Driving electric? Think twice

October 30, 2017 | 00:00
Salar de Atacama in Chile. By Francesco Mocellin. CC BY-SA 3.0 licence
Salar de Atacama in Chile. By Francesco Mocellin. CC BY-SA 3.0 licence
So you’re driving electric, assuming you’re on the road to sustainability? Well, it’s not the road to nowhere but think twice. Extraction of vast amounts of lithium just started, indigenous communities are suffering and recycling hasn’t taken a foothold – by far. Meanwhile, global lithium barons will replace oil barons in (semi) authoritarian regions. Eastern Tibet and parts of South-America may become the next ‘new frontier’.

Ready for a bumpy ride?

Lithium-ion (Li-ion) powers almost everything in our digital world, from cell phones to smart buildings, from IoT (Internet of Things) to electric vehicles (EVs). There’s no sign that demand in the consumer electronics market will decrease. Neither does the volume of EVs. Last year the global electric car stock surpassed two million units, 60% more than in 2015, according to the latest Global EV Outlook.

EVs are hot. Whether you like it or not, they are on the rise. And it’s going to be a steep rise: sales will quadruple in 2024, global market research consultancies forecast. If the Electric Vehicle Initiative, a multigovernmental program of more than ten countries coordinated by the International Energy Agency (IEA), has its way, by 2030 a 30% EV market share for EVs will be realised by 2030 .

That’s a darn lot of batteries. Whereas a laptop uses only six, a full electric car needs 6000 to 9000 battery cells. No wonder Elon Musk (CEO of Tesla) builds a gigafactory in Sparks, Nevada, on a plain with a mountainous horizon where wild horses roam. This factory has an output of 35 GWh and supplies Li-ion batteries to produce half a million EVs, not to mention Tesla’s forthcoming storage plant of 129 MWh in South Australia and their home storage appliances (such as the Powerwall).

The versatile metal
Lithium is the lightest, most versatile metal in the world. Amongst other things, it was used as an anti-depressant. Nowadays, though, EVs manufacturers are getting an increasing share. Most investors focus on Clayton Valley (NV), 200 miles south of Sparks, because of Tesla’s factory. Clayton Valley is the only commercial production site in the USA, mainly from the Silver Peak mine, acquired in 2015 by Albemarle (NC). Investment banks like Goldman Sachs, Deutsche Bank and Macquarie Research expect an increase of 60 to 250% in lithium demand, equal to 9,2% EVs worldwide by 2025.

Hey, keep your eye on the road; we’re passing Copper State (Arizona), heading towards Mexico. So that’s your question? Can supply keep up with demand worldwide? Well, in 2016 the ‘Big Three’ couldn’t provide enough lithium for the coming years (the ‘Big Three’ are the afore mentioned Albemarle, SQM – or Sociedad Quimica y Minerva de Chile – and FMC in Argentine. In 2017 these three had a market share of 53%, China accounts for 40%). A reflection of this imbalance can be seen in prices of pure grade lithium: they’ve risen from $4000 per metric tons in 2014 to more than $15.000 per metric tons this summer, according to Lithium Investing News.

Let’s suppose we are driving your Tesla straight to South-America. More precisely to Bolivia, the northern part of the ‘lithium triangle’ where the new lithium-rush takes place (Tesla is not the only one to build gigafactories, others will start to do that as well).
 
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