. Their effects on the demand for lithium will however pale when compared to those of the automotive industries. To estimate the effects of the rise in hybrid demand to lithium demand it is important to have an estimate of lithium quantity that is needed for one battery in the hybrid. The measure of the lithium component in the battery is measure in terms of lithium carbonate equivalent (LCE). An estimated 425 grams of LCE are needed for every KWH of battery capacity, and from these figures one can estimate the estimated lithium demand.
The battery capacity varies for each of the vehicles varies according to the power needs of the car. Logically, the power capacity for the hybrid car should be lower than that of the pure electric car because the pure electric car gets all its power from the batter. In addition, there is no homogeneity because each of the car manufacturers produces unique batteries for the different cars. In analyzing this battery needs, the battery types are divided in to three standards that are prevalent in the industry today, these are plug in hybrid electric, full electric vehicle and hybrid vehicle. The capacities associated with these batteries are hybrid electric at 5.3 KWh, plug-in hybrid electric at 20 KWh and pure electric at 50KWh. From these figures, one can easily compute the amount of LCE needed for each of the cars, and they are 2,300 grams for the hybrid electric vehicles, 8,500 grams for the hybrid electric and 21,300 grams for the pure electric. It is however important to note that these are estimate figures from various manufacturers because there is no standardization for LCE in lithium ion batteries. The real figures for the demand would be evaluated by multiplying the number of cars in the particular segment (hybrid or pure electric) by its LCE consumption. According to (Evans, 2008) 10 of all cars will be powered by lithuim by 2015, rising to 20 in 2020. Consequently, he estimates that demand for lithiium will rise to 160,000 tonnes by 2015. The demand for lithium cannot be simply extrapolated from the demand of hybrid cars because there are many other inherent dynamics involved in the scenario. One of the most important is the fact that lithium is facing competition from other metals such as zinc, lead and nickel.
Challenges facing the lithium in the battery market
Lithium remains the leading metal used in the manufacture of car batteries, but it is facing some challenges too. Some of the challenges include
Presence of substitute metals
As noted, lithium is the leading metal in battery manufacture, but by no means the only one. Some of the metals competing for a piece of the battery industry include zinc, lead and nickel. They may have their shortcomings, and probably ranked a few steps behind lithium, but nevertheless they eat in to the market share of lithium. Given the dynamism of technology, it may not be prudent to write them off on the account of lithium currently having the lead. One advantage however of lithium is that it is a relatively new piece of metal, and the fact that it has overtaken the other metals is a healthy sign in as far as competitive positioning is concerned. Nevertheless, the metals may have an effect of delaying the full acceptance of lithium in the electric car battery market.
Real emission reduction results
One of the driving factors previously identified for the demand for hybrid technology cars revolved around the environmental considerations. The ability of the electric car to mitigate environmental degradation arising from greenhouse gas emissions was identified as one of the major demand stimulants for the car, and in extension lithium. However, it may be that as all eyes are on the hybrid car to reduce emission, other pollutants go on unabated. This will result in a zero sum game so that the government and other stakeholders fail to see the results of promoting the hybrid car. That would lead to a drop in public support for the hybrid in terms of legislation and demand. This is best applied to the US, which has a high number of coal fired plants to produce electricity. The demand for electricity may be rising in almost similar proportions to the hybrid car sales, which means any gains made in the reduction of emissions through the hybrid vehicle is quickly offset by an increase in emission from the coal powered plants. Ultimately, the popularity enjoyed by the hybrids will dip as people will now go back to the drawing board to come up with newer ways of dealing with climate change.
The two are some of the challenges facing the lithium battery in the market but the general picture so far is that lithium demand is bound to grow. So far, the demand side of the metal has been explored, but lithium supply is also intricate.
Supply of lithium
Abundance of lithium as an element is not in question the problem is that more often than not this presence does not necessarily translate to economic significance. In fact, lithium as a pure element is rare, and this is perhaps explained by its position the periodic table. Lithium is a group one element, which means it has one valence electron, something that makes it highly reactive. For that reason, lithium easily combines with other elements in its environment, and is subsequently ever in found in form of compounds, some of which include supersaturated brines, lithium rich clays and hard rock pegmatites. The metal may be sold as a compound (e.g. carbonate), brine, pure metal or as a mineral concentrate. The state at which the mineral is sold is dependent on the end use for the product.
