The demand for battery lithium metal is expected to grow significantly in the coming years.
Livent (NYSE:LTHM) Chief Strategy Officer Sarah Maryssael said in a keynote address at Benchmark Mineral Intelligence’s Battery Gigafactories Europe: event. Lithium plays an important role in electric vehicle batteries.
“It goes without saying that lithium is currently agnostic to cathode chemistries, including unknown alternatives. I will,” she added.
Maryssael, who previously worked at Tesla (NASDAQ:TSLA) as the global supply manager for battery metals, said investments in the lithium space are as important as ever and should come from all parties across the supply chain. said it is.
Securing stable supplies of raw materials, especially lithium, has been a top priority for automakers and OEMs. But in 2023, General Motors (NYSE:GM) will sign a $650 million deal with Lithium Americas (NYSE:LAC, TSX:LAC) and Tesla will sign Piedmont Lithium (ASX:PLL, NASDAQ). There is increasing interest in junior minors, including amending the contract of :PLL).
“I think[OEMs]realize that this is by far the biggest risk to the survival of the automotive industry and the transition from the internal combustion engine business to success,” says Maryssael.
Building regional supply chains
Efforts to build regional supply chains, from the United States to Europe, have become critical. Legislation aimed at securing supply of raw materials for batteries and reducing vulnerability (such as the U.S. Inflation Reduction Act and Europe’s Critical Materials Act) will continue to shape the lithium-ion industry.
“You have to ask yourself, from first principles, what is the most efficient supply chain, fundamentally,” Marisael said. “I would like to challenge the view that drilling holes in refining capacity in Europe and North America is not always right, although much of Western policy is based on this idea.”
A key factor to consider when building a supply chain is how to reduce end-to-end costs while balancing environmental footprint factors. “You can’t look at each step of the supply chain in isolation. You have to think about this whole value chain, designing it from mine to cell.
Another important factor for management to consider is speed to market.
“How do we get the scale? How do we qualify these materials not just downstream, but midstream as quickly as possible?” she asked. “We also have to think about sharing the value produced in the countries that produce many of the minerals we depend on, especially in places like Africa and South America.”
The Democratic Republic of the Congo is the world’s number one cobalt producer and the world’s third largest copper producer. Last year, Chile was the second largest lithium producer, followed by neighboring Argentina in fourth place and Brazil in fifth place.
“This is also an important strategic consideration in diversifying our refining capacity so that we don’t end up in a situation like today where China’s refining capacity is concentrated,” she said. . “How do we ensure that our policies are more inclusive and less protectionist so that other countries can benefit from the energy transition?”
For Maryssael, the supply chain has to be designed differently for each jurisdiction and metal.
“But the key is that we need to take a holistic view of how we build them, and only a handful of players can capture all the financial benefits,” she said. I explained in my presentation, “I don’t think it’s profitable to try to isolate China from a market size standpoint. I think we need to work with them.”
Integration in lithium space
With lithium prices in China dropping from all-time highs, it may seem like a golden opportunity for mergers and acquisitions in this space. Indeed, at the end of March, Albemarle (NYSE:ALB) made an offer to acquire Australia’s Liontown Resources (ASX:LTR,OTC Pink:LINRF). The bid was rejected, but we were able to show what was coming for the space.
Maryssael said consolidation would be necessary for the industry to supply battery raw materials in bulk and quickly.
“We need to focus on what we are good at and we need to do that through partnerships,” she added. “So let’s not underestimate the complexity and know-how required to reliably produce better grad chemicals at scale and integrate qualified ones into our supply chain. There is no room for error in delivering lithium hydroxide to the cathode.”
In the future, it will also make more sense for OEMs to certify materials from fewer producers for industry leaders.
“If you are dealing with multiple producers producing small quantities, it slows down the certification process and poses more risk from a supply chain management perspective,” she said. “Integration will be industry-wide. This will be necessary to incorporate these materials into batteries as soon as possible.”
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Securities Disclosure: I, Priscilla Barrera, do not make direct investments in the companies mentioned in this article.
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