With new energy vehicles becoming the tuyere of the times, the lack of global lithium production capacity is becoming a growing problem
Dragged down by the shortage of skilled workers, equipment commissioning and other factors, on December 21, Pilbara minerals, one of Australia’s largest lithium miners, significantly reduced the lithium ore shipment forecast, and lowered the spodumene shipment forecast for the fiscal year ending June 30 next year to 380000-440000 tons, compared with the previous forecast of 440000-490000 tons.
Echoing the global shortage of lithium resources, lithium prices are continuing to soar. According to the data of Shanghai Nonferrous Metals network, on December 23, the average spot price of domestic battery grade lithium carbonate reached 250000 yuan / ton, an increase of 4000 yuan / ton compared with the 22nd, continuing to set a new record, rising by more than 4000 yuan / ton for the third consecutive trading day. Meanwhile, battery grade lithium hydroxide also rose 4000 yuan / ton on the 23rd to 212000 yuan / ton.
Zhang Xiang, a researcher at the automotive industry innovation research center of Northern University of technology, analyzed to the 21st Century Business Herald reporter that the current problem is that the sales of downstream new energy vehicles are growing too fast, but the output of upstream metals can not keep up quickly. The most common way to solve the contradiction between supply and demand is to raise prices, which will restrain some demand.
the shortage of supply gave birth to a fanatical market
How fierce is the lithium price surge? This year’s three lithium concentrate auctions by Australian mining giants are a living case.
On July 29, Pilbara held the first online auction of spodumene, with 10000 tons of spodumene concentrate, and more than 30 enterprises participated in the auction. The auction was extremely popular. In the three-hour auction, all parties conducted 62 auctions, of which 17 bidders were “strongly interested”. Finally, the auction price of this batch of spodumene concentrate was raised to US $1250 / ton, and the price of shipping to China was US $1315 / ton, a record high, and the cost converted into lithium carbonate was more than US $97000 / ton.
On September 14, Pilbara ended the second lithium concentrate auction this year, and the final transaction price was US $2240 / T, setting a new record. Compared with the first auction price of US $1250 / T at the end of July, the price soared by 80% in just 47 days.
On October 26, Pilbara held the third spodumene concentrate auction. The increase slowed down. The final auction price was US $2350 / ton, up 4.91% compared with the second auction price, setting a new record.
Zhang Xiang told reporters that lithium is very important for new energy vehicles, and the demand this year is particularly strong. According to the latest prediction of China Automobile Association, the sales volume of new energy vehicles this year is 3.4 million, a year-on-year increase of 1.5 times; Next year, the sales volume of new energy vehicles is expected to be 5 million, a year-on-year increase of 47%. While the global demand for new energy vehicles is growing, the lithium supply has failed to keep up, which exacerbates the contradiction between supply and demand. For Contemporary Amperex Technology Co.Limited(300750) and other enterprises, the lithium cost is expected to rise next year.
At the time of the soaring lithium price, lithium battery industry chain enterprises have also arranged upstream lithium mines and joined the international competition for lithium resources, hoping to control the cost of raw materials.
On December 22, Zhejiang Huayou Cobalt Co.Ltd(603799) announced that the company plans to acquire 87% equity of Zimbabwe prospect lithium mining company held by Singapore pmpl, a wholly-owned subsidiary of Australia prospect company, through its subsidiary Huayou international mining for us $378 million, and the related creditor’s rights of prospect company to prospect lithium mining company under the inter company loan agreement.
Where are you going after the hurricane?
Although the world’s major lithium miners are currently stepping up efforts to improve production capacity, they can not catch up with the soaring demand in the market, and the market supply may continue to be tight in the short term.
Dennis IP and Leo Ho, analysts of Daiwa capital market, said that the prices of lithium chemical products and spodumene are expected to continue to rise, and the supply of spodumene will be particularly short.
With the soaring price of lithium this year, some car companies have taken precautions and locked resources in advance. In August this year, French carmaker Renault SA signed a five-year lithium supply agreement with German and Australian start-up Vulcan energy resources. From 2026, Vulcan will use its geothermal brine deposit in Germany to supply 6000 to 17000 tons of lithium to Renault every year. If both parties agree, the five-year agreement can be renewed.
On the importance of lithium, the reporter learned in the interview that due to the limited reserves and distribution of lithium ore and cobalt ore, it may become a bottleneck after the expansion of the electric vehicle market. If there is no overall control ability, the automobile manufacturer may “overturn”.
There is no doubt that lithium will continue to play a leading role in the “electric vehicle era”. According to the report released by cochilco, a Chilean Mining Organization, due to the impact of the covid-19 epidemic, the demand for lithium in the electric vehicle industry will weaken in 2020, about 75000 tons, but it is expected to soar to 1.4 million tons by 2030. In the next decade, the electric vehicle industry will dominate the demand for lithium. By 2030, lithium will account for 79% of the metal consumption of ultra light batteries, far higher than one-third of that in 2019.
However, there are still some uncertainties in the global lithium resource supply in the future. One major concern of the market is Chile, the world’s second largest lithium supplier. On December 19, the left-wing candidate Gabriel boric was elected president of Chile. During his election campaign, boric has always emphasized ecology and environmental protection, advocated strengthening national regulation, increasing royalties of mining enterprises, opposing privatization of mineral resources and promoting the establishment of state-owned lithium companies, which may put future mine development at risk.
In addition to Chile, the United States and China are also quite unfriendly to new mining. The proposed mining projects in the United States are enough to produce lithium for more than 2 million electric vehicles, but now these mining projects are facing opposition from environmentalists, American ranchers and other groups. For example, a rare flower was found on several acres of the lithium and boron miner ioner Ltd. Nevada lithium project, and the U.S. Fish and wildlife service is preparing to list it as an endangered species, which may hinder the approval of the project.
Looking to the future, Zhang Xiang told reporters that China, the United States, Europe and other places are vigorously developing new energy vehicles, and the market demand for lithium will continue to be hot. However, from a longer-term perspective, the problem of lithium resources in short supply will eventually be gradually solved. The global lithium resources reserves themselves are relatively abundant. In the future, we can gradually alleviate the shortage of supply by increasing production in many ways.
(21st Century Business Herald)
