Tag Archives: lithium

The Sacrificial Lambs of Green Energy

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Lithium Americas, a Canadian company, has plans to build a mine and processing plant at Thacker Pass, near the southern tip of the caldera in Nevada. It would be America’s biggest lithium mine. Ranchers and farmers in nearby Orovada, a town of about 120 people, worry that the mine will threaten their water supply and air quality. Native American tribes in the region say they were not properly consulted before the Bureau of Land Management (BLM), a federal agency that manages America’s vast public lands, decided to permit the project. Tribes also allege that a massacre of their ancestors took place at Thacker Pass in 1865…

The fight over Thacker Pass is not surprising. President Joe Biden wants half of all cars sold in 2030 to be electric, and to reach net-zero emissions by 2050. These ambitious climate targets mean that battles over where and how to mine are coming to mineral-rich communities around the country. America is in need of cobalt, copper and lithium, among other things, which are used in batteries and other clean-energy technologies. As with past commodity booms, large deposits of many of these materials are found in America’s western states . America, of course, is not the only country racing to secure access to such materials. As countries pledge to go carbon-free, global demand for critical minerals is set to soar. The International Energy Agency, a forecaster, estimates that by 2040 demand for lithium could increase by more than 40 times relative to 2020. Demand for cobalt and nickel could grow by about 20 times in the same period.

Beyond its green goals, America is also intent on diversifying mineral supplies away from China and Russia (big producer of nickel), which—by virtue of its natural bounty and muscular industrial policy—has become a raw-materials juggernaut… The green transition has also turned the pursuit of critical minerals into a great-power competition not unlike the search for gold or oil in eras past. Mining for lithium, the Department of Energy (DOE) says, is not only a means of fighting climate change but also a matter of national security.

Westerners have seen all this before, and are wary of new mines…The economic history of the American West is a story of boom and bust. When a commodity bubble burst, boomtowns were abandoned. The legacy of those busts still plagues the region. In 2020 the Government Accountability Office estimated that there could be at least 530,000 abandoned hardrock-mine features, such as tunnels or waste piles, on federal lands. At least 89,000 of those could pose a safety or environmental hazard. Most of America’s abandoned hardrock mines are in 13 states west of the Mississippi River…

Is it possible to secure critical minerals while avoiding the mistakes of previous booms? America’s debates over how to use its public lands, and to whom those lands belong, are notoriously unruly. Conservationists, energy companies, ranchers and tribal nations all feel some sense of ownership. Total harmony is unlikely. But there are ways to lessen the animosity.

Start with environmental concerns. Mining is a dirty business, but development and conservation can coexist. In 2020 Stanford University helped broker a national agreement between the hydropower industry and conservation groups to increase safety and efficiency at existing dams while removing dams that are harming the environment….Many worry that permitting new development on land sacred to tribes will be yet another example of America’s exploitation of indigenous peoples in pursuit of land and natural resources. msci, a consultancy, reckons that 97% of America’s nickel reserves, 89% of copper, 79% of lithium and 68% of cobalt are found within 35 miles of Native American reservations.

TThe BLM is supposed to consult tribes about policies that may affect the tribes but the  consultation process is broken. Often it consists of sending tribes a letter notifying them of a mining or drilling proposal.

Lithium Americas has offered to build the town a new school, one that will be farther away from a road that the firm will use to transport sulphur. Sitting in her truck outside a petrol station that doubles as Orovada’s local watering hole, Ms Amato recalled one group member’s response to the offer: “If all I’m going to get is a kick in the ass, because we’re getting the mine regardless, then I may as well get a kick in the ass and a brand new school.”

Excerpt from America’s Next Mining Boom: Between a Rock and a Hard Place, Economist, Feb. 19, 2022

An Impossible Made Possible: the Green Energy Revolution

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Since the cost of renewable energy can now be competitive with fossil fuels. Government, corporate and consumer interests finally seem to be aligning.  The stock market has noticed. After years of underperformance, indexes that track clean-energy stocks bottomed out in late 2018. The S&P Global Clean Energy index, which covers 30 big utilities and green-technology stocks, is now up 37% over two years, including dividends, compared with 18% for the S&P 500.

This year’s Covid crisis will delay some renewable projects, but could speed up the energy transition in other ways. Alternative-energy spending has held up much better than spending on oil and gas. Globally, clean-energy investment is now expected to account for half of total investment in the entire energy sector this year, according to UBS.  Moreover, the crisis has pushed governments to spend money, including on renewable technologies. The massive stimulus plan announced by the European Union last month is decidedly green. The German government increased electric-car subsidies as part of its pandemic-related stimulus package rather than rolling out a 2009-style “cash-for-clunkers” program. China’s plans include clean-energy incentives, too.

