There are now 45 battery mega factories driving demand for lithium, cobalt and graphite
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Production of lithium-ion batteries is increasing exponentially and will drive long-term demand for materials such as lithium, cobalt, graphite and nickel, investors were told at a BenchMark Mineral Intelligence conference in Perth on Monday
“In 2015, we declared that the battery mega factories were coming,” said Benchmark managing director Mr Simon Moores.
“In August 2018 there were 42 mega factories built or being built – up from three in 2015.
“In September that number had already increased to 45. This shows where the investment is going.”
By 2028 these mega battery factories — such as the gigafactories being built by Elon Musk’s Tesla — would need 840,000 tonnes per year of lithium, 193,000 tonnes per year of cobalt, 1.1 million tonnes per year of graphite anode, and 480,000 tonnes of nickel chemical, Mr Moores said.
Some 95 per cent of the Electric Vehicle (EV) market and 50 per cent of the battery storage market would be lithium-ion by 2028, he said.
“The money is going into the mega factories, and it’s going into expanding the lithium industry by four or five times.
“If I am a car company, I want technology that is good enough and cheap enough that I can make EVs on a massive scale. At the moment, that is lithium ion.”
Despite this projected growthm there remained a “disconnect” between the stockmarket and “real lithium producers”.
Nearly every lithium focused explorer or miner has seen their share price drop this year as lithium oversupply fears gain traction.
The likes of Tawana, Kidman and Pilbara Minerals — which is ticking all the boxes at its Pilgangoora project in the Pilbara — have seen share price discounts.
> @cberry1 takes the stage in Perth. “The ups and downs in lithium are not limited to explorers and developers. The SQM share price is not that of an industry where demand is growing 20-35% a year. A disconnect with financial and real lithium markets” pic.twitter.com/XUFSFovARX
— Benchmark Mineral Intelligence (@benchmarkmin) September 17, 2018
But as the battery industry gears up for the mass adoption of EVs, automakers were still looking to secure long term, high quality lithium supply from producers.
Pilbara Minerals, for example, is increasing lithium production at Pilgangoora because its customers are demanding more product.
And Kidman made history earlier this year when it became the first Australian lithium miner to strike a supply deal with American electric car giant Tesla.
“Lithium ion batteries are getting better, they are getting cheaper, and they are getting more abundant,” Mr Moores said.
“We are coming into a period where it’s a great opportunity for battery companies to sign long-term deals with miners, because prices are slightly lower — and it’s not going to be that way for long.”