More often than not however, the metal is sold as a compound. Of these compound states the metal is sold in, lithium carbonates, chlorides and hydroxides account for 76 with the other 24 percent being in form of mineral concentrates such as spodumene. The interest of the battery manufacturer is a lithium ion (Li-ion) structure and this is mostly in the form of lithium carbonate.
Lithium production
As noted, lithium supply remains an intricate affair because of some of the half truths and secrecies surrounding it. One of the not so good attributes of lithium production is that it is dominated by four major players, and that almost amounts to an oligopoly. The dominant players in the market are Chemetall, SQM, Tallison minerals and FMC. Three of the companies are in the Americas while the fourth one is in Australia. Lithium production in 2000 was 13,100 metric tons, but that has since increased to 22,800 metric tons. The growth in output is however skewed with South America (Argentina and Chile) and Australia accounting for 82 of the growth. The concentration of the metal in terms of compounds and minerals also had a continental trend with South America producing 90 of brines and Australia producing 70 of the lithium minerals.
However, the production of lithium carbon has more than doubled over the past twelve years, thanks to the entry of China in to the equation. With the entry of China four groups are now in the business of producing lithium carbonate. The leading producer is SQM chile with 30 market share, with Chemetall and FMC having the rest of the market. China is now producing lithium compounds by converting spodumene found within its borders in combination with imports from Australia.
Distribution of lithium deposits
Lithium is fairly distributed in all the continents of the world, though certain forms have a bigger presence in certain continents only. According to (Evans, 2008), the total deposits of lithium are in the order of 21.8 million metric tons. The table below shows the major reserves of lithium in terms of reserves and reserve base. Definition of reserve is restricted to that material that can be produced at the time with the existing technology and be capable of being sold at the existing market price. Other deposits may be present in economic quantities, but their extraction may be uneconomical at the time due to technology constraints. These deposits are not considered as reserves because should they be required in short notice, then they may not be extracted and sold at the existing market price. They are referred to as reserve base.
Country2005 production (Metric tons)Reserves (metric tons)Reserve base
(metric tons)United States 1,00038,000410,000Argentina 2,0002,000,000 (est.)2,000,000 (est.)Australia4,000160,000260,000Bolivia--5,400,000Brazil240190,000910,000Canada700180,000360,000Chile8,0003,000,0003,000,000China2,700640,0001,100,000Portugal320NANARussia2,200NANAZimbabwe24023,00027,000Total21,4006,200,00013,400,000Table SEQ Table ARABIC 2 Source USGS MIR for US and Argentina estimates
From the table, South America holds the largest deposits, which explains why it takes the lions share in terms of production quantities. The table paints a good picture in terms of the abundance of the element.
Lithium extraction (conversion costs)
Like all the other minerals, the presence of lithium deposits anywhere does not directly imply an immediate economic gain. Related to the problem noted earlier of market domination by a few large players, is the problem of secrecy. Facts regarding the costs of extracting lithium are scanty because the market players are reluctant to release them. Estimates indicate that the lithium carbonate production from Chilean brine is between 1,400metric ton and 1,800metric ton. The estimated cost of extracting Argentinean brine by FMC is estimated at between 2,300 and 2,600, which is a much higher value compared to that of the Chilean brine, something attributed to higher energy costs attributable to its use of selective absorption method.
Chinese operations have proven to be more cost efficient in the extraction of lithium carbonate from spodumene. Currently, the estimates show that costs of conversion range from 2,500metric ton to 3,000metric ton. The figures however refer to the conversion of 8 metric tons of 5 Lithia being required to produce one metric ton of lithium carbonate. The Chinese however, have shown capability of producing the carbonate using 1 Lithia, something that the western miners find hard to do economically. High prices of lithium carbonate will continue to determine the continued production of lithium carbonate in particular, the production cost of the carbonate will required to maintain a threshold price of US 5,000metric ton.
Some of the advantages of the lithium battery include
The metal has a small atomic mass, which means that a lithium ion battery will be lighter than the other batteries.
The high reactivity of the lithium metal means that it is capable of giving off large quantities of heat in its reactions.
The batteries hold their charge very well and do not have memory effect meaning that one does not have to completely drain the battery before recharging it.
