Lithium: Market Outlook to 2017 - Land Matrix

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Lithium: Market Outlook to 2017

Twelfth Edition, 2013

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Table of Contents

Page

1. Summary 1

2. Lithium Mineralogy, Occurrences and Reserves 10

2.1 Occurrence of lithium 10

2.1.1 Lithium minerals 10

2.1.2 Lithium clays 12

2.1.3 Lithium brines 12

2.2 Lithium reserves 14

3. Lithium mining and processing 16

3.1 Extraction and processing of lithium brines 17

3.1.1 Other methods of brine extraction 20

3.2 Mining and processing of lithium minerals 21

3.3 Processing lithium mineral concentrates to lithium compounds 23

3.4 Processing lithium bearing clays into lithium compounds 26

3.5 Lithium compounds and chemicals 27

3.6 Production costs 30

4. Production of lithium 34

4.1 Lithium production by source 35

4.1.1 Production of Lithium Minerals 37

4.1.2 Production from Lithium Brines 39

4.1.3 Production of lithium compounds from mineral conversion 41

4.1.4 Production of downstream lithium chemicals 43

4.2 Outlook for production capacity of lithium to 2017 44

4.2.1 Outlook for production capacity of lithium minerals 45

4.2.2 Outlook for lithium production capacity from brines 48

4.2.3 Outlook on lithium compound production from mineral conversion 51

4.3 Forecast production of lithium to 2017 52

5. Review of lithium producing countries 55

5.1 Afghanistan 55

5.2 Argentina 56

5.2.1 FMC Litihum (Minera del Altiplano S.A.) 58

5.2.2 ADY Resources 59

5.2.3 Lithium Americas 61

5.2.4 Galaxy Resources (Lithium 1) 66

5.2.4.1 Sal de Vida Project 66

5.2.4.2 James Bay Hard-rock Lithium Project 68

5.2.5 Orocobre Ltd. 69

5.2.5.1 Salar de Olaroz 71

5.2.5.2 Salinas Grandes (Cangrejillo) 74

5.2.5.3 Guayatoyoc Project 74

5.2.5.4 Cauchari Project 75

5.2.6 Rodinia Lithium Inc. 76

5.2.6.1 Rodinia Lithium USA 78

5.2.7 Marifil Mines Ltd. 78

5.2.8 International Lithium Corporation 79

5.2.9 Other prospects for Lithium Production 79

5.3 Australia 80

5.3.1 Talison Lithium 82

5.3.1.1 Resources and Reserves 82

5.3.1.2 Production 85

5.3.1.3 Products 86

5.3.2 Galaxy Resources Ltd. 87

5.3.2.1 Reserves and Resources 88


5.3.3 Reed Resources Ltd. 91

5.3.4 Altura Mining Ltd. 92

5.3.5 Artemis Resources 93

5.3.6 Amerilithium 93

5.3.7 Reward Minerals 93

5.4 Austria 93

5.5 Belgium 94

5.6 Bolivia 96

5.6.1 Salar de Uyuni 97

5.6.2 Salar de Coipasa 99

5.6.3 New World Resource Corp. 99

5.7 Brazil 100

5.7.1 Companhia Brasileira de Litio 102

5.7.2 Arqueana de Minérios e Metais Ltda. 103

5.7.3 Advance Metallurgical Group (AMG) 104

5.8 Canada 104

5.8.1 Lithium resources in Canada 105

5.8.2 Canadian trade in lithium 107

5.8.3 Past producers of lithium in Canada 108

5.8.3.1 Tantalum Mining Corp. of Canada Ltd. (TANCO) 108

5.8.4 Potential new producers of lithium in Canada 109

5.8.4.1 Canada Lithium Corp. 109

5.8.4.2 Nemaska Lithium 112

5.8.4.3 Avalon Rare Metals Inc. 115

5.8.4.4 Perilya Limited 116

5.8.4.5 Rock Tech Lithium Inc. 117

5.8.4.6 Critical Elements Corporation 120

5.8.4.7 Glen Eagle Resources Inc. 120

5.8.4.8 Aben Resources Ltd. 121

5.8.4.9 Toxco Inc. Canada 122

5.8.4.10 Other Canadian Lithium Projects 122

5.9 Chile 126

5.9.1 Chilean lithium reserves 127

5.9.2 Chilean lithium production 127

5.9.3 Special Lithium Operations Contracts (CEOLs) 128

5.9.4 Sociedad Química y Minera 129

5.9.4.1 Reserves and Resources 130


5.9.4.3 Products 132

5.9.4.4 Markets 134

5.9.4.5 Exports 135

5.9.5 Rockwood Litihum (Salar de Atacama and La Negra Plant) 136

5.9.6 Simbalik Group 138

5.9.7 Li3 Energy Inc. 139

5.9.7.1 Maricunga Property 139

5.9.7.2 Li3 Energy Peruvian Projects 141

5.9.8 First Potash Corp. 141

5.9.9 CODELCO 142

5.9.10 Mammoth Energy Group Inc. 142

5.9.11 Lomiko Metals Inc. 143

5.9.12 Errázuriz Lithium 143

5.9.13 Exports of litihum from Chile 143

5.10 China 146

5.10.1 Chinese reserves of lithium 147

5.10.1.1 Lithium Mineral Reserves 147

5.10.1.2 Lithium Brine Reserves 148

5.10.2 Production of lithium 149

5.10.2.1 Mineral Production 150

5.10.2.2 Brine Production 151

5.10.2.3 Lithium Chemicals and Metal Production 152

5.10.3 Chinese trade in lithium 155

5.10.4 Chinese lithium brine producers 157

5.10.4.1 Tibet Lithium New Technology Development Co. Ltd. 157

5.10.4.2 Qinghai CITIC Guoan Technology Development Co. Ltd. 159

5.10.4.3 Qinghai Salt Lake Industry Co. Ltd. 160

5.10.4.4 Qinghai Lanke Lithium Industry Co. Ltd. 161

5.10.4.5 Tibet Sunrise Mining Development Ltd. 162

5.10.4.6 China MinMetals Non-Ferrous Metals Co. Ltd 163

5.10.5 Chinese lithium mineral producers 163

5.10.5.1 Fujian Huamin Import & Export Co. Ltd. 163

5.10.5.2 Yichun Huili Industrial Co. Ltd. 164

5.10.5.3 GanZi Rongda Lithium Co., Ltd. 164

5.10.5.4 Sichuan Hidili Dexin Mineral Industry 165

5.10.5.5 Xinjiang Non-Ferrous Metals (Group) Ltd. 166

5.10.6 Chinese lithium mineral producers with mineral conversion capacity 166

5.10.6.1 Jiangxi Western Resources Lithium Industry 166

5.10.6.2 Sichuan Aba Guangsheng Lithium Co. Ltd. 167

5.10.6.3 Minfeng Lithium Co. Ltd. 167

5.10.6.4 Sichuan Ni&Co Guorun New Materials Co. Ltd. 168

5.10.7 Chinese mineral conversion plants 169

5.10.7.1 Sichuan Tianqi Lithium Shareholding Co. Ltd. 169

5.10.7.2 Galaxy Resources (Jiangsu Lithium Carbonate Plant) 171

5.10.7.3 General Lithium (Haimen) Corp. 172

5.10.7.4 China Non-Ferrous Metal Import & Export Xinjiang Corp. 173

5.10.7.5 Sichuan State Lithium Materials Co. Ltd. 174

5.10.7.6 Jiangxi Ganfeng Lithium Co. Ltd. 174

5.10.7.7 Sichuan Chenghehua Lithium Technology Co. Ltd. 176

5.10.8 Chinese lithium chemical producers 176

5.10.9 Specialist lithium bromide producers 177

5.10.10 Specialist lithium metal producers 178

5.11 Czech Republic 179

5.12 Democratic Republic of Congo (DRC) 179

5.13 Finland 180

5.13.1 Keliber Oy 180

5.13.2 Nortec Minerals Corp. 181

5.13.3 Leviäkangas Deposit 182

5.13.4 Syväjärvi Deposit 182

5.14 France 182

5.15 Germany 184

5.15.1 Rockwood Lithium (Langelsheim Plant) 185

5.15.2 Helm AG 185

5.15.3 Lithium exploration in Germany 185

5.16 Greece 186

5.17 India 186

5.17.1 FMC India Private Ltd. 188

5.17.2 Rockwood Lithium 188

5.18 Ireland 189

5.19 Israel 189

5.20 Japan 190

5.21 Kazakhstan 192

5.22 Mali 193

5.23 Mexico 193

5.23.1 Litio Mex S.A. de C.V. (Piero Sutti S.A. de C.V.) 193

5.23.2 First Potash Corp. (Mexico) 195

5.23.3 Bacanora Minerals Ltd. 195

5.24 Mongolia 196

5.25 Mozambique 196

5.26 Namibia 197

5.27 Netherlands 198

5.28 Portugal 199

5.28.1 Sociedad Mineira de Pegmatites 200

5.29 Russia 200

5.29.1 Russian Lithium Reserves and Resources 201

5.29.2 Russian Lithium Production 202

5.29.2.1 JSC Chemical and Metallurgical Plant 202

