How new production technologies drive the electric vehicle revolution -Lithium - Ion Battery Equipment
Lithium is an important driving force behind electric vehicles. Since 2021, concerns about the long-term imbalance between supply and demand of lithium and market speculation have led to the "soaring" price of lithium and the general price increase of electric vehicles. Can lithium supply keep up with demand in the future? We believe that new technologies and supply sources are expected to fill the supply gap.
Author: Marcelo Azevedo, Magdalena Baczy ń ska、KenHoffman、AleksandraKrauze
The industry expects that the market demand for lithium will surge from about 500000 tons of lithium carbonate equivalent (LCE) in 2021 to 34 million tons in 2030, but we believe that the lithium industry has the ability to supply enough products to meet the rapid development of the lithium battery industry. It is expected that from 2021 to 2030, the lithium supply using traditional production process is expected to increase by more than 300%; In addition, direct lithium extraction (DLE) and direct lithium production (DLP) technologies are expected to become important driving forces, enabling the lithium industry to meet the soaring demand faster. Although DLE and DLP technologies are still in their infancy and are vulnerable to fluctuations caused by the industry's "hockey stick" demand rise curve and lead time, these two technologies have great potential in increasing lithium supply, reducing the industry's carbon footprint and reducing costs. At present, the published production of DLE and DLP accounts for about 10% of the lithium supply in 2030, and a number of projects adopting traditional lithium production technology are also under planning.(Lithium - Ion Battery Equipment)
However, it is not easy to meet the lithium demand of the market. Despite the impact of the COVID-19, the sales of electric vehicles still increased by about 50% in 2020, and doubled to about 7 million in 2021. The soaring demand for electric vehicles has driven the price of lithium to rise by about 550% in a year. At the beginning of March, the price of lithium carbonate has exceeded 75000 dollars/ton, and the price of lithium hydroxide has exceeded 65000 dollars/ton (the five-year average price is only about 14500 dollars/ton). At present, almost all vehicle power lithium batteries and electronic consumer goods need lithium. Lithium batteries are also widely used in many other scenarios, such as energy storage, air vehicles, etc. As the battery capacity varies with the proportion of its active materials, various new battery technologies have also entered the market. There are still many uncertain factors about the impact of the battery market on the future lithium demand. For example, the lithium metal anode battery, which can significantly improve the energy density of the battery, requires almost twice as much lithium per kilowatt-hour as the graphite anode battery commonly used at present.
So will there be enough lithium to meet the needs of a new electric world in the future? This issue is crucial to every link in the value chain, such as mining enterprises, refineries, battery manufacturers and vehicle manufacturers.
Several factors affecting lithium demand
McKinsey expects that the lithium battery market will continue to rise at a compound annual growth rate of about 30% in the next decade. By 2030, the demand for lithium batteries in electric vehicles, energy storage systems, electric bicycles, electric tools and other battery-intensive applications is expected to reach a total of 4000 to 4500 GWh.
Not long ago, in 2015, lithium demand from the battery industry accounted for less than 30%; Important lithium demand comes from ceramic and glass industries (35%) and industrial applications such as grease, metallurgical powder and polymer (more than 35%). By 2030, the lithium demand of the battery industry is expected to reach 95%. According to the two scenarios listed in Figure 2, the total demand will increase to 3.3~3.8 million tons of LCE at an annual growth rate of about 25%~26%.
Future lithium supply
In the face of soaring demand, should the world be worried about the future lithium supply? In 2020, lithium production will be slightly higher than 410000 tons of LCE; It exceeded 540000 tons in 2021, up 32% year on year. In McKinsey's current baseline scenario analysis, lithium demand will reach 3.3 million tons in 2030, with a compound annual growth rate of 25%. Due to the short lead time for lithium preparation, the known lithium supply in 2030 is about 2.7 million tons; It is expected that the remaining demand will be filled by the new green land and brownfield expansion projects.
At present, almost all lithium mining is concentrated in Australia, Latin America and China, with the total output accounting for 98% of the world in 2020. A number of upcoming projects are likely to bring new players and expand the territory of lithium mining to Western Europe, Eastern Europe, Russia and other CIS countries. These outputs should be sufficient to drive the supply to rise at an annual rate of 20% and reach more than 2.7 million tons of LCE by 2030.