These are some of the advantages of the lithium ion batteries, while the major disadvantage of the battery has been identified as having a relatively short shelf life.
Lithium demand will continue to rise in spite of the shortcomings and the competition from other metals. The fact that metals such as nickel have been in use for so many years, but have now been overtaken by lithium is an indication that lithium has superior qualities that need improvement. A look at the stock market shows that lithium companies are performing well, mainly because of the lithium potential even though it is yet to be fully understood and exploited. Similarly, looking at the distribution of lithium deposits, it is safe to say that there is enough lithium deposits for feed the demand in the foreseeable future. Nonetheless, future technological advancements and researches should also start focusing on the possibility of recycling lithium.
It would be foolhardy to look at the impressive figures on the availability of the element and be content that the mineral will be enough to feed infinite demand. There may be no cause for alarm now because the hybrid vehicle is still in its infantry stages, and therefore its full effect on the exploration of lithium remains somewhat of unclear because its future demand figures may be hard to predict with certainty. In addition, the growth of Asian auto market is still a wild card as well it is an emerging market and whether, for example, the Chinese auto market will be able to sustain the current growth is not clear. In other words, the question of lithium demand cannot be predicted with certainty as one would do for an obvious commodity such as food. The only sure prediction is that lithium demand is set to grow and there are enough stocks to supply this demands in the short term.
History of lithium
Lithium was first discovered as a chemical element in 1817, but did not catch the attention of many industrialists then. The first commercial production of lithium was in 1923 by a German company by way of electrolysis, and was mainly used by airline manufacturers. The mineral has evolved in its use, from the days when it was used for medicinal purposes, then aircraft and nuclear enrichment and now its use in lithium ion batteries. In other words, the use of lithium has diversified over the years, and in particular, its use in the manufacture of lithium ion batteries has put its demand on an irreversible growth path.
Presence of lithium
At 65 ppm (parts per million), Lithium is a relatively abundant element, and its availability is in the same neighborhood as that of copper, tin, cerium, tungsten and nickel (Lentech, 2009). Being an alkali metal, lithium cannot exist as a free element due to its reactivity, and therefore, it is always found in combination with other elements. The metal can be found in a number of forms including hard rock pegmatites, clays and in supersaturated brines. Its presence in any environment however does not amount to an economic benefit because most of these deposits do not present lithium in commercially extractable quantities. It is not always necessary to separate the metal from the other compounds depending in its use. As a result, lithium may be sold in a variety of forms including brine or other compounds such as lithium carbonate. The usability of the lithium in these forms reflects its diversity in terms of use, which includes glass industry, ceramics and of course the lithium ion battery segment.
Given lithiums nature of being abundant in less commercially viable deposits, the metals production is severely concentrated in the hands of a few companies confined to a relatively small area. Most of the minerals deposits are to be found in Australia and parts of South America, an indication that even though the metal is abundant, these areas are the only ones that have metal quantities suitable for commercial production.
Dynamics of lithium use
As noted earlier lithium use has evolved over the years from the days when it was confined to medicinal uses only. The current trend is indicative that lithium use is shifting towards more sophisticated uses, although that is not to say that historical uses of the element are disappearing. Nonetheless, the proportional usage of the metal in this industry is reducing in relation to the newer industries. The traditional industry such as glass and ceramics are now giving way to newer and more sophisticated industries such as automotive, pharmaceuticals and electronics. The growth in the traditional sector is mainly driven by gross domestic product (GDP) growth, which means that growth in these sectors has stabilized. On the other hand, the newer sectors are breaking in to new markets that make their growth dependent on both the GDP and increase in consumer awareness and purchasing power. Ultimately, future lithium demand will mainly be driven by the new sectors.
Newer uses of lithium
Lithium use has been evolving over the years with the newer uses gaining an edge over the old uses. One of the most outstanding new uses of the element is in the manufacture of rechargeable batteries. The popularity of the rechargeable batteries lies in its wide applicability. Today, 27 of the lithium market demand is made up of batteries for both the portable gadgets as well as those of the automotives. Any power consuming gadget in use today will most likely have a rechargeable battery for example, laptops, ipods, ipads and cars are just some of the few of the gadgets that make use or have the potential of using the rechargeable batteries. In the case of the automotives, the use of the rechargeable batteries is slowly gaining significance. These two sectors are bound to be the growth drivers for lithium demand because they are consistent with the current world trend of energy consumption. The question however is which of the two is likely to experience more demand. They both have potential, but most of the effort is concentrated on eliminating greenhouse gas emissions, and nothing epitomizes efforts to reduce the emissions more than the attempt to develop automotives that use clean energy. For that reason, it is likely that in the foreseeable future, more efforts will be geared towards developing appropriate technology for greenhouse gas reduction. The small gadgets have their place in terms of lithium usage, but their usage may not be at par with that of the automotive industry for a number of reasons.