5.29.2.2 JSC Novosibirsk Chemical Concentration Plant 203

5.29.3 Russian Imports and Exports of Lithium 204

5.30 Serbia 205

5.31 South Africa 206

5.32 South Korea 206

5.33 Spain 207

5.33.1 Minera Del Duero 208

5.33.2 Solid Resources Ltd. 209

5.34 Taiwan 209

5.35 Tajikistan 210

5.36 Turkey 210

5.37 UK 211

5.38 Ukraine 212

5.39 USA 212

5.39.1 Trade in lithium to/from the USA 213

5.39.2 Rockwood Lithium (Chemetall Group) 214

5.39.2.1 Silver Peak, Kings Mountain and New Johnsonville operations

(USA) 215

5.39.3 FMC Corporation 216

5.39.3.1 FMC Lithium 217

5.39.3.2 Other FMC Corporation facilities 218

5.39.4 Western Lithium Corporation 219

5.39.5 Simbol Materials Corp. 222

5.39.6 Albemarle Corporation 223

5.39.7 Toxco Inc. 223

5.39.8 AusAmerican Mining Corp. Ltd. 223

5.39.9 Other USA Companies 224

5.40 Uzbekistan 226

5.41 Zimbabwe 226

5.41.1 Bikita Minerals Ltd 227

5.41.2 Zimbabwe Mining Development Corporation 228

5.41.3 Premier African Minerals 228

5.41.4 Cape Range Ltd. 229

6. International trade in lithium 230

6.1 Trade in lithium carbonate 230

6.2 Trade in lithium hydroxide and oxides 233

6.3 Trade in lithium chloride 236

6.4 Trade in mineral concentrates 237

6.5 Trade in lithium brines 238

7. Consumption of lithium 239

7.1 Consumption of lithium by end-use 239

7.2 Consumption of lithium by country/region 243

7.3 Consumption of lithium by product 245

7.4 Outlook for consumption of lithium by end-use 247

7.5 Outlook for lithium consumption by product 251

8. Use of lithium in rechargeable batteries 253

8.1 Types of rechargeable batteries 253

8.1.1 Lithium-ion batteries 254

8.1.2 Lithium metal polymer batteries 256

8.1.3 Lithium-sulphur batteries 256

8.1.4 Lithium-air batteries 258

8.1.5 NiMH and NiCd batteries 258

8.2 Production of rechargeable batteries 258

8.2.1 Producers of rechargeable lithium batteries 261

8.2.2 Producers of nickel metal hydride batteries 262

8.3 Production of rechargeable lithium battery materials 262

8.3.1 Producers of rechargeable lithium battery materials 264

8.3.1.1 Cathode materials 264

8.3.1.2 Electrolyte salts 267

8.3.1.3 Anode materials 268

8.4 Consumption of rechargeable lithium batteries 268

8.4.1 Computing, communication and consumer (3C) market 269

8.4.2 Power devices and motive power 270

8.4.3 Heavy duty applications 272

8.4.4 Transportation 272

8.5 Consumption of NiMH and NiCd batteries 274

8.6 Consumption of lithium in rechargeable batteries 274

8.7 Outlook for demand for rechargeable batteries 278

8.8 Outlook for consumption of lithium in rechargeable batteries 281

9. Use of lithium in ceramics 284

9.1 Use of lithium in ceramics 284

9.2 Production and consumption of ceramics 286

9.2.1 Ceramic tiles 287

9.2.1.1 Producers of ceramic tiles 289

9.2.2 Sanitaryware 291

9.2.2.1 Producers of sanitaryware 291

9.2.3 Tableware 293

9.2.3.1 Producers of tableware 294

9.2.4 Cookware and bakeware 295

9.3 Production and consumption of glazes and enamels 295

9.3.1 Producers of glazes and enamels 297

9.4 Outlook for ceramics production and consumption 298

9.5 Consumption of lithium in ceramics 299

9.5.1 Outlook for lithium demand in ceramics 300

10. Use of lithium in glass-ceramics 302

10.1 Use of lithium in glass-ceramics 302

10.2 Production and consumption of glass-ceramics 304

10.2.1 Producers of glass-ceramics 305

10.3 Consumption of lithium in glass-ceramics 306

11. Use of lithium in lubricating grease 309

11.1 Types of lubricating grease 309

11.2 Production of grease 311

11.2.1 Producers of lithium grease 314

11.3 Consumption of lithium greases 317

11.4 Consumption of lithium in greases 320

11.4.1 Outlook for demand for lithium in greases 321

12. Use of lithium in glass 323

12.1 Use of lithium in glass 323

12.2 Production and consumption of glass 325

12.2.1 Container glass 326

12.2.2 Fibreglass 329

12.2.3 Speciality glass 330

12.3 Consumption of lithium in glass 330

12.3.1 Outlook for demand for lithium in glass 331

13. Use of lithium in metallurgical powders 333

13.1 Continuous casting 333

13.1.1 Producers of continuous casting mould powders 334

13.1.2 Continually cast steel production 334

13.1.3 Consumption of continuous casting mould powders 335

13.1.4 Consumption of lithium in continuous casting mould powders 335

13.2 Traditional metal casting 337

13.3 Outlook for demand for lithium in casting powders 337

14. Use of lithium in polymers 338

14.1 Types of polymers 338

14.2 Production of polymers 340

14.2.1 Producers of polymers 342

14.3 Consumption of polymers 344

14.4 Consumption of lithium in polymers 348

14.4.1 Outlook for lithium demand in polymers 348

15. Use of lithium in air treatment 350

15.1 Absorption chillers 350

15.1.1 Production of absorption chillers 351

15.1.2 Producers of adsorption chillers 352

15.1.3 Producers of lithium bromide for absorption chillers 354

15.1.4 Consumption of lithium in absorption chillers 356

15.2 Dehumidification 357

15.2.1 Production of desiccant dehumidification systems 358

15.2.2 Producers of desiccant dehumidification systems 358

15.2.3 Consumption of lithium in desiccant dehumidifiers 359

15.3 Air purification 359

15.5 Outlook for demand for lithium in air treatment 360

16. Use of lithium in primary batteries 362

16.1 Types of primary batteries 362

16.2 Production of lithium primary batteries 365

16.2.1 Producers of lithium primary batteries 367

16.3 Trade in primary batteries 369

16.4 Production of primary lithium battery materials 370

16.4.1 Producers of lithium primary battery anodes 371

16.5 Consumption of lithium primary batteries 373

16.5.1 Outlook for primary lithium battery consumption 374

16.6 Consumption of lithium in primary batteries 374

16.6.1 Outlook for demand for lithium in primary batteries 377

17. Use of lithium in aluminium smelting 378

17.1 Process of aluminium smelting 378

17.2 Consumers of lithium in aluminium smelting 380

17.3 Consumption of lithium in aluminium smelting 382

17.3.1 Outlook for lithium demand in aluminium smelting 383

18. Minor end-uses for lithium 385

18.1 Sanitization 385

18.2 Organic synthesis 386

18.3 Construction 388

18.4 Alkyd resins 388

18.5 Alloys 391

18.5.1 Aluminium-lithium alloy 391

18.5.1.1 Producers of aluminium-lithium alloys 394

18.5.1.2 Applications for aluminium-lithium alloys 395

18.5.1.3 Consumption of lithium in aluminium-lithium alloys 398

18.5.1.4 Outlook for demand for lithium in aluminium-lithium alloys 398

18.5.2 Magnesium-lithium alloy 400

18.6 Electronics 400

18.7 Analytical agents 402

18.8 Dyestuffs 402

18.9 Metallurgy 402

18.10 Photographic industry 402

18.11 Welding fluxes 402

18.12 Electrochromic glass 403

