Electric vehicles spark a new lithium boom for Australian miners
Some reports estimate that by 2040 more than 50 percent of all vehicle sales and more than 30 percent of the global car fleet will be electric vehicles (EVs). The rapid growth is not only changing the face of the auto industry, but it spurring a rush in the mining industry to find the minerals needed to supply the growing demand.
The modern day gold rush is taking place on small patch of the iron-ore rich outback in the north of Western Australia where mining companies are working at feverous pace to build the world's next major lithium mines that will feed the soaring demand for the metal from electric car battery makers.
Almost 60 per cent of supply from planned large projects through about the next five years will be added in Australia, enabling the country - already the world's biggest supplier of lithium - to cement its grip on the market, according to CRU Group.
The Sydney Morning Herald reported that the biggest mines due to enter production next year are both about 120 km (75 miles) from Port Hedland, the gateway to markets in China.
Altura Mining, which expects to start output in the first three months of 2018, is on schedule and already studying a rapid expansion to more than double capacity, according to managing director James Brown.
Pilbara Minerals is targeting a second-quarter start at a site with capacity to become the world's second-largest hard rock lithium mine.
Along with nearby Mineral Resources's Wodgina mine -- the biggest known hard rock lithium deposit -- these and other projects form an emerging cluster of global production, according to Altura's Brown.
“The Pilbara will be the most significant supplier” to Asia, he said in an interview. The region “does lend itself to becoming a hub, probably the size of which the world hasn’t seen,” he said.
Rising Chinese demand for lithium-ion batteries needed for electric vehicles and energy storage is driving significant price gains. More than half of all new car sales and a third of the total global light-duty vehicle fleet will be electric by 2040, Bloomberg New Energy Finance said in a July report.
Even as multiple new sources of supply emerge in the longer term, Australia will remain dominant, according to Bloomberg New Energy Finance forecasts.
The nation will account for about 37 per cent of production in 2027, ahead of Argentina's 18 percent share, it said in a report this month.
Perth-based Pilbara Minerals has attracted supply deals and investments, including from Jiangxi Ganfeng Lithium and Great Wall Motor, China's biggest maker of sport utility vehicles, while Jiangxi Special Electric Motor this month agreed to invest in Australian developer Tawana Resources. Altura may seek to add further partners for a mine expansion, according to Brown.
Still, Macquarie Group has warned there's a bearish outlook for lithium prices in the short-to-medium term as “too many Australian rock producers are crowding in” with new projects.
The surge is threatening to create a period of oversupply before rising demand for electric vehicles clears the surplus from about 2021, the bank said in a note this month.
Prices stabilized in September, though remain at a high level with a lack of available raw materials, according to industry consultant Benchmark Mineral Intelligence.