Use lithium in the automotive battery
Granted, the demand growth for lithium will be determined by demand for rechargeable batteries, however, most of the demand will be in the automotive sector, and therefore, evaluation of lithiums market dynamics will be incomplete if the market dynamics of the automotive industry are not looked in to. Use of lithium rechargeable batteries is at its infantry stages and has all the potential for growth if the current trends are anything to go by. Initially, the lithium car battery served the traditional car battery, which was to power ancillary features in the car such as car wipers, headlights, power windows and so on. The use of the lithium battery is however evolving to include providing part or the whole driving power for the car. This concept, known as hybrid technology is continually taking root amongst the major vehicle manufacturers, mostly with the support of the respective government. A number of factors will play a pivotal role in driving the demand of lithium for future cars, some of which are looked at below in order to paint a clearer picture regarding the demand lithium for these batteries.
Reduction in carbon emissions
Worldwide, the noose is tightening on polluters as governments try to deal with the effects of climate change. One of the most effective ways for most governments has been in the legislation of emission standards. The US, for example, is looking to cap emissions at 250 grams per mile by 2016. This is obviously a far cry from the current averages of 400 grams per mile for the conventional vehicles and 294grams per mile for the hybrid. The hybrid vehicles present the best opportunity for reaching the targets because of its potential for improvements. It is envisaged that future hybrid vehicles will be able to get alternative power from nuclear and other forms of renewable energy, and thereby have the capability of reducing the emissions to 150 grams per mile. Of course, that will mean that development of lithium ion batteries is matched by development by other forms of energy supplies such as nuclear, but nevertheless, it is an indication of the potential of the lithium ion battery. There is no telling how far the war against emission will go, it would not be surprising in future to have zero emission as the standard.
Improvements in fuel economy
Besides compliance with emission regulations, automakers are keen to brand themselves as suppliers of economical vehicles. This is both marketing as well as a regulatory strategy. For a long time, auto manufacturers did not pay attention to matters of fuel efficiency, especially for the mature markets such as Europe and North America. With the 200708 economic crisis, all these changed as the previously upper market segment vehicles such as the hummer faced a severe dip in sales. A reduction of engine capacity is one of the strategies that have been used for a long time by companies, but reducing engine capacity is limited as far as fuel economy is concerned. There is room for improvement of course in this sector, but companies are now looking towards alternative power sources. The electric hybrid car is at the center of all this with leading companies such as General Motors and Toyota accelerating resource allocation towards the production of hybrid vehicles. Lithium
Government support
In recognition of the potential of hybrid technology to increase fuel economy and reduce greenhouse gas emissions, governments are now encouraging companies to move in this direction. A variety of ways are used by different governments to hasten the shift towards hybrid technology. For instance, to spur demand for this type of vehicles, the US government is offering tax credits for purchases of electric hybrid vehicles in line with the America recovery and reinvestment Act of 2009.
Future trends in automotive industry
So what is the future like for the lithium market So far the driving factors that have spurred the demand of the hybrids have been enumerated, although it is even better to say that demand for hybrid would grow at its own potential, given the many advantages that come with it. Figures are encouraging for lithium producers because sales for the first quarter of 2009 have surpassed all the sales for 2008. With this kind of growth, it is obvious that the world is just waking up to the reality of hybrid, and therefore its growth potential is still unlimited.
Forecast in vehicle demand
Demand for hybrids will largely be determined by the levels of car demand. From the foregoing, it is obvious that the hybrid is the car for the future. Consequently, the rise in demand for electric hybrid cars is directly proportional to the rise in auto sales. The state of the economy is the main driving factor in determining demand for vehicles. A good illustration of this is the world economic crisis of 2008, which saw auto sales plummet to an extent that hitherto market giants such GM and Ssang Yong motors (South Korea) had to file for bankruptcy to survive an onslaught from creditors.