18.13 Pharmaceuticals 403

18.13.1 Producers of lithium-based pharmaceuticals 404

18.13.2 Production and consumption of lithium-based pharmaceuticals 404

18.13.3 Consumption of lithium in pharmaceuticals 405

18.14 Speciality lithium inorganics 405

19. Prices of lithium 408

19.1 Technical-grade lithium mineral prices 409

19.2 Chemical-grade spodumene prices 412

19.3 Technical-grade lithium carbonate prices 413

19.4 Battery-grade lithium carbonate 415

19.5 Technical-grade lithium hydroxide prices 416

19.6 Battery-grade lithium hydroxide prices 418

19.7 Lithium chloride prices 419

19.8 Lithium metal prices 420

19.9 Outlook for lithium prices 421

19.9.1 Technical-grade lithium carbonate prices 421

19.9.2 Battery-grade lithium carbonate prices 424

19.9.3 Technical-grade lithium mineral prices 425

19.9.4 Chemical-grade spodumene prices 425

19.9.5 Lithium hydroxide prices 426

List of Tables

Page

Table 1: World: Forecast nominal and real prices for technical-grade lithium

carbonate, 2012 to 2017 8

Table 2: Properties of lithium 10

Table 3: Significant lithium minerals 11

Table 4: Major lithium bearing smectite group members 12

Table 5: Brine concentrations at selected deposits 13

Table 6: Lithium reserves by country 15

Table 7: Composition of standard lithium concentrates 22

Table 8: Specifications for lithium carbonate produced by SQM and Rockwood

Lithium 28

Table 9: Specifications for lithium carbonate produced by other suppliers 28

Table 10: Battery grade lithium hydroxide product specifications of major producers 29

Table 11: Production of lithium by country and company, 2005 to 2012 35

Table 12: Capacity and production of lithium minerals by company, 2011 to 2012 39

Table 13: Capacity and production of lithium compounds from brine-based

producers, 2011 to 2012 40

Table 14: Capacity and production of lithium mineral converters, 2011 to 2012 42

Table 15: Production of lithium compounds from minerals, 2005 to 2012 43

Table 16: Planned expansions as reported by existing lithium mineral producers

to 2017 46

Table 17: Potential lithium mineral producers to 2017 47

Table 18: Planned expansions by existing lithium brine producers to 2017 49

Table 19: Potential new lithium brine projects to 2017 50

Table 20: Planned expansions to production capacity for existing and potential

mineral conversion plants 51

Table 21: Afghanistan: Spodumene bearing pegmatites identified in Nuristan,

Badakhshan, Nangarhar, Lagman and Uruzgan provinces 55

Table 22: Argentina: Exports of lithium carbonate, 2004 to 2012 57

Table 23: Argentina: Exports of lithium chloride, 2004 to 2012 58

Table 24:FMC: Brine reserves at the Salar del Hombre Muerto 58

Table 25: FMC: Production and value of lithium carbonate and chloride at the Salta

plant, Argentina 2005 to 2012 59

Table 26: ADY Resources: Salar del Rincón reserve estimation, 2007 60

Table 27: Lithium Americas: Lithium and potash resource estimation for the

Cauchari-Olaroz property, July 2012 61

Table 28: Lithium Americas: Lithium and potash reserve estimation for the Cauchari-

Olaroz property, July 2012 61

Table 29: Lithium Americas: Estimated capital costs for Lithium carbonate

production at the Cauchari-Olaroz project, July 2012 63

Table 30: Lithium Americas: Estimated operating costs for Cauchari-Olaroz project,

July 2012 65

Table 31: Galaxy Resources: Resource estimation for the Sal de Vida project,

January 2012 66

Table 32: Galaxy Resources: Reserve estimate for the Sal de Vida project,

April 2013 67

Table 33: Galaxy Resources: Estimated capital costs for Sal de Vida project ,

October 2011 68

Table 34: Orocobre: Agreements between Borax Argentina and other lithium

companies 70

Table 35: Orocobre: Resource estimation for the Salar de Olaroz project, May 2011 71

Table 36: Orocobre: Assay results of first battery grade lithium carbonate product

from the Orocobre pilot plant 72

Table 37: Orocobre: Capital costs for 16,400tpy LCE operation at the Salar de

Olaroz, May 2011 73

Table 38: Orocobre: Operating costs for battery grade lithium carbonate

for the Salar de Olaroz, May 2011 73

Table 39: Orocobre: Resource estimation for the Salinas Grande project, April 2012 74

Table 40: Orocobre: Averaged assay results from pit sampling of brine at the

Guayatoyoc project 75

Table 41: Orocobre: Maiden resource estimation for the Salar de Cauchari project,

October 2012 75

Table 42: Rodinia Lithium: Salar de Diablillos resource estimation, March 2011 76

Table 43: Rodinia Lithium: Estimated capital costs for the Salar de Diablillos project 77

Table 44: Rodinia Lithium: Estimated operating costs for the Salar de Diablillos

project 77

Table 45: Rodinia Lithium: Other Argentine lithium projects 78

Table 46: Australia: Exports of mineral substances NES (excl. natural micaceous

iron oxides) 2005 to 2012 81

Table 47: Australia: Unit value of mineral substances NES (excl. natural micaeous

iron oxides) 2005 to 2011 81

Table 48: Talison Lithium: Resource estimation for the Greenbushes deposit,

December 2012 83

Table 49: Talison Lithium: Lithium mineral reserve estimation for the Greenbushes

deposit, December 2012 83

Table 50: Talison Lithium: Li, K and Na content of brines, Salares 7 project saline

lakes 1998, (ppm) 84


lakes 2009, (ppm) 84

Table 52: Talison Lithium: Production and sales of lithium mineral concentrates and

ores, 2005 to 2011 85

Table 53: Talison Lithium: Standard lithium mineral concentrate product

specifications 87

Table 54: Galaxy Resources: Mount Cattlin mineral resource estimate, February

2011 89

Table 55: Galaxy Resources: Mount Cattlin mineral reserve estimate, December

2011 89

Table 56: Galaxy Resources: James Bay mineral resource estimate, November

2010 89

Table 57: Galaxy Resources: Mt. Cattlin mine and plant production, Q3 2010 –

Q4 2011 90

Table 58: Reed Resources : Mt Marion resource estimation, July 2011 91

Table 59: Altura: Mineral resource estimation for the Pilgangoora lithium project,

October 2012 92

Table 60: Belgium: Trade is lithium carbonate, 2005 to 2012 95

Table 61: Belgium: Trade in lithium hydroxide and oxide, 2005 to 2012 96

Table 62: Salars and Lagunas in Bolivia identified by Gerencia Nacional de

Recursos Evaporíticos 97

Table 63: Results of sampling campaign by Université de Liegé and Universidad

Tecnica de Oruro at the Salar de Coipasa, 2002 99

Table 64: Assay data for brines intercepted during drilling at the Pastos Grandes

Salar, August 2011 100

Table 65: Brazil: Lithium resource estimation by mineral type, 2009 101

Table 66: Brazil: Trade in lithium chemicals and concentrates, 2004 to 2011 102

Table 67: CBL: Production of lithium concentrates and lithium salts, 2005 to 2011 102