Solar and wind are now mature technologies that provide predictable long-term returns. Big lithium-ion batteries, such as those that power Teslas, are industrializing rapidly. More speculatively, hydrogen is a promising green fuel for hard-to-decarbonize sectors such as long-haul transport, aviation, steel and cement.  Many big companies—the likes of Royal Dutch Shell, Air Liquide and Toyota —have green initiatives worth many hundreds of millions of dollars. They are, however, a relatively small part of these large businesses, some of whose other assets may be rendered obsolete by the energy transition… Early-stage electric-truck maker Nikola jumped on its market debut this month to a valuation at one point exceeding that of Ford.

Investors might be better off looking at the established specialists in between. Vestas is the world’s leading manufacturer of wind turbines. Orsted, another Danish company, has made the transition from oil-and-gas producer to wind-energy supplier and aspires to be the first green-energy supermajor. More speculatively, Canadian company Ballard has three decades of experience making hydrogen fuel cells.

Rochelle Toplensky, Green Energy Is Finally Going Mainstream, WSJ, June 24, 2020

The New Oil – Lithum

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As demand heats up for lithium, a group of companies are hastening efforts to shine a light into the long-opaque market for the battery material that metal-industry cheerleaders call the “new oil.” … Auto makers, battery companies, and smartphone and laptop providers have been racing to lock down supplies of lithium from major producers such as Albemarle Corp of United States, the world’s biggest miner of lithium by volume, and Chilean company Sociedad Quimica y Minera de Chile, the No. 2 producer. Some of the world’s notable lithium users include Apple Inc., Samsung Electronics Co. and TeslaInc.

The surge in demand has sparked efforts to bring transparency to prices for lithium. …Because lithium isn’t traded on any exchange—unlike gold or silver, for instance—buyers have long been at a disadvantage in negotiations with producers, according to market watchers. In opaque markets, producers often have greater access to information about fast-moving market dynamics, such as unintended mine outages or suddenly sagging demand. That is especially the case with lithium, a metal mined by a relatively small group of big suppliers in countries from Chile to Australia…Big lithium miners “may say they support transparency, but they really don’t,” said Chris Berry, founder of New York commodity consultant House Mountain Partners. “Keeping prices secret between themselves and their end users is good for them.”

Excerpts  from Scott Patterson Lithium Boom Raises Question: What Is Its Price? WSJ,  Nov. 27, 2018

Lithium Resources and Markets

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Lithium is a coveted commodity. Lithium-ion batteries store energy that powers mobile phones, electric cars and electricity grids (when attached to wind turbines and photovoltaic cells). Joe Lowry, an expert on the lightest metal, expects demand to nearly triple by 2025. Supply is lagging, which has pushed up the price. Annual contract prices for lithium carbonate and lithium hydroxide doubled in 2017, according to Industrial Minerals, a journal. That is attracting investors to the “lithium triangle” that overlays Argentina, Bolivia and Chile .  The region holds 54% of the world’s “lithium resources”, an initial indication of potential supply before assessing proven reserves.

Chile dominated the world lithium markets for decades. The Atacama salt flat has the largest and highest-quality proven reserves. The desert’s blazing sun, scarce rainfall and mineral-rich brines make Chile’s production costs the world’s lowest. Allied to this is the region’s most benign investment climate. Chile is far ahead in rankings of ease of doing business, levels of corruption, and the quality of its bureaucracy and courts (see charts). Its lithium deposits are close to Antofagasta and other Chilean ports;

But growth has flattened, allowing Australia to threaten Chile’s position as the world’s top producer…Laws enacted in the 1970s and 1980s classify lithium as a “strategic” material on the ground that it can be used in future nuclear-fusion power plants. There is little prospect that Chile will soon build one of these, but controls on lithium production remain as a way of protecting the desert’s fragile ecosystem.

Just two companies, Chile’s SQM and Albemarle of the United States, are allowed to extract brine under leases that were signed in the 1980s. In addition, they are subject to quotas on the lithium they can produce from the brine, which also yields other minerals

Argentina: Under the constitution, provinces, not the federal government, own the country’s minerals. Mining firms had to find their way through a confusion of provincial rules and regulations. “It was like the Tower of Babel,” says Daniel Meilán, the country’s current mining secretary. I Argentina’s newish president, Mauricio Macri, has tried to unblock investment, including that in lithium….  The federal government is trying to harmonise provincial regulations. It has hammered out agreement on a standard royalty (3% of revenue, plus 1.5% to improve local infrastructure)…

These advances have started to unfreeze investment in lithium. In 2016 the sector attracted $1.5bn; production rose by nearly 60%……..Ending the metal’s strategic status and getting rid of quotas would make still more sense. So would improving Chile’s institutions and infrastructure.

Under the left-wing government led by President Evo Morales since 2006, Bolivia has pulled out of numerous bilateral investment treaties, denying investors access to international arbitration. His government has nationalised parts of the oil and gas industries, along with the biggest telecoms company and most of the electricity sector.  The government keeps an even tighter grip on lithium than it does on gas, its biggest export. YPFB, the state-owned natural-gas company, at least enters into joint ventures with private-sector firms. Since 2010 the right to extract lithium brine has been reserved for the state. Private firms can now do no more than gaze longingly upon the Uyuni salt flat near Potosí, the largest in the world…

Like Chile, Bolivia hopes to form partnerships with private firms to make value-added products, including batteries and electric cars, through a new lithium enterprise, Yacimientos de Litio Bolivianos. But the government’s insistence on keeping a controlling stake is discouraging potential investors. In 2016 Bolivia sold 25 tonnes of lithium carbonate to China, pocketing a princely $208,000.

The white gold rush: The lithium triangle, Economist, June 17, 2017

The Hunger for Rare Metals

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Indium, part of an iPhone’s screen, is an “invisible link…between the phone and your finger”. Just a pinch of niobium, a soft, granite-grey metal mined mostly in Brazil, greatly strengthens a tonne of steel used in bridges and pipelines. Lithium is so light that it has become essential for rechargeable car-batteries. Dysprosium, as well as making an electric toothbrush whirr, helps power wind turbines. Military technology depends on numerous rare metals. Tungsten, for instance, is crucial for armour-piercing bullets. America’s forthcoming F-35 fighter planes are “flying periodic tables”, Mr Abraham writes….[T]he “long tailpipe” of pollution left in the wake of mining and refining, rare metals..

Supplies are also a worry. In 2010 a Chinese trawler rammed Japanese coastguard vessels in waters near islands called the Senkakus in Japanese and the Diaoyu in Chinese (their ownership is disputed by both countries). After the Chinese captain was detained, supplies of rare metals from the mainland to Japan suspiciously dried up. Though China never acknowledged an export ban, the incident caused rare-metal prices to spike, and unsettled manufacturers around the world. …

[The business of rare metals] generates $4 billion of revenues a year and also plays a critical role in systems worth about $4 trillion. China, which develops more rare metals than any other country, understands the calculus. The West, his book suggests, does not.

Excerpts from Rare metals: Unobtainiums, Economist, Jan. 16,  2016 (Book Review of ‘The Elements of Power by  D. Abraham]

The Scramble for Lithium

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SQM, Chile’s biggest lithium producer [has]Its headquarters in the military district of Santiago bears no name. The man who for years ran the business, Julio Ponce, is the former son-in-law of the late dictator, Augusto Pinochet. He quit as chairman in 2015, during an investigation into SQM for alleged tax evasion. (The company is co-operating with the inquiry.) Last month it emerged that CITIC, a Chinese state-controlled firm, may bid for part of Mr Ponce’s controlling stake in SQM, as part of China’s bid to secure supplies of a vital raw material…

SQM is part of a global scramble to secure supplies of lithium by the world’s largest battery producers, and by end-users such as carmakers. That has made it the world’s hottest commodity. The price of 99%-pure lithium carbonate imported to China more than doubled in the two months to the end of December, to $13,000 a tonne…

The industry is fairly concentrated, which adds to the worry. Last year Albermarle, the world’s biggest lithium producer, bought Rockwood, owner of Chile’s second-biggest lithium deposit. It and three other companies—SQM, FMC of America and Tianqi—account for most of the world supply of lithium salts, according to Citigroup, a bank. What is more, a big lithium-brine project in Argentina, run by a joint venture of Orocobre, an Australian miner, and Toyota, Japan’s largest carmaker, is behind schedule. Though the Earth contains plenty of lithium, extracting it can be costly and time-consuming, so higher prices may not automatically stimulate a surge in supply.

Demand is also on the up. At the moment, the main lithium-ion battery-makers are Samsung and LG of South Korea, Panasonic and Sony of Japan, and ATL of Hong Kong. But China also has many battery-makers…Tesla Motors, an American maker of electric cars founded by Elon Musk, a tech tycoon, is also on the prowl. It is preparing this year to start production at its “Gigafactory” in Nevada, which it hopes will supply lithium-ion batteries for 500,000 cars a year within five years….[I]n August Bacanora, a Canadian firm, said it had signed a conditional agreement to supply Tesla with lithium hydroxide from a mine that it plans to develop in northern Mexico. Bacanora’s shares jumped on the news—though analysts noted that shipping fine white powder across the United States border would need careful handling.Bigger carmakers also have a growing appetite for lithium…

Another big source of demand may be for electricity storage. The holy grail of renewable electricity is batteries cheap and capacious enough to overcome the intermittency of solar and wind power—for example, to store enough power from solar panels to keep the lights on all night.

Excerpts from  An increasingly precious metal, Economist, January 16, 2016