Looking at historic trends, one can easily see that growth in auto demand is and will be driven (at least in the near future) by the Asian market, and in particular, the demand in the Chinese market. The Asian markets have in the recent past showed strong growth figures averaging 4 per annum compared to the European and American markets that have lower growth rates averaging 1 percent. This are year on year growth rates, but the bottom line is that companies serious about their future have to pay close attention to the Asian markets because that is where is the future of the auto industry is.
Global hybrid electric car demand
A rise in vehicle demand will definitely be matched by a growth in the demand for hybrid cars. Evidently, most manufacturers are substituting the traditional gasoline engines for hybrid cars in tandem with objectives of a cleaner environment and better fuel efficiency. Most of the growth in this industry will be in the direction of hybrid electric vehicles as most companies will continually eschew from production of the gasoline vehicles. The market and demand for hybrid vehicles is still a wild card at the moment going by the historical trends. For example, the sales figures for the hybrid in the first quarter of 2009 have surpassed all the sales for 2008. That trend is indicative of a somewhat runaway growth. The market demand is convoluted for two reasons one is that economic growth may slow down demand, while the same economic slowdown may lead to new opportunities for development and growth of better technologies, in this case hybrid and electric cars.
There are two types of electric vehicles in the world market namely hybrid electric vehicle, and secondly, pure electric cars. The electric cars still have a very small market share compared to the hybrid because its developmental stage is still infantile. However, both bring the same advantages only that one has not been fully developed. The table below draws a comparison between the electric, hybrid and other fossil fuel powered vehicles.
From the table, it is notable that most of the problems in the electric car can easily be attributed to insufficient research, which is a result of the car model being in its developmental stages. The problems aside, these car models are showing the best results in terms of fuel efficiency and gas emissions. For that reason, the electric car seems to be the car for the future if these shortcomings can be addressed. Nevertheless, given the amount of research needed to do that optimization, growth focus for the electric car model will be on the hybrid car in the short term.
(Allbusiness, 2005 ) projects that by 2013 the demand for hybrid vehicles will hit 4.5 million units representing 6 of the total market share. Of these, the US is expected to account for half the quantity while the Asian countries will be expected to have a higher demand than Europe. On the other hand, given the operational disadvantages still being faced by the pure electric car, its potential is not yet fully recognizable, and any projections on future demand will not be based on fair judgment. There are a number of projections regarding the growth of demand for electric vehicles. Nissan Corp. boss predicts that the electric vehicles will constitute 10 of all vehicle sales, while a credit Suisse report predicts that electric vehicles will have 1.1 of the total car sales market by the year 2015 (GM-volt, 2009). Although the predictions may not be precise, one thing is sure the demand for electric cars is bound to grow.
Lithium demand
Having looked at the growth of demand for electric vehicles, the question is whether this demand will translate to a higher demand for lithium. Other gadgets such as laptops and mobile phones have an influence on the demand because they also utilize the same lithium ion technology in their rechargeable batteries. Their effects on the demand for lithium will however pale when compared to those of the automotive industries. To estimate the effects of the rise in hybrid demand to lithium demand it is important to have an estimate of lithium quantity that is needed for one battery in the hybrid. The measure of the lithium component in the battery is measure in terms of lithium carbonate equivalent (LCE). An estimated 425 grams of LCE are needed for every KWH of battery capacity, and from these figures one can estimate the estimated lithium demand.
The battery capacity varies for each of the vehicles varies according to the power needs of the car. Logically, the power capacity for the hybrid car should be lower than that of the pure electric car because the pure electric car gets all its power from the batter. In addition, there is no homogeneity because each of the car manufacturers produces unique batteries for the different cars. In analyzing this battery needs, the battery types are divided in to three standards that are prevalent in the industry today, these are plug in hybrid electric, full electric vehicle and hybrid vehicle. The capacities associated with these batteries are hybrid electric at 5.3 KWh, plug-in hybrid electric at 20 KWh and pure electric at 50KWh. From these figures, one can easily compute the amount of LCE needed for each of the cars, and they are 2,300 grams for the hybrid electric vehicles, 8,500 grams for the hybrid electric and 21,300 grams for the pure electric. It is however important to note that these are estimate figures from various manufacturers because there is no standardization for LCE in lithium ion batteries. The real figures for the demand would be evaluated by multiplying the number of cars in the particular segment (hybrid or pure electric) by its LCE consumption. According to (Evans, 2008) 10 of all cars will be powered by lithuim by 2015, rising to 20 in 2020. Consequently, he estimates that demand for lithiium will rise to 160,000 tonnes by 2015. The demand for lithium cannot be simply extrapolated from the demand of hybrid cars because there are many other inherent dynamics involved in the scenario. One of the most important is the fact that lithium is facing competition from other metals such as zinc, lead and nickel.
Challenges facing the lithium in the battery market
Lithium remains the leading metal used in the manufacture of car batteries, but it is facing some challenges too. Some of the challenges include
Presence of substitute metals
As noted, lithium is the leading metal in battery manufacture, but by no means the only one. Some of the metals competing for a piece of the battery industry include zinc, lead and nickel. They may have their shortcomings, and probably ranked a few steps behind lithium, but nevertheless they eat in to the market share of lithium. Given the dynamism of technology, it may not be prudent to write them off on the account of lithium currently having the lead. One advantage however of lithium is that it is a relatively new piece of metal, and the fact that it has overtaken the other metals is a healthy sign in as far as competitive positioning is concerned. Nevertheless, the metals may have an effect of delaying the full acceptance of lithium in the electric car battery market.
Real emission reduction results
One of the driving factors previously identified for the demand for hybrid technology cars revolved around the environmental considerations. The ability of the electric car to mitigate environmental degradation arising from greenhouse gas emissions was identified as one of the major demand stimulants for the car, and in extension lithium. However, it may be that as all eyes are on the hybrid car to reduce emission, other pollutants go on unabated. This will result in a zero sum game so that the government and other stakeholders fail to see the results of promoting the hybrid car. That would lead to a drop in public support for the hybrid in terms of legislation and demand. This is best applied to the US, which has a high number of coal fired plants to produce electricity. The demand for electricity may be rising in almost similar proportions to the hybrid car sales, which means any gains made in the reduction of emissions through the hybrid vehicle is quickly offset by an increase in emission from the coal powered plants. Ultimately, the popularity enjoyed by the hybrids will dip as people will now go back to the drawing board to come up with newer ways of dealing with climate change.
The two are some of the challenges facing the lithium battery in the market but the general picture so far is that lithium demand is bound to grow. So far, the demand side of the metal has been explored, but lithium supply is also intricate.
Supply of lithium
Abundance of lithium as an element is not in question the problem is that more often than not this presence does not necessarily translate to economic significance. In fact, lithium as a pure element is rare, and this is perhaps explained by its position the periodic table. Lithium is a group one element, which means it has one valence electron, something that makes it highly reactive. For that reason, lithium easily combines with other elements in its environment, and is subsequently ever in found in form of compounds, some of which include supersaturated brines, lithium rich clays and hard rock pegmatites. The metal may be sold as a compound (e.g. carbonate), brine, pure metal or as a mineral concentrate. The state at which the mineral is sold is dependent on the end use for the product.
More often than not however, the metal is sold as a compound. Of these compound states the metal is sold in, lithium carbonates, chlorides and hydroxides account for 76 with the other 24 percent being in form of mineral concentrates such as spodumene. The interest of the battery manufacturer is a lithium ion (Li-ion) structure and this is mostly in the form of lithium carbonate.
Lithium production
As noted, lithium supply remains an intricate affair because of some of the half truths and secrecies surrounding it. One of the not so good attributes of lithium production is that it is dominated by four major players, and that almost amounts to an oligopoly. The dominant players in the market are Chemetall, SQM, Tallison minerals and FMC. Three of the companies are in the Americas while the fourth one is in Australia. Lithium production in 2000 was 13,100 metric tons, but that has since increased to 22,800 metric tons. The growth in output is however skewed with South America (Argentina and Chile) and Australia accounting for 82 of the growth. The concentration of the metal in terms of compounds and minerals also had a continental trend with South America producing 90 of brines and Australia producing 70 of the lithium minerals.
However, the production of lithium carbon has more than doubled over the past twelve years, thanks to the entry of China in to the equation. With the entry of China four groups are now in the business of producing lithium carbonate. The leading producer is SQM chile with 30 market share, with Chemetall and FMC having the rest of the market. China is now producing lithium compounds by converting spodumene found within its borders in combination with imports from Australia.
Distribution of lithium deposits
Lithium is fairly distributed in all the continents of the world, though certain forms have a bigger presence in certain continents only. According to (Evans, 2008), the total deposits of lithium are in the order of 21.8 million metric tons. The table below shows the major reserves of lithium in terms of reserves and reserve base. Definition of reserve is restricted to that material that can be produced at the time with the existing technology and be capable of being sold at the existing market price. Other deposits may be present in economic quantities, but their extraction may be uneconomical at the time due to technology constraints. These deposits are not considered as reserves because should they be required in short notice, then they may not be extracted and sold at the existing market price. They are referred to as reserve base.
Country2005 production (Metric tons)Reserves (metric tons)Reserve base
(metric tons)United States 1,00038,000410,000Argentina 2,0002,000,000 (est.)2,000,000 (est.)Australia4,000160,000260,000Bolivia--5,400,000Brazil240190,000910,000Canada700180,000360,000Chile8,0003,000,0003,000,000China2,700640,0001,100,000Portugal320NANARussia2,200NANAZimbabwe24023,00027,000Total21,4006,200,00013,400,000Table SEQ Table ARABIC 2 Source USGS MIR for US and Argentina estimates
From the table, South America holds the largest deposits, which explains why it takes the lions share in terms of production quantities. The table paints a good picture in terms of the abundance of the element.
Lithium extraction (conversion costs)
Like all the other minerals, the presence of lithium deposits anywhere does not directly imply an immediate economic gain. Related to the problem noted earlier of market domination by a few large players, is the problem of secrecy. Facts regarding the costs of extracting lithium are scanty because the market players are reluctant to release them. Estimates indicate that the lithium carbonate production from Chilean brine is between 1,400metric ton and 1,800metric ton. The estimated cost of extracting Argentinean brine by FMC is estimated at between 2,300 and 2,600, which is a much higher value compared to that of the Chilean brine, something attributed to higher energy costs attributable to its use of selective absorption method.
Chinese operations have proven to be more cost efficient in the extraction of lithium carbonate from spodumene. Currently, the estimates show that costs of conversion range from 2,500metric ton to 3,000metric ton. The figures however refer to the conversion of 8 metric tons of 5 Lithia being required to produce one metric ton of lithium carbonate. The Chinese however, have shown capability of producing the carbonate using 1 Lithia, something that the western miners find hard to do economically. High prices of lithium carbonate will continue to determine the continued production of lithium carbonate in particular, the production cost of the carbonate will required to maintain a threshold price of US 5,000metric ton.
Some of the advantages of the lithium battery include
The metal has a small atomic mass, which means that a lithium ion battery will be lighter than the other batteries.
The high reactivity of the lithium metal means that it is capable of giving off large quantities of heat in its reactions.
The batteries hold their charge very well and do not have memory effect meaning that one does not have to completely drain the battery before recharging it.
These are some of the advantages of the lithium ion batteries, while the major disadvantage of the battery has been identified as having a relatively short shelf life.
Lithium demand will continue to rise in spite of the shortcomings and the competition from other metals. The fact that metals such as nickel have been in use for so many years, but have now been overtaken by lithium is an indication that lithium has superior qualities that need improvement. A look at the stock market shows that lithium companies are performing well, mainly because of the lithium potential even though it is yet to be fully understood and exploited. Similarly, looking at the distribution of lithium deposits, it is safe to say that there is enough lithium deposits for feed the demand in the foreseeable future. Nonetheless, future technological advancements and researches should also start focusing on the possibility of recycling lithium.
It would be foolhardy to look at the impressive figures on the availability of the element and be content that the mineral will be enough to feed infinite demand. There may be no cause for alarm now because the hybrid vehicle is still in its infantry stages, and therefore its full effect on the exploration of lithium remains somewhat of unclear because its future demand figures may be hard to predict with certainty. In addition, the growth of Asian auto market is still a wild card as well it is an emerging market and whether, for example, the Chinese auto market will be able to sustain the current growth is not clear. In other words, the question of lithium demand cannot be predicted with certainty as one would do for an obvious commodity such as food. The only sure prediction is that lithium demand is set to grow and there are enough stocks to supply this demands in the short term.
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