Lithium Supplies Ample For Now, Potential Bottlenecks Ahead

Current economic downturn may delay needed lithium resource projects.

Published: 29-Jan-2009

In a presentation earlier this week at the Lithium Supply and Markets 2009 IM Conference in Santiago, Chile, the President and CEO of the TRU Group, Edward R. Anderson, told attendees to that there will be ample supplies of lithium thru the middle of the next decade.

Sharing research his firm conducted on behalf of Mitsubishi Corporation, the TRU Group forecasts that the market will enter a critical transition stage in the 2017-2018 time frame, when demand for lithium, a key element in future electric-drive vehicle batteries, including hybrids(HEV) , plug-in hybrids (PHEV) and pure electric vehicles (PEV), will begin to climb. A second large market for lithium will be in aircraft alloys. TRU's projections see ample supply through the end of its forecast period in 2020 as long as there is sufficient industry investment in mining and distribution, including Admiralty Resources' brine pipeline from the Rincon Solar in Argentina.

The company noted in its press release, "The industry does need at least one of the announced pipeline production projects to come into production and also could do with another new project as the market tightens around 2015-2017."

It further adds, "New lithium producers still will need to be cost competitive with existing salt lake brine based producers in South America and China. Emerging technology may make some of the undeveloped medium sized (brine) lithium resources quite attractive. Certainly the industry through expansion and development of new resources will have no problem meeting demand."

Anderson tempered his remarks by noting that the current global economic downturn will slow demand for lithium by at least 6%; this in an industry that has enjoyed steady growth over the last decade, leading to an excess of capacity. He foresees demand resuming by mid-decade, but cautions that delays or cancellations of lithium recovery projects could lead to future production bottlenecks in the 2015-2017 timeframe.

Overall, TRU Group are confident there not only will be growing demand for lithium, which should spur industry investment in resources, production and refinement facilities -- including new ways to more cheaply produce high purity lithium -- but that there will be sufficient supplies because of those investments. However, he is forecasting possible supply shortfalls beyond 2019.

Mr. Anderson's slide presentation from the conference is available on the TRU Group web site.

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