Battery boom to fuel fading resources sector

While the bulk of the mining boom is behind us, demand for lithium may keep our resources sector rolling for a little longer.

Prices for lithium carbonate, as used in lithium-ion batteries, have increased by 47% in 2016 thanks to electric vehicles, power storage development and consumer-driven growth in China.

There are three ways to source lithium products: 1) hard rock mining of mineral ore — which comes at a higher price, although with lower capital costs and increased speed; 2) recycling of existing battery products; and, 3) evaporation of brine from salt ponds.

Estimates by Citicorp suggest that demand for lithium products will increase by 64% on 2015 levels by 2020, driven largely by electric vehicles and power storage. Analysts are warning that an oversupply is likely, as producers scrabble to deliver based on projection targets that may fall in the realm of ‘optimistic’, including China’s stated intent to have five million electric vehicles on the road by 2020.

That said, a number of megafactories (both completed and in the planning stage) will stretch current and projected supply once they all come on stream. These include Tesla’s Gigafactory battery plant in Nevada, US, which will require 25,000 tonnes of lithium hydroxide per year — around 45% of the current global supply. In addition, LG Chem Ltd has finished building an electric-vehicle battery plant in Nanjing, China, with capacity to supply batteries for 50,000 high-performance electric cars annually.

Australia may just be able to squeeze that last drop out of the resources boom thanks to these sorts of numbers.