Table 68: Arqueana: Production of lithium concentrates, 2008 to 2011 103

Table 69: Canada: Resources estimations for Canadian lithium projects 106

Table 70: Canada: Imports and exports of lithium compounds 2005 to 2012 108

Table 71: TANCO: Spodumene concentrate production 2005 to 2011 109

Table 72: Canada Lithium: Resource estimation for the Quebec Lithium project,

December 2011 109

Table 73: Canada Lithium: Reserve estimation for the Quebec Lithium project,

December 2011 110

Table 74: Canada Lithium: Estimated capital expenditure for Quebec Lithium

project (inc. LiOH and Na2SO4 plant costs), October 2012 111

Table 75 :Canada Lithium: Estimated operating expenditure for Quebec Lithium

project, October 2012 111

Table 76: Nemaska Lithium: Resource estimation for the Whabouchi project,

June 2011 113

Table 77: Nemaska Lithium: Reserve estimation for the Whabouchi project,

October 2012 113

Table 78: Avalon Rare Metals: Separation Rapids NI 43-101 resource and reserve

estimation, 1999 116

Table 79: Perilya Ltd: Mineral resource estimation for Moblan deposit, May 2011 117

Table 80: Rock Tech Lithium: Structure of the Georgia Lake project, November

2011 118

Table 81: Rock Tech Lithium: Updated mineral resource estimation for Georgia

Lake project, July 2012 119

Table 82: Glen Eagle: Resource estimation for Authier lithium property, January

2012 121

Table 83: Canada: Lithium exploration projects in Canada with uncompleted

scoping studies or PFS in October 2012 122

Table 84: Chile: Lithium carbonate, chloride and hydroxide production, 2004 to 2011 128

Table 85: Chile: Special operating licence bidders for the September 2012 auction 129

Table 86: SQM: Majority shareholders of SQM as of December 31st 2011 130

Table 87: SQM: Reserves within brines at the Salar de Atacama project 131

Table 88: SQM: Production, revenue and value per tonne of lithium compounds,

2003 to 2012 132

Table 89: SQM: Specifications for lithium carbonate 133

Table 90: SQM: Specifications for lithium hydroxide 134

Table 91: RWL: Gross tonnage, value and unit value of lithium carbonate exports,

2006 to 2012 137

Table 92: RWL: Gross tonnage, value and unit value of lithium chloride exports,

2006 to 2012 138

Table 93: Li3 Energy: Resource estimation for the Maricunga property, April 2012 140

Table 94: Chile: Exports of lithium carbonate by destiatnion, 2004 to 2011 144

Table 95: Chile: Litihum carbonate export volume, value and unit price by company,

2005 to 2011 144

Table 96: Chile: Lithium chloride exports by destination, 2004 to 2012 145

Table 97: Chile: Lithium hydroxide exports by destination, 2004 to 2012 146

Table 98: China : Estimated resources and reserves of both lithium mineral and

brine operations and projects 148

Table 99: China: Production of lithium, 2003 to 2012 149

Table 100: China: Producers of lithium minerals, 2011 to 2012 151

Table 101: China: Production and capacity of Chinese lithium brine operations,

2011 152

Table 102: China: Mineral conversion plant production and production capacity,

2012 154

Table 103: China: Producers of battery grade lithium metal, 2012 154

Table 104: China: Imports and exports of lithium carbonate, 2005 to 2012 155

Table 105: China: Imports and exports of lithium chloride, 2005 to 2012 156

Table 106: China: Imports and exports of lithium hydroxide, 2005 to 2012 157

Table 107: China: Imports and exports of lithium oxide, 2005 to 2012 157

Table 108: Tibet Lithium New Technology Development: Lithium production,

2010 to 2012 158

Table 109: Qinghai CITIC: Lithium carbonate production, 2008 to 2012 160

Table 110: Dangxiongcuo reserve estimation from 2006 qualifying report 163

Table 111: Jiangxi Western Resources: Lithium Production, 2010 167

Table 112: Sichuan Tianqi: Production and sales of lithium products, 2010 to 2011 169

Table 113: Galaxy Resources: Battery grade lithium carbonate chemical

specifications 172

Table 114: Keliber Oy: Claims, reservation and mining concessions for lithium

projects held by Keliber in Finland, 2012 181

Table 115: France: Imports and exports of lithium carbonate, 2005 to 2012 183

Table 116: France: Imports and exports of lithium hydroxide and oxide, 2005

to 2012 184

Table 117: Germany: Imports and exports of lithium carbonate, 2005 to 2012 184

Table 118: India: Trade in lithium hydroxide and oxides, 2005 to 2012 187

Table 119: India: Trade in lithium carbonate, 2005 to 2012 187

Table 120: India: Producers of lithium chemicals 188

Table 121: Japan: Trade in lithium carbonate, 2005 to 2012 190

Table 122: Japan: Trade in lithium hydroxide and oxide, 2005 to 2012 191

Table 123: Mexico: Litio Mex S.A. concessions and resource estimations 194

Table 124: Namibia: Production of lithium minerals, 1990 to 1998 197

Table 125: Netherlands: Trade in lithium carbonate, 2005 to 2012 198

Table 126: Netherlands: Trade in lithium hydroxide and oxide, 2005 to 2012 199

Table 127: Sociedad Mineira de Pegmatites: Production of Lithium, 2004 to 2012 200

Table 128: Russia: Deposits of lithium 201

Table 129: Russia: Imports of lithium carbonate, 2002 to 2012 204

Table 130: Russia: Exports of lithium hydroxide, 2002 to 2012 204

Table 131: Russia: Imports of lithium hydroxide, 2002 to 2012 205

Table 132: South Korea: Trade in lithium carbonate, 2005 to 2012 207

Table 133: South Korea: Trade in lithium hydroxide, 2005 to 2012 207

Table 134: Spain: Imports of lithium compounds, 2005 to 2012 208

Table 135: Minera Del Duero: Production of lepidolite in Spain, 2003 to 2011 208

Table 136: Inferred mineral resource estimation for the Doade-Presquerias project,

October 2011 209

Table 137: Taiwan: Imports of lithium carbonate, 2005 to 2012 210

Table 138: UK: Imports of lithium carbonate and lithium hydroxides and oxides

2005 to 2012 211

Table 139: USA: Imports and exports of lithium carbonate 2005 to 2012 213

Table 140: USA: Imports and exports of lithium oxide and hydroxide 2005 to 2012 214

Table 141: FMC: Product range 218

Table 142: WLC: Resource estimation for the Kings Valley project, January 2012 219

Table 143: WLC: Reserve estimation for the Kings Valley project, December 2011 220

Table 144: WLC: Estimated operating and capital costs for ‘Case 1’ and ‘Case 2’

scenarios at the Kings Valley project. 221

Table 145: USA: Lithium exploration projects yet to reach scoping study or PFS

stage in development 224

Table 146: Zimbabwe: South African imports of mineral substances from

Zimbabwe, 2005 to 2012 227

Table 147: Bikita Minerals: Mine production and lithium content 2003 to 2011 228

Table 148: World: Total exports of lithium carbonate, 2005 to 2012 230

Table 149: World: Total imports of lithium carbonate, 2005 to 2012 232

Table 150: World: Total exports of lithium hydroxide and oxide, 2005 to 2012 234

Table 151: World: Total imports of lithium hydroxide and oxide, 2005 to 2012 236

Table 152: World: Major importers and exporters of lithium chloride, 2005 to 2012 237

Table 153: World: Exports of lithium minerals by major lithium mineral producing

nations (excl. China), 2005 to 2012 238

Table 154: Chile: Exports of lithium chloride brine1 by SQM to China, 2005 to 2012 238

Table 155: World: Consumption of lithium by end-use, 2002, 2007 and 2012 240

Table 156: World: Estimated consumption of lithium by country/region, 2002, 2007

and 2012 244

Table 157: World: Consumption of lithium by end-use, by product, 2012 246

Table 158: World: Forecast consumption of lithium by end-use, 2012 to 2017 248

Table 159: Japan: Producers of lithium-ion battery cathode materials, 2012 265

Table 160: South Korea: Producers of lithium-ion battery cathode materials, 2012 265

Table 161: China: Producers of lithium-ion battery cathode materials, 2012 266

Table 162: World: Producers of lithium salts for electrolytes, 2012 267

Table 163: World: Lithium battery consumption in 3C products, 2012 269

Table 164: World: Lithium battery consumption in power devices and motive

power, 2012 271

Table 165: World: Lithium battery consumption in heavy duty applications, 2012 272

Table 166: World: Lithium battery consumption in transport applications, 2012 274

