How Recession-proof is Lithium?
By Bill Moore
Many thoughtful analysts and knowledgeable policy makers are asking the question, Is there enough lithium to manufacture all the batteries the planet will need to make possible the shift from petroleum to an electrically-propelled transportation system?
A related question asks what impact will low oil prices have on investments in lithium carbonate mining and refining, as well as large format automotive battery manufacturing? Will $2 gasoline wither consumer interest in electric-drive vehicles and thus stymie OEM efforts to bring less petroleum-dependent vehicles to market?
At the moment, the collapse in car sales in general and conventional hybrids in particular, would suggest that in the short term, the answer to the second question would be yes, though not because of low fuel prices but more because of the general level of uncertainty across the entire global economy. You don't commit to a $25-35,000 car contract if you're not sure you'll have a job this year or next.
Bolivian economist Juan Carlos Zuleta Calderon examines these questions and what impact they are likely to have on the lithium battery supply chain in a paper he presented at the Lithium supply conference in Santiago, Chile. In Can the Inauguration of the Lithium Era Be taken for Granted? he re-examines a thesis put forward in a recent issue of Industrial Minerals that "the oil market, technological development and resistance to change may determine whether lithium-ion (Li-ion) batteries will be adopted by the global automobile industry for its transition to electric propulsion..."
Zuleta, who is a contributing editor to EV World, asserts that it isn't so much the issue of low oil prices that could slow the uptake of electric vehicle technology, but price volatility; it may also spur it.
"If the price of oil constitutes one of the main determinants of the market demand for REEVs and BEVs as well as for advanced rechargeable batteries," he writes, "it then follows that the price of oil may also stimulate or hinder REEV and BEV as well as rechargeable battery innovations."
Since 1998, the price of a barrel of Brent Crude has risen from an average of $12.48 to $97.19 in 2008, he observes.
His paper notes, "This provides an explanation for the recent interest of the global automotive industry in electric vehicles following General Motors´ announcement in January 2007 that by 2010 it will introduce the first mass-produced Li-ion powered plug-in hybrid electric cars. It also explains why all major battery producers have decided to invest heavily in the development of advanced batteries to be launched into the market in the coming years."
In a footnote, he observes, "Of course high oil prices remain one the most influential factors for the adoption of 'green' technologies in the car industry. However, as the data seem to reflect, under high oil price volatility, temporary low oil prices may not constitute a real hindrance to this possibility."
It is price volatility, which shows not indication of moderating ever again given global demand and declining reserve capacity, that will be a significant driver of innovation.
One of those innovations -- and perhaps the key point -- of Zuleta's paper is the emergence of Lithium Iron Phosphate (LiFePo) battery chemistry. This is the technology found in BYD's batteries and now in Chery's newly introduced electric-drive S18, which will have an enormous impact on lithium producers, battery makers and eventually consumers.
The key reason is because lithium constitutes only 3.4% of the materials in this type of cell. In contrast, in both Lithium cobalt and manganese cells, it represents 28% and 25% respectively.
"What is so crucial about this type of batteries is that they use about an eighth of lithium in comparison to other lithium-ion batteries," Zuleta states.
This suggests to both Zuleta and The Economist that LiFePo batteries "appear to cost now roughly half as much as rival lithium based designs, are likely to reflect an even more pronounced downward trend in cost in the coming years."
It also, "seriously erodes one of the most important "Peak Lithium" arguments," he contends.
On the final point of "resistance to change" and the role of the oil giants, he points out that 95% of the world's oil reserves are now in the hands of national oil companies, while the likes of Exxon, Mobil and Shell control just 5%. This suggests a diminished role by the oil multinationals in blocking the development of electric-vehicle technologies. As Exxon Chemical's recent public relations forays touting their lithium battery separator material suggests, they are starting to see opportunities instead of threats from this emerging technology.
That being said, Zuleta offers a cautionary caveat.
"It remains to be seen how the new players in the game, namely oil producing countries, will behave under the new circumstances, although there are already some indications that at least some of them may be seriously committed to 'seeking a lead in clean energy.'"
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