Although the supply and demand forecast shows that the balance between supply and demand will be maintained in a short time, the industry may still need to build a new batch of production before 2030. It is predicted that the lithium output to make up the supply gap will come from the following sources: emerging conventional lithium mining and salt lake lithium extraction projects, unconventional geothermal or oilfield brine lithium extraction projects, as well as unexplored source projects. At the same time, new technologies such as DLE and DLP are expected to improve oil recovery and increase production. In addition, as in 2018, direct delivery of raw ore (DSO) also helps to resolve the risk of short supply shortage.
Early conventional lithium assets
From Australia, Chile, China, Argentina and other old-brand lithium producing countries, to Mexico, Canada, Bolivia, the United States, Ukraine and other countries that have recently proved lithium resources and reserves, and to Siberia, Thailand, the United Kingdom, Peru and other regions that are usually unrelated to lithium mining, conventional "white gold" mineral exploration is being carried out. With the feasibility of some of these early projects verified, we expect that the industry will announce a batch of new production in 2022, including a batch of conventional brine projects with lithium content between 200 and 2000 ppm, as well as a batch of hard rock lithium assets, with grades generally between 0.4% and 1.0%.
Unconventional brine projects (geothermal, oilfield brine)
Another batch of production may come from unconventional mineral deposits: geothermal and oilfield brine projects with grades ranging from 100 to 200 ppm. The former focuses on the dual objectives of supplying clean geothermal energy and lithium at the same time. Although it has not yet been verified on a commercial scale, there are some projects in Europe and North America that are financially feasible, and some early assets are in preparation. We expect that with the continuous development of technology and the validation of various concepts, more geothermal brine lithium extraction projects will appear on the global lithium industry map. Some complete vehicle manufacturers and automobile companies have begun to test geothermal lithium projects with lower technical requirements for water. For example, Renault Group, Stellantis and General Motors have signed a number of strategic cooperation and off-take agreements for geothermal brine lithium extraction projects in Europe and North America.
In addition, projects in North America focus on extracting lithium from oilfield wastewater. Although the lithium grade of such projects is low, if appropriate technology is available, it can be regarded as an additional lithium source supplement.
Direct lithium extraction (DLE)
To become a reliable lithium supply source, geothermal or oilfield brine lithium extraction projects must have a proven DLE process. At present, some companies are testing various DLE processes. Although the methods are different, the concepts are the same: using adsorption, ion exchange, membrane separation or solvent extraction, let the brine flow through a lithium adsorption material, and then leach out lithium carbonate or lithium hydroxide.
DLE technology has a bright future. At present, it is considered not only by unconventional lithium extraction companies, but also by companies that have been focusing on "typical" brine lithium extraction assets. Potential advantages of DLE include:
Eliminate or reduce the carbon footprint of evaporation pond
The production time is shorter than the traditional brine lithium extraction method
Increase oil recovery from about 40% to more than 80%
The use of fresh water is lower, which is the decisive factor for mining in water shortage areas
Compared with the traditional brine lithium extraction process, the amount of extractant used is lower and the product purity is higher (less impurities such as magnesium, calcium, boron, etc.)
At present, only adsorption DLE technology has been put into commercial use in Argentina and China. If DLE technology can be popularized on a large scale and applied to various brine projects, it will be able to optimize existing production by improving oil recovery and reducing operating costs, while improving the environmental impact of the project.
Direct lithium production (DLP)
Similar to DLE, DLP technology uses polymer to adsorb metal lithium, and then extracts lithium and puts it into the electrolytic tube to make the final lithium product. If successful, this lithium production process is expected to have a significant impact on the supply.