Table 167: World: Lithium consumption in rechargeable lithium batteries

end-use, 2012 275

Table 168: World: Lithium consumption in NiMH and NiCd batteries, 2012 275

Table 169: World: Consumption of lithium in rechargeable batteries by type, 2007

to 2012 277

Table 170: Japan: Consumption of lithium in rechargeable batteries, 2007 to 2012 277

Table 171: World: Consumption of lithium in rechargeable batteries by country,

2007 to 2012 278

Table 172: World: Rechargeable lithium battery demand by market, 2012 and 2017 278

Table 173: World: Comparison of EV production estimates in 2017 by industry

consultant 280

Table 174: World: Forecast rechargeable battery consumption in EVs, 2017 281

Table 175: World: Lithium consumption in rechargeable lithium batteries by

end-use, 2017 281

Table 176: World: Forecast demand for lithium in rechargeable lithium batteries,

2012 to 2017 282

Table 177: World: Forecast demand for lithium in rechargeable batteries by battery

type, 2012 to 2017 282

Table 178: World: Forecast demand for lithium in rechargeable batteries by

product type, 2007 to 2012 283

Table 179: Typical whiteware body compositions 285

Table 180: World: Production of ceramic tiles by leading country, 2007 to 2012 287

Table 181: World: Consumption of ceramic tiles by leading countries, 2007 to 2011 289

Table 182: World: Leading ceramic tile manufacturing companies, 2010 290

Table 183: World: Leading sanitaryware manufacturing companies, 2010 292

Table 184: World: Consumption of lithium in ceramics, 2012 300

Table 185: World: Consumption of lithium in ceramics, 2007 to 2012 300

Table 186: World: Forecast demand for lithium in ceramics, 2012 to 2017 301

Table 187: Glass-ceramic matrices 302

Table 188: Compositions of commercial glass-ceramics 303

Table 189: Japan: Consumption of lithium carbonate in glass-ceramics, 2007

to 2012 306

Table 190: World: Consumption of lithium in glass-ceramics by end-use and

product type, 2012 307

Table 191: World: Consumption of lithium in glass-ceramics, 2007 to 2012 307

Table 192: World: Forecast demand for lithium in glass-ceramics, 2012 to 2017 308

Table 193: Properties of commercial greases 311

Table 194: World: Producers of lubricating grease 315

Table 195: World: Forecast demand for lithium in greases, 2012 to 2017 322

Table 196: Typical batch compositions for glass by type 323

Table 197: Main sources of lithium used in glass 324

Table 198: EU: Production of glass by type, 1998 to 2012 328

Table 199: USA: Production of container glass, 1999 to 2008 328

Table 200: Typical chemical composition of types of textile-grade fibreglass 329

Table 201: World: Estimated consumption of lithium in glass, 2012 331

Table 202: World: Consumption of lithium in glass, 2007 to 2012 331

Table 203: World: Forecast demand for lithium in glass, 2012 to 2017 332

Table 204: World: Consumption of lithium in continuous casting mould powders,

2007 to 2012 336

Table 205: Japan: Consumption of lithium in fluxes, 2007 to 2012 336

Table 206: World: Forecast demand for lithium in casting powders, 2012 to 2017 337

Table 207: Microstructure of different types of polybutadienes 339

Table 208: World: Producers of SSBR, BR and SBC, 2012 343

Table 209: World: Planned new/expanded SBR, BR and SBC plants 344

Table 210: World: Forecast demand for lithium in synthetic rubber and

thermoplastics, 2011 to 2017 349

Table 211: World: Capacity for lithium bromide production, end-2012 355

Table 212: Japan: Consumption of lithium bromide, 2007 to 2012 356

Table 213: World: Forecast demand for lithium in air treatment, 2012 to 2017 361

Table 214: Characteristics of primary lithium batteries 363

Table 215: Japan: Production of primary batteries by type, 1998 to 2012 367

Table 216: World: Trade in lithium primary batteries, 2007 to 2011 369

Table 217: Primary lithium batteries and their material compositions 371

Table 218: Specifications for battery-grade lithium metal 371

Table 219: World: Producers of battery-grade lithium metal, end-2012 372

Table 220: Japan: Consumption of lithium in primary lithium batteries, 2007 to 2012 375

Table 221: Japan: Unit consumption of lithium in primary batteries, 2007 to 2012 375

Table 222: World: Imports of battery-grade lithium metal, 2007 to 2012 376

Table 223: World: Forecast demand for lithium in primary batteries, 2012 to 2017 377

Table 224: Effects of additives and temperatures on properties of molten cryolite 379

Table 225: World: Aluminium smelters using Söderberg technology, end-2012 381

Table 226: World: Forecast demand for lithium in aluminium smelting, 2012 to 2017 384

Table 227: World: Consumption of lithium in other end-uses, 2007, 2012 and 2017 385

Table 228: Examples of uses for lithium in organic synthesis 387

Table 229: Physical properties of Al-Li alloys 392

Table 230: Chemical composition of Al-Li alloys 393

Table 231: Use of Al-Li alloys in selected aircraft 397

Table 232: World: Forecast demand for lithium in aluminium-lithium alloys, 2012

to 2017 399

Table 233: Properties of lithium niobate and lithium tantalite 401

Table 234: Applications for SAW components 401

Table 235: Applications for speciality inorganic lithium compounds 406

Table 236: Prices of lithium minerals, 2000-2013 410

Table 237: Comparison of prices for lithium minerals and carbonate, 2004 to 2012 411

Table 238: Comparison of prices for chemical-grade spodumene concentrate and

lithium carbonate, 2004 to 2012 412

Table 239: Comparison of technical- and battery- grade lithium carbonate prices,

2004 to 2012 416

Table 240: Average values of exports/imports of lithium oxides and hydroxides by

leading exporting/importing country, 2004 to 2012 417

Table 241: Average values of exports of lithium chloride by leading producing

country, 2004 to 2012 420

Table 242: Average values of exports of lithium metal by leading producing

country, 2004 to 2012 421

Table 243: World: Forecast nominal and real prices for technical-grade lithium

carbonate, 2012 to 2017 423

Table 244: World: Forecast nominal prices for technical-grade lithium carbonate

and chemical-grade lithium minerals, 2012 to 2017 425

Table 245: World: Forecast nominal prices for technical-grade lithium carbonate

and technical-grade lithium hydroxide, 2012 to 2017 426

List of Figures

Figure 1: Lithium product flow chart and main end-uses, 2012 1

Figure 2: Consumption of lithium by end-use, 2000 to 2012 2

Figure 3: Production of lithium by country, 2000 to 2012 4

Figure 4: Price history of lithium carbonate, 1990 to 2012 6

Figure 5: World: Forecast real prices for technical-grade lithium carbonate, 2012

to 2017 9

Figure 6: Overview of lithium production 16

Figure 7: Extraction and processing of brines from the Salar de Atacama, Chile and

Silver Peak, Nevada by Rockwood Lithium 18

Figure 8: Flow sheet showing the processing of brines at Salar de Carmen by SQM 19

Figure 9: Simplified flow sheet of the Li SX™ method patented by Bateman Lithium

Projects 21

Figure 10: Simplified mineral concentrate production flow sheet for a typical hard

rock lithium operation 22

Figure 11: Simplified flow sheet for lithium carbonate production from spodumene

mineral concentrate using the acid-roast method 24

Figure 12: Simplified flow sheet for lithium hydroxide and lithium hydroxide

monohydrate production from spodumene mineral concentrate using the

lime-roast method 25

Figure 13: Simplified flow sheet for lithium carbonate production from hectorite clay

developed by Western Lithium 27

Figure 14: Mining and milling costs for hard rock lithium mineral operations/projects 31

Figure 15: Lithium carbonate cash operating costs, 2012 32

Figure 16: Potential new producers production costs 33

Figure 17: World: Production of lithium by country, 2000 to 2012 34

Figure 18: Production of lithium from mineral and brine sources, 2005 to 2012 37

Figure 19: Production of lithium minerals by company, 2012 38

Figure 20: Production of lithium from brines by country, 2005 to 2012 40

Figure 21: Planned production capacity and consumption for lithium, 2012 to 2017 45

