Lithium producers warn global supplies may not meet electric vehicle demand

Lake Resources NL

22/06/2023 23:55

By Ernest Scheyder
       LAS VEGAS, June 22 (Reuters) - Lithium producers are
growing anxious that delays in mine permitting, staffing
shortages and inflation may hinder their ability to supply
enough of the battery metal to meet the world's aggressive
electrification timelines.
    Once a niche metal used primarily in ceramics and
pharmaceuticals, lithium is now one of the world's most
in-demand metals given aggressive EV plans from Stellantis
 STLAM.MI , Ford  F.N  and other automakers. 
    At stake is the pace with which electric vehicles could
displace internal combustion engines, a key goal of the green
energy transition. 
    "You could end up in a crisis situation where the battery
companies don't have the security of (lithium) feedstock," Stu
Crow, chairman of Lake Resources  LKE.AX , said on the sidelines
of this week's Fastmarkets Lithium and Battery Raw Materials
conference in Las Vegas. 
    "There's a disconnect between the panic that we're seeing
here, and the frenetic activity of trying to secure supply
within the industry."     
    This week, Lake Resources became the latest lithium company
to announce a project delay, pushing back first production from
its Kachi lithium project in Argentina by three years. It cited
power supply and other logistics concerns.   
    Albemarle  ALB.N , the world's largest lithium producer, is
growing rapidly across the Americas, Asia and Australia. Still,
it expects global lithium demand to exceed supply by 500,000
metric tons in 2030. Various consultancies and other producers
have slightly different projections, but all warn of a looming
shortage. 
    "It's a big challenge," said Eric Norris, head of
Albemarle's lithium business. 
    There were 45 lithium mines operating in the world last
year, with 11 expected to open this year and seven next year,
according to Fastmarkets. That pace is far below what
consultants say is needed to ensure adequate global supply. 
    Those growth projections assume a best-case scenario, even
as mining companies face difficulty hiring technical talent,
rising costs and delay times for crucial equipment. 
    Even if more lithium mines are built, there are not enough
facilities to produce specialized types of the metal for
batteries. Automakers may be forced to accept lower-quality
lithium, which decreases an EV battery's range, executives said.
    "There's a big difference between lithium that comes out of
the ground and lithium that goes into a battery," said Sarah
Maryssael of Livent  LTHM.N , which supplies Tesla  TSLA.O  and
is set to combine with rival Allkem  AKE.AX  later this year.   
    
    ATTENDANCE
    Once a niche event attended by industry die-hards, the
Fastmarkets conference has grown rapidly alongside breakneck
lithium demand. Roughly 1,100 attended this year, nearly triple
2019 levels and up 68% from last year.
    Exxon Mobil  XOM.N  sent a contingent as part of its foray
into the battery metals sector. So did its fellow oil companies
SLB  SLB.N  and Equinor  EQNR.OL .
    Banking giants JPMorgan  JPM.N , Goldman Sachs  GS.N , and
BMO Capital Markets  BMO.TO  and others also attended, their
interest fueled by an expected wave of lithium takeover deals
and rising demand for hedging and other financial instruments. 
    "Our strategic investment and M&A pipeline is
extraordinarily strong," said Rahim Bapoo, managing director of
BMO's critical minerals practice. 
    In one example of the rampant hunt for lithium, Mitsui
 8031.T  is on the verge of signing a $65 million deal with
Atlas Lithium  ATLX.O  to guarantee supply from a Brazilian mine
project that Atlas hasn't finished designing.   
    "Investment has to continue, otherwise there will be more
delays to (lithium) timelines that are already massively long,"
said Tara Berrie of EV maker Rivian  RIVN.O .

 (Reporting by Ernest Scheyder; Editing by David Gregorio)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))