Direct delivery of raw ore (DSO)
In case of delay in production deployment, there is another way to make up for the risk of short supply shortage, that is to supply direct delivery of raw ore (DSO) to the market. Low-grade spodumene concentrate can be put on the market with only a short lead time (less than one year for the brownfield project), and the resulting sales will help to build a large-scale spodumene processing plant. The cost of refining DSO is higher and the challenge is greater, but the situation in 2018 shows us the possibility of this method. At that time, facing the market environment of high price and supply shortage, China's refineries directly imported low-grade spodumene concentrate with lithium oxide content less than 1.5% (lithium content only 0.7%) from Australia, which met the market demand.
recycling
Whether lithium batteries can be recycled has become a common concern of people. The expected life of passenger car batteries is 10 to 15 years. In addition, the energy storage industry has the feasibility of using waste electric vehicle batteries. During the second decade of this century, the battery recycling rate is expected to increase, but not to the extent of overturning the existing pattern. Through different recovery processes, the lithium recovery rate in waste batteries will be between 0 and 80%. By 2030, renewable lithium is expected to account for slightly more than 6% of the total output.
Substitution risk
Another question is whether lithium will be replaced? Most grid scale energy storage application scenarios have a series of alternative battery technologies with different development levels, such as vanadium flow battery, zinc-air battery, sodium-sulfur battery, sodium-nickel battery, etc. However, there is no substitute for lithium battery to meet the requirements of electric transportation. The only possible option is sodium ion battery, but even if the technology is fully mature and put into use, it can only replace some low performance application scenarios. To sum up, by 2030, the risk of lithium demand reduction caused by alternatives is small.
Next steps
So, can the world get enough lithium to support the upcoming electric vehicle revolution? We have confidence in this, but we need to take concrete actions at all links of the lithium industry value chain:
Invest in the development of new technologies. For example, DLE technology can improve lithium production of conventional brine projects by improving oil recovery; At the same time, this technology also makes it possible to extract lithium from unconventional geothermal or oilfield brine.
Explore and develop new projects. In 2021, almost 90% of lithium mining activities are concentrated in Australia, Chile and China. The expansion of new mineral resources in other regions is conducive to the establishment of a larger resource mining base.
User demand alert. Depending on the development of battery technology, the industry will produce more lithium carbonate or lithium hydroxide. Accordingly, end users such as vehicle manufacturers and relevant digital manufacturers can better meet the market demand by determining the specification and quantity of lithium products required in advance and sending out early warning signals to reserve sufficient response time for mining enterprises.
Author: Marcelo Azevedo, Magdalena Baczy ń ska、KenHoffman、AleksandraKrauze
The industry expects that the market demand for lithium will surge from about 500000 tons of lithium carbonate equivalent (LCE) in 2021 to 34 million tons in 2030, but we believe that the lithium industry has the ability to supply enough products to meet the rapid development of the lithium battery industry. It is expected that from 2021 to 2030, the lithium supply using traditional production process is expected to increase by more than 300%; In addition, direct lithium extraction (DLE) and direct lithium production (DLP) technologies are expected to become important driving forces, enabling the lithium industry to meet the soaring demand faster. Although DLE and DLP technologies are still in their infancy and are vulnerable to fluctuations caused by the industry's "hockey stick" demand rise curve and lead time, these two technologies have great potential in increasing lithium supply, reducing the industry's carbon footprint and reducing costs. At present, the published production of DLE and DLP accounts for about 10% of the lithium supply in 2030, and a number of projects adopting traditional lithium production technology are also under planning.(Lithium - Ion Battery Equipment)
However, it is not easy to meet the lithium demand of the market. Despite the impact of the COVID-19, the sales of electric vehicles still increased by about 50% in 2020, and doubled to about 7 million in 2021. The soaring demand for electric vehicles has driven the price of lithium to rise by about 550% in a year. At the beginning of March, the price of lithium carbonate has exceeded 75000 dollars/ton, and the price of lithium hydroxide has exceeded 65000 dollars/ton (the five-year average price is only about 14500 dollars/ton). At present, almost all vehicle power lithium batteries and electronic consumer goods need lithium. Lithium batteries are also widely used in many other scenarios, such as energy storage, air vehicles, etc. As the battery capacity varies with the proportion of its active materials, various new battery technologies have also entered the market. There are still many uncertain factors about the impact of the battery market on the future lithium demand. For example, the lithium metal anode battery, which can significantly improve the energy density of the battery, requires almost twice as much lithium per kilowatt-hour as the graphite anode battery commonly used at present.
So will there be enough lithium to meet the needs of a new electric world in the future? This issue is crucial to every link in the value chain, such as mining enterprises, refineries, battery manufacturers and vehicle manufacturers.
Several factors affecting lithium demand
McKinsey expects that the lithium battery market will continue to rise at a compound annual growth rate of about 30% in the next decade. By 2030, the demand for lithium batteries in electric vehicles, energy storage systems, electric bicycles, electric tools and other battery-intensive applications is expected to reach a total of 4000 to 4500 GWh.
Not long ago, in 2015, lithium demand from the battery industry accounted for less than 30%; Important lithium demand comes from ceramic and glass industries (35%) and industrial applications such as grease, metallurgical powder and polymer (more than 35%). By 2030, the lithium demand of the battery industry is expected to reach 95%. According to the two scenarios listed in Figure 2, the total demand will increase to 3.3~3.8 million tons of LCE at an annual growth rate of about 25%~26%.
Future lithium supply
In the face of soaring demand, should the world be worried about the future lithium supply? In 2020, lithium production will be slightly higher than 410000 tons of LCE; It exceeded 540000 tons in 2021, up 32% year on year. In McKinsey's current baseline scenario analysis, lithium demand will reach 3.3 million tons in 2030, with a compound annual growth rate of 25%. Due to the short lead time for lithium preparation, the known lithium supply in 2030 is about 2.7 million tons; It is expected that the remaining demand will be filled by the new green land and brownfield expansion projects.
At present, almost all lithium mining is concentrated in Australia, Latin America and China, with the total output accounting for 98% of the world in 2020. A number of upcoming projects are likely to bring new players and expand the territory of lithium mining to Western Europe, Eastern Europe, Russia and other CIS countries. These outputs should be sufficient to drive the supply to rise at an annual rate of 20% and reach more than 2.7 million tons of LCE by 2030.
Although the supply and demand forecast shows that the balance between supply and demand will be maintained in a short time, the industry may still need to build a new batch of production before 2030. It is predicted that the lithium output to make up the supply gap will come from the following sources: emerging conventional lithium mining and salt lake lithium extraction projects, unconventional geothermal or oilfield brine lithium extraction projects, as well as unexplored source projects. At the same time, new technologies such as DLE and DLP are expected to improve oil recovery and increase production. In addition, as in 2018, direct delivery of raw ore (DSO) also helps to resolve the risk of short supply shortage.
Early conventional lithium assets
From Australia, Chile, China, Argentina and other old-brand lithium producing countries, to Mexico, Canada, Bolivia, the United States, Ukraine and other countries that have recently proved lithium resources and reserves, and to Siberia, Thailand, the United Kingdom, Peru and other regions that are usually unrelated to lithium mining, conventional "white gold" mineral exploration is being carried out. With the feasibility of some of these early projects verified, we expect that the industry will announce a batch of new production in 2022, including a batch of conventional brine projects with lithium content between 200 and 2000 ppm, as well as a batch of hard rock lithium assets, with grades generally between 0.4% and 1.0%.
Unconventional brine projects (geothermal, oilfield brine)
Another batch of production may come from unconventional mineral deposits: geothermal and oilfield brine projects with grades ranging from 100 to 200 ppm. The former focuses on the dual objectives of supplying clean geothermal energy and lithium at the same time. Although it has not yet been verified on a commercial scale, there are some projects in Europe and North America that are financially feasible, and some early assets are in preparation. We expect that with the continuous development of technology and the validation of various concepts, more geothermal brine lithium extraction projects will appear on the global lithium industry map. Some complete vehicle manufacturers and automobile companies have begun to test geothermal lithium projects with lower technical requirements for water. For example, Renault Group, Stellantis and General Motors have signed a number of strategic cooperation and off-take agreements for geothermal brine lithium extraction projects in Europe and North America.
In addition, projects in North America focus on extracting lithium from oilfield wastewater. Although the lithium grade of such projects is low, if appropriate technology is available, it can be regarded as an additional lithium source supplement.
Direct lithium extraction (DLE)
To become a reliable lithium supply source, geothermal or oilfield brine lithium extraction projects must have a proven DLE process. At present, some companies are testing various DLE processes. Although the methods are different, the concepts are the same: using adsorption, ion exchange, membrane separation or solvent extraction, let the brine flow through a lithium adsorption material, and then leach out lithium carbonate or lithium hydroxide.
DLE technology has a bright future. At present, it is considered not only by unconventional lithium extraction companies, but also by companies that have been focusing on "typical" brine lithium extraction assets. Potential advantages of DLE include:
Eliminate or reduce the carbon footprint of evaporation pond
The production time is shorter than the traditional brine lithium extraction method
Increase oil recovery from about 40% to more than 80%
The use of fresh water is lower, which is the decisive factor for mining in water shortage areas
Compared with the traditional brine lithium extraction process, the amount of extractant used is lower and the product purity is higher (less impurities such as magnesium, calcium, boron, etc.)
At present, only adsorption DLE technology has been put into commercial use in Argentina and China. If DLE technology can be popularized on a large scale and applied to various brine projects, it will be able to optimize existing production by improving oil recovery and reducing operating costs, while improving the environmental impact of the project.
Direct lithium production (DLP)
Similar to DLE, DLP technology uses polymer to adsorb metal lithium, and then extracts lithium and puts it into the electrolytic tube to make the final lithium product. If successful, this lithium production process is expected to have a significant impact on the supply.
Direct delivery of raw ore (DSO)
In case of delay in production deployment, there is another way to make up for the risk of short supply shortage, that is to supply direct delivery of raw ore (DSO) to the market. Low-grade spodumene concentrate can be put on the market with only a short lead time (less than one year for the brownfield project), and the resulting sales will help to build a large-scale spodumene processing plant. The cost of refining DSO is higher and the challenge is greater, but the situation in 2018 shows us the possibility of this method. At that time, facing the market environment of high price and supply shortage, China's refineries directly imported low-grade spodumene concentrate with lithium oxide content less than 1.5% (lithium content only 0.7%) from Australia, which met the market demand.
recycling
Whether lithium batteries can be recycled has become a common concern of people. The expected life of passenger car batteries is 10 to 15 years. In addition, the energy storage industry has the feasibility of using waste electric vehicle batteries. During the second decade of this century, the battery recycling rate is expected to increase, but not to the extent of overturning the existing pattern. Through different recovery processes, the lithium recovery rate in waste batteries will be between 0 and 80%. By 2030, renewable lithium is expected to account for slightly more than 6% of the total output.
Substitution risk
Another question is whether lithium will be replaced? Most grid scale energy storage application scenarios have a series of alternative battery technologies with different development levels, such as vanadium flow battery, zinc-air battery, sodium-sulfur battery, sodium-nickel battery, etc. However, there is no substitute for lithium battery to meet the requirements of electric transportation. The only possible option is sodium ion battery, but even if the technology is fully mature and put into use, it can only replace some low performance application scenarios. To sum up, by 2030, the risk of lithium demand reduction caused by alternatives is small.
Next steps
So, can the world get enough lithium to support the upcoming electric vehicle revolution? We have confidence in this, but we need to take concrete actions at all links of the lithium industry value chain:
Invest in the development of new technologies. For example, DLE technology can improve lithium production of conventional brine projects by improving oil recovery; At the same time, this technology also makes it possible to extract lithium from unconventional geothermal or oilfield brine.
Explore and develop new projects. In 2021, almost 90% of lithium mining activities are concentrated in Australia, Chile and China. The expansion of new mineral resources in other regions is conducive to the establishment of a larger resource mining base.
User demand alert. Depending on the development of battery technology, the industry will produce more lithium carbonate or lithium hydroxide. Accordingly, end users such as vehicle manufacturers and relevant digital manufacturers can better meet the market demand by determining the specification and quantity of lithium products required in advance and sending out early warning signals to reserve sufficient response time for mining enterprises.