Figure 22: Forecast production and consumption of lithium, 2012 to 2017 54

Figure 23: Pilot plant flow sheet developed for Lithium Americas at SGS Mineral

Services 62

Figure 24: Brazil: Production of Lithium products 2005 to 2010 101

Figure 25: SQM: Lithium sales by destination 2011, 2009, 2007 and 2005 135

Figure 26: SQM: Destination of lithium carbonate exports, 2006 to 2011 136

Figure 27: China: Location of mineral conversion and lithium chemical/metal plants

in China, 2012 153

Figure 28: Japan: Imports of lithium carbonate, hydroxide & oxide and combined

LCE, 2005 to 2012 191

Figure 29: World: Leading exporters of lithium carbonate, 2006, 2008, 2010

and 2012 231

Figure 30: World: Leading importers of lithium carbonate, 2006, 2008, 2010

and 2012 233

Figure 31: World: Leading exporters of lithium hydroxide and oxides, 2006, 2008,

2010 and 2012 235

Figure 32: World: Growth in consumption of lithium, 2000 to 2012 239

Figure 33: World: Consumption of lithium by end-use, 2012 240

Figure 34: World: Consumption of lithium by end-use, 2000 to 2012 241

Figure 35: World: Consumption of lithium by end-use, 2000 to 2012 241

Figure 36: World: Estimated consumption of lithium by country/region, 2002, 2007

and 2012 244

Figure 37: World: Consumption of lithium by product, 2012 245

Figure 38: World: Consumption of lithium by type, 2000 to 2012 247

Figure 39: World: Historical and forecast consumption of lithium by end-use, 2007

to 2017 248

Figure 40: World: Forecast consumption of lithium by form, 2007, 2012 and 2017 252

Figure 41: Specific energy and energy density of rechargeable batteries 253

Figure 42: Lithium-ion battery schematic 254

Figure 43: Lithium metal polymer battery schematic 256

Figure 44: Lithium-sulphur cell schematic 257

Figure 45: Lithium-air cell schematic 258

Figure 46: World: Production of rechargeable batteries1, 1995 to 2012 259

Figure 47: World: Production of rechargeable batteries1, 1995 to 2012 260

Figure 48: World: Rechargeable lithium battery production by country, 2000 to 2012 260

Figure 49: Lithium-ion battery materials value chain 263

Figure 50: World: Production of lithium cathode materials by type, 2000 to 2012 264

Figure 51: World: Market for rechargeable lithium batteries by end-use, 2002, 2007

and 2012 268

Figure 52: World: Market for rechargeable lithium batteries by end-use, 2012 269

Figure 53: World: Production of rechargeable batteries and consumption of lithium,

2000 to 2012 276

Figure 54: World: Market for rechargeable lithium batteries by end-use, 2002

to 2017 279

Figure 55: World: Ceramic tile production by region, 2007 and 2012 288

Figure 56: World: Sanitaryware production by region/country, 2010 291

Figure 57: World: Production of tableware by country/region, 2008 293

Figure 58: USA: Shipments of cookware, bakeware and kitchenware, 2001 to 2010 295

Figure 59: World: Shipments of white goods by region, 2000 to 2020 296

Figure 60: World: Year-on-year growth in construction spending and GDP, 2000

to 2017 298

Figure 61: World: Production of lubricating grease by additive type, 2011 312

Figure 62: World: Production of lubricating grease by type, 2000 to 2012 313

Figure 63: World: Production of lithium grease by region/country and by type, 2000

and 2011 314

Figure 64: World: Output of automobiles by region, 2000 to 2012 318

Figure 65: World: Deliveries of commercial aircraft, 2000 to 2012 318

Figure 66: World: Shipbuilding deliveries, 2000 to 2012 319

Figure 67: World: Relative industrial and transport output and lithium grease

production, 2002 to 2011 320

Figure 68: World: Production of grease and consumption of lithium, 2000 to 2012 321

Figure 69: World: Estimated production of glass by type, 2012 326

Figure 70: World: Production of container glass by region/country, 2012 326

Figure 71: World: Consumption of glass packaging by region, 2011 327

Figure 72: World: Production of continuously cast steel by region, 1998 to 2012 335

Figure 73: World: Capacity for synthetic rubber production by country/region, 2012 340

Figure 74: World: Capacity for BR, ESBR and SSBR rubber by country/region,

end-2011 341

Figure 75: World: SBC capacity by region/country, end-2010 341

Figure 76: World: Production of synthetic rubber by region, 1996 to 2011 342

Figure 77: World: Consumption of synthetic rubber by type, 2012 345

Figure 78: World: consumption of BR by end-use, 2010 346

Figure 79: World: Consumption of SBC by region/country, 2010 347

Figure 80: Consumption of SBC by end-use, 2007 347

Figure 81: World: Production of absorption chillers, 2003 to 2012 352

Figure 82: World: Consumption of lithium bromide in air treatment, 2001 to 2012 356

Figure 83: Specific energy and energy density of primary batteries 362

Figure 84: Primary and secondary battery gravimetric energy density 365

Figure 85: World: Production of primary lithium batteries by country, 1998 to 2012 366

Figure 86: Primary lithium battery schematics 370

Figure 87: World: Demand for lithium metal in primary batteries, 2000 to 2012 376

Figure 88: World: Aluminium output by type and lithium consumption, 2000 to 2012 383

Figure 89: World: Consumption of alkyd-based paints and coatings, 2010 390

Figure 90: Development of Al-Li alloys 392

Figure 91: World: Deliveries of commercial aircraft and lithium consumption, 2007

to 2019 399

Figure 92: Price history of lithium carbonate, 1990 to 2012 408

Figure 93: Compound annual prices of lithium minerals, 2000 to 2013 411

Figure 94: Prices for technical-grade lithium carbonate, 1999 to 2012 414

Figure 95: Prices for battery-grade lithium carbonate, 1999 to 2012 415

Figure 96: Comparison of lithium hydroxide and lithium carbonate prices, 2000

to 2012 418

Figure 97: Japan: Quarterly average import value of lithium hydroxide from the

USA, 2008 to 2012 419

Figure 98: World: Forecast nominal prices for technical-grade lithium carbonate,

2012 to 2017 423

Figure 99: World: Forecast real prices for technical-grade lithium carbonate,

2012 to 2017 424

List of Appendices (See attached CD)

Appendix A: International trade statistics

List of Symbols and Abbreviations

Symbols

p Preliminary ø Under half of one unit

e Estimated … Not available

r Revised - Nil

Abbreviations

M Million

Bn Billion

t Tonne

Mt Million tonnes

tpd Metric tonne per day

tpm Metric tonne per month

tpy Metric tonne per year

g Gramme

kg Kilogramme

mg Milligramme

lb Pound

l Litre

μm Micrometre

m Metre

m3 Cubic metre

km Kilometre

km2

Square kilometre

wt % Weight percent

ppm Parts per million

V Volt

Ah Ampere-hour

kWh KiloWatt hour

Wh/kg Watt hours/kg oC Degrees Celsius

K Kelvins

Pa Pascal

dwt Deadweight tonnage

3C Computing, communication & consumers

HLF High lithium feldspar

BR Polybutadiene rubber

SBR Styrene butadiene rubber

SBC Styrenic block polymers

SBS Styrene-butadiene-styrene

SSBR Solution based styrene butadiene rubber

BQM Bank Cubic Metre

LCE Lithium Carbonate Equivalent

LCO Lithium cobalt oxide

LMO Lithium manganese oxide

LNO Lithium nickel (+/- cobalt) oxide

LFP Fluorinated lithium iron phosphate

LMPF Fluorinated lithium metal phosphate

NCM Lithium nickel-cobalt-manganese oxide

NCA Lithium nickel-cobalt-aluminium oxide

PEA Preliminary Economic Assessment

PFS Preliminary Feasibility Study

DFS Definative Feasibility Study

BFS Bankable Feasibility Study

USGS US Geological Survey

BGS British Geological Survey

DNPM Departamento Nacional de Produção Mineral

IGME Instituto Geológico y Minero de España

CIS Commonwealth of Independent States

Equivalent values kg lb kg 1 2.204662 t 1,000 2,204.62

Conversion Table

The lithium content of minerals and compounds is referred to in three units depending

on the source quoted and the end-use referred to:

lithium (Li) content

lithium oxide (lithia, Li2O) content

lithium carbonate (Li2CO3) content or lithium carbonate equivalent (LCE)

Lithium oxide content is widely-used in the glass and ceramics industry, while lithium

carbonate content is mainly used for processed lithium compounds. The conversion

factors for the main commercial lithium compounds are shown in the table below.

Conversion factors for lithium compounds

To convert from: to Li to Li2O to Li2CO3

Lithium: x x x

Li (100% Li) 1.000 2.153 5.323

Lithium oxide (lithia):

Li2O (46.4% Li) 0.464 1.000 2.473

Lithium bromide:

LiBr (8.0% Li) 0.080 0.172 0.425

Lithium carbonate:

Li2CO3 (18.8% Li) 0.188 0.404 1.000

Lithium hydroxide monohydrate:

LiOH.H2O (16.5% Li) 0.165 0.356 0.880

Lithium chloride:

LiCl (16.3% Li) 0.163 0.362 0.871

Lithium fluoride:

LiF (26.8% Li) 0.268 0.576 1.420

Lithium hypochlorite:

LiOCl (11.89% Li) 0.119 0.256 0.633

Butyllithium:

C4H9Li (10.83% Li) 0.108 0.233 0.576

Lithium: Market Outlook to 2017, 12th edition 2013 Page | 1

Roskill

Copyright © 2013 by Roskill Information Services Ltd. Unauthorised copying prohibited. www.roskill.com

1. Summary

In 2012, the lithium market by volume totalled 150,200t lithium carbonate equivalent (LCE),

with a value estimated at around US$2.2Bn. There are eight main lithium products

consumed, ranging from low-value technical-grade minerals through to high-value

organolithium, all produced from two main sources, hard rock mines and salt lake brines

(Figure 1).

Figure 1: Lithium product flow chart and main end-uses, 2012 (t LCE)

Source: Roskill estimates Note: Production may exceed consumption due to stockpiling and/or losses LI Batteries = Lithium-ion & polymer secondary batteries; LP Batteries = Primary batteries

Minerals

(82,300)

Brines

(86,030)

Lithium

carbonate

(116,080)

Lithium

hydroxide

(23,900)

Lithium

chloride

(12,500)

Glass-ceramics

(9,500)

Ceramics (9,500)

Glass (8,000)

Metallurgical powders

(4,200)

Aluminium smelting

(2,200)

Other (3,400)

Low-Na Metal

(2,500)

Pharmaceutical

(250)

Other (250)

LI Batteries

(35,100)

Technical-grade

(36,800)

Mineral

conversion

(42,050)

Battery-grade

(35,100)

Technical-grade

(18,500)

Battery-grade

(5,400)

Greases (13,500)

Other (5,000)

LI Batteries (5,200)

LP Batteries (200)

Lithium salts

(16,080)

High-purity

(500)

Bromide (7,100)

Hypochlorite

(3,000)

Other

(5,980)

LI Batteries (100)

LP Batteries (2,300)

Other (100)

(49,470)

(6,500)

(6,000)

(79,530)

(36,550)

(5,500)

(18,400)

Organolithium

(8,000)

(91,680)

Polymers

(7,500)

Other

(500)

(32,830)

High-Na Metal

(9,000)

Catalysis

& other

(1,000)

Ceramics

(13,600)

Glass-ceramics

(8,650)

Metallurgical

powders

(4,000)

Glass

(3,800)

Dehumidifiers

(200)

Other

(1,800)

Page | 2 Lithium: Market Outlook to 2017, 12th edition 2013

Roskill


Consumption

Consumption of lithium has shown strong growth since the beginning of the millennium,

increasing from just over 68,000t LCE in 2000 to 150,200t in 2012, an average annual

growth rate (AAGR) of 6.8%py. Prior to the global economic downturn of 2008/09,

consumption had grown even more strongly, by 10.6%py, from 2002.

Growth in consumption has been led by the rechargeable battery market, which accounted

for 27% of total lithium consumption in 2012, or 40,400t LCE, a more than ten-fold increase

from the 4% market share it held in 2000 (Figure 2). Demand for rechargeable lithium

batteries has increased significantly because of rapid expansion in the portable consumer

electronics (3C) sector. All cellular phones and portable computers now incorporate lithium

rechargeable batteries because of their higher energy density and lighter weight than nickel-

cadmium or nickel-metal hydride alternatives. Lithium rechargeable batteries have also

been gaining market share in other markets since the mid-2000s, including for use in power

tools and electric bicycles, as new battery chemistries allow lithium-ion batteries to be used

in these higher power applications. In more recent years, further technological

advancement has seen the use of lithium rechargeable batteries extended to use in electric

vehicles (EVs) and large-scale energy storage systems.

Figure 2: Consumption of lithium by end-use, 2000 to 2012 (t LCE)

Source: Section 7

The majority of lithium is, however, consumed in the manufacture of lower value industrial

and construction related products such as glass, ceramics, glass-ceramics, greases,

metallurgical powders, polymers and aluminium.

When combined, glass, ceramics and glass-ceramics remain the largest market for lithium,

accounting for 35% of total consumption in 2012. These end-uses consume both lithium

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Rechargeable battery Ceramics Glass-ceramicsGlass Greases Metallurgical powdersPolymer Air treatment Primary batteryAluminium Other


Roskill


compounds and lithium minerals, with an almost 50:50 share of demand between the two

products. Growth in consumption of lithium in ceramics and glass-ceramics has averaged

6.0 and 6.5%py, to 23,100t and 18,100t LCE, respectively since 2002, driven by a boom in

construction in emerging and developed economies, especially before 2008/09, and hence

increased use of construction materials and kitchen equipment. In glass, lithium lowers the

viscosity of the melt and can partially replace fluorine and other refining agents, and is

especially valued in the manufacture of flaconnage and container glass. The glass market

for lithium grew by 7.0%py between 2002 and 2012, to 11,800t LCE.

Rapid growth in construction and manufacturing output in emerging economies, particularly

China, has also led to increased lithium consumption in metallurgical powders used in the

continuous casting of steel, and in the production of lithium-based greases. Lithium

consumption in greases increased by 5.0%py between 2002 and 2012, to 13,500t LCE,

while the metallurgical powders market expanded by 6.0%py over the same period to 8,200t

LCE. The use of organolithium products for catalysing certain synthetic rubbers and

thermoplastics has also provided strong growth, of around 6.0%py, in consumption of lithium

in polymers since 2002 as demand for tyres, tubes and consumer goods increased in

emerging economies.

Lithium is added during aluminium smelting using Söderberg pot lines to reduce fluorine

emissions, as well as occasional use to decrease the melting point of alumina and raise

electrical conductivity of the bath in newer smelters using pre-baked anode pot lines. In

absorption chillers, lithium bromide is used as the absorption medium to produce chilled air

from waste heat in large commercial and industrial complexes. The air treatment market

for lithium also includes desiccant dehumidifiers and air purification systems. While

consumption of lithium in aluminium has declined by 7.0%py to 2,200t LCE since 2002, as outdated Söderberg smelters are decommissioned or replaced, the air treatment market has

grown by 4.0%py to 7,400t LCE, again largely due to emerging economy industrialisation.

The primary battery industry has witnessed growth, albeit on a much smaller scale than for

rechargeable batteries (7.0%py compared to 21.5%py) since 2002 to total 2,500t LCE.

Primary batteries are used for memory back-up in 3C electronics and remote monitoring

systems through to industrial equipment.

China is the world’s largest consumer of lithium, accounting for 35% of consumption in 2012,

with domestic demand having grown three-fold since 2002, to 53,000t LCE. Europe

represented a further 24% of consumption followed by Japan and South Korea. South

Korea and China are the dominant rechargeable battery and battery material producers,

hence their consumption has increased rapidly during the mid-2000s on increased

rechargeable battery output. Japan is also a major battery material producer, but has faced

growing competition from its Asian neighbours. China, Europe and North America consume

lithium in the manufacture of industrial and construction –related products, such as

ceramics, glass-ceramics, greases, polymers and aluminium.

The surge in consumption of lithium in rechargeable batteries in the 2000s has led to a

sharp rise in battery-grade lithium carbonate, and battery-grade lithium hydroxide,

consumption, the latter growing particularly strongly since 2008. Together, these two

products account for a similar volume (40,300t LCE) of consumption to technical-grade

lithium carbonate (40,000t LCE). Lithium mineral use is also significant, at over 30,000t


Roskill


LCE, followed by technical-grade lithium hydroxide at 18,500t LCE. Other lithium products

such as butylithium, lithium bromide and lithium metal together account for the remaining

20% of lithium consumption by product.

Production

Since 2000, global lithium production has increased by 7.0%py, from just over 68,000t LCE

to 152,400t LCE in 2012. Lithium is produced from two different sources: lithium brines and

lithium minerals. Production from lithium brine sources is confined to Chile, Argentina, the

USA and China, which collectively accounted for 51% of global lithium output in 2012.

Lithium mineral production is dominated by output from Australia, accounting for 40.5% of

global lithium output in 2012, with lesser amounts produced in China (3.7%) and Zimbabwe

(3.2%).

Figure 3: Production of lithium by country, 2000 to 2012 (t LCE)

Source: Roskill estimates

The majority of lithium production is undertaken by the ‘big four’ companies: Talison Lithium

in Australia, SQM in Chile, Rockwood Lithium in Chile and the USA, and FMC Lithium in

Argentina. Together, these four companies produced 82.3% of global lithium output in 2012.

The largest producer of lithium mineral concentrates is Talison Lithium, which produced

398,874t (59,185t LCE) of spodumene concentrate in 2012. SQM is the largest producer of

lithium compounds, such as lithium carbonate and lithium hydroxide, and produced 45,700t

LCE in 2012.

Lithium compounds are also produced through the conversion of lithium minerals at facilities

predominantly located in China, sourcing raw materials from Australian and domestic

sources. World lithium mineral conversion capacity in 2012 was 68,500t LCE, with 99% of

this located in China; however global production totalled 42,054t LCE.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Argentina Australia Chile China Others


Roskill


The production of downstream lithium chemicals and lithium metal is undertaken by a

number of companies in China. Outside of China, Rockwood Lithium and FMC Lithium are

the largest producers of lithium chemicals and metal, from facilities in Germany, the USA,

Taiwan, India, the UK and Japan.

Trade

As the main centres of lithium production are in countries that have little domestic

consumption (with the exception of China), trade in lithium is significant, with world exports

reaching 79,064t (gross weight) of lithium carbonate, 21,109t (gross weight) of lithium

hydroxide and 8,860t (gross weight) lithium chloride in 2012. The largest exporter of lithium

compounds in 2012 was Chile, which exported 55,899t (gross weight) of lithium carbonate,

6,711t (gross weight) of lithium hydroxide and 4,123t (gross weight) of lithium chloride in

2012, mainly to Asia, the USA and Europe. Lithium minerals are predominantly exported by

Australia and Zimbabwe, to markets in China, Japan, Europe and the USA.

Prices

The concentration of lithium production among a small number of producers means pricing

is very competitive. Producers negotiate prices with individual consumers and price

information is rarely reported, particularly for downstream lithium chemicals.

The entry of SQM into the lithium market in 1996 resulted in a fundamental restructuring of

the industry. Between 1995 and 1999, average technical-grade lithium carbonate prices

plunged from US$4,400/t CIF (US$6,175/t in constant 2012 dollars) to US$1,625/t CIF

(US$2,350 in constant 2012 dollars), causing the closure of mineral-based operations in

China, Russia and the USA.

In the mid-2000s, the combination of accelerating consumption and a lag in the response

time of brine producers to increase output (due to the time taken to concentrate brine by

natural evaporation) led to rising prices as higher-cost (>US$4,000/t LCE compared to

<US$3,000/t for brine operations) lithium mineral conversion plants re-started to fulfil market

requirements.

Prices peaked in 2007 at just over US$6,500/t CIF (US$7,230/t in constant 2012 dollars) but

then gradually fell as the global economic downturn of 2008/09 reversed the tightness in

supply leading up to the peak.


Roskill


Figure 4: Price history of lithium carbonate, 1990 to 2012

Source: Supply/demand 1990-1999 = USGS; 2000-2012 = Roskill data; Prices 1990-1999 = USGS, US domestic price;

2000-2012 = Average values of imports of technical-grade lithium carbonate Note: Real prices adjusted to constant 2012 US dollars using World GDP deflator data from the International Monetary Fund's

World Economic Outlook Database

As lithium carbonate is the main starting product for the production of lithium hydroxide and

other lithium compounds, prices of these tend to track the price of lithium carbonate.

Battery-grade lithium carbonate has been priced at around US$500/t CIF higher than

technical-grade while lithium hydroxide is priced with a US$900/t premium. Technical-grade

lithium minerals and chemical-grade spodumene concentrate also follow the price of lithium

carbonate, the former in competition with it and the latter as the main input cost to mineral

conversion plants.

Outlook

The outlook for lithium consumption appears optimistic. Overall growth is estimated at

9.7%py in the base-case scenario, resulting in a rise in world consumption to 238,940t LCE

in 2017. Consumption of lithium in volume terms will continue to be driven by the

rechargeable battery sector, which is forecast to register 21.5%py growth through to 2017,

reaching 106,400t LCE in the base-case scenario.

Other markets for lithium are also forecast to provide areas of growth for lithium

consumption, but only at around 4.0%py in the base-case scenario. The volume of lithium

consumption in rechargeable batteries, representing 27% of total consumption in 2012, is

now starting to have much more impact on overall lithium consumption and this sector’s

influence will continue to increase to 2017 when rechargeable batteries could account for

45% of the total market.

There are, however, both upside and downside risks to the outlook for growth in

consumption of lithium to 2017. The low-case (pessimistic) scenario foresees slower global

0

20

40

60

80

100

120

140

160

180

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Lit

hiu

m s

up

ply

(000t

LC

E)

Lit

hiu

m c

arb

on

ate

pri

ce (

US

$/t

)

Price (constant 2012 dollars) Price (nominal) Supply

Stable mineral-based supply and demand growth

New low-cost brine supply (SQM) enters market

Asian economic crisis, 9/11 and US recession

Strong demand growth, return of Chinese mineral converters

Global economic downturn and recovery


Roskill


economic growth affecting demand for basic products like ceramics, glass, aluminium, steel

and rubber, as well as lower demand for portable consumer electronics and delays in the

introduction of lithium battery powered EVs. In this scenario, growth in consumption of

lithium is forecast at 4.5%py to reach just under 187,000t LCE by 2017. Meanwhile, in the

high-case (optimistic) scenario, growth in consumption of lithium is forecast to increase by

15.7%py to reach just under 313,000t LCE by 2017. The optimistic scenario is based on

stronger global economic growth, and surging demand for lithium secondary batteries in

EVs.

Installed capacity for lithium production at end-2012 (279,000t LCE) is sufficient to meet

forecast demand to 2017 in the base-case demand scenario (238,940t LCE). Installed

capacity for lithium compound production, however, is only 190,650t LCE (comprising

122,150t LCE of brine and 68,500t LCE of mineral conversion capacity), versus projected

consumption of compounds at around 200,000t LCE. New or expanded capacity is

therefore required to satisfy future demand for lithium compounds (around 200,000t LCE) in

the base-case demand scenario.

Two new projects (Canada Lithium, 19,000tpy LCE and Orocobre, 17,000tpy LCE) are

expected to be commissioned in 2013 and 2014 meaning that capacity should be more than

sufficient to meet market requirements to 2017. In addition to these new projects, however,

FMC Lithium in Argentina is ramping up its 7,000tpy LCE expansion in mid-2013 and

Rockwood Lithium is expanding its operations in Chile by 20,000tpy LCE by late-2013.

SQM has also stated its intention to increase capacity to 60,000tpy LCE. Chinese mineral

converters have also recently expanded their plants (Sichuan Tianqi by 5,000tpy LCE and

Ganfeng Lithium by 10,000tpy LCE), utilising increased availability of spodumene from

Talison Lithium’s newly (2012) expanded chemical-grade spodumene capacity in Australia.

From a situation of relative market balance in 2011/12, following re-stocking in 2010 after

the global economic downturn, 2013 and 2014 are likely to witness supply-side pressure on

pricing. Nevertheless, there is insