Lithium needs a Rio Tinto to get to 2.2m tonnes demand by 2030

Today, there has been some high-profile news articles on Rio Tinto’s second lithium foray as it brings to life a lithium tailings project and chemical plant at California’s largest open pit mine, adding to the Jadar project in Serbia.

Rio Tinto has been mining borates in Boron, California since 1872 but has only recently been developing a lithium chemical pilot plant to unlock the lithium in tailings produced over the many decades of operation.

Rio Tinto has now reached the stage where it is producing what it believes is battery-ready lithium chemicals from the plant. The plant is to begin operations with 5,000 tpa LCE capacity and expand to 15,000 tpa LCE beyond that.

Benchmark Minerals Week 2019 will be visiting this operation as part of the official Field Trip on Friday 15 November 2019. You can sign up to join us here.

Bold Baatar, Chief Executive of Energy and Minerals at Rio Tinto said:“Our team had a eureka moment when they did some testing to look for valuable minerals beyond boron in our waste rock and found high grades of lithium.”

“If the trials continue to be successful, this has the potential to become America’s largest domestic producer of battery grade lithium — all without the need for further mining,” he added.

Three articles of interest on this subject have been written by Financial Times, Bloomberg, and Wall Street Journal.

Lithium disruption needed to get beyond 2m tonnes

The last 18 months in the lithium has been one of depressed sentiment and all but a freeze in new investment in capacity expansions beyond 2024.

Despite the Benchmark Mineral Lithium Price Index falling by 17% in 2019 to end-September, this year’s lithium demand is expected to increase between 14-16%.

Benchmark Minerals’ Lithium Carbonate, CIF North America, 99.5%, was assessed at $10,625/tonne as of 30 September 2019.

The reason for the lull in sentiment is the fact that oversupply of spodumene and a slowing of electric vehicle (EV) demand growth from the highs of 2017 and H1 2018 have weighed on lithium prices.

The reality is that lithium will experience double digit growth short term, and the long-term picture has significantly strengthened.

Benchmark Minerals forecasts lithium demand to reach 2.2m tonnes by 2030 but as things stand lithium supply (LCE) is only set to reach 1.67m leaving a huge structural deficit. This demand will be driven by growing EV adoption through the 2020s, with Benchmark Minerals’ forecasting an EV penetration rate of 4.3% in 2020 rising to 30.7% in 2030.

Considering the time it takes to build new lithium mines and ramp up to meaningful chemical capacity, which by mid-2020s will be anything larger than 50,000 tpa LCE, the industry will need to shift the way it thinks and the way operates – bigger fish will need to enter lithium.

Benchmark Minerals’ reaction:

  • The California project is a low cost, low risk way for Rio Tinto to more deeply understand the lithium chemical processing step first-hand
  • This leaves an option to parlay this knowledge into its bigger Jadar deposit – despite the deposits having different mineralogy they share similarities
  • The development helps Rio Tinto build intellectual property in the lithium chemicals space so if it looks at acquiring lithium chemicals assets it has a deeper technical know-how
  • The move builds confidence internally on how the company wants to position itself in the electric vehicle revolution
  • No commodity major has yet made a serious play in lithium unlike Glencore in cobalt
  • Opportunity offers for a first mover advantage for the more financially powerful commodity houses, especially with lithium sentiment and share prices in the doldrums despite the double-digit growth this year
  • The lithium industry needs a commodity major to shift its thinking from short term increments to long term big expansions, big thinking to keep pace with EV and battery expansions

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Cathodes 2019 delegates are invited to join us on a field trip to Rio Tinto’s Boron project on 15th November 2019. For more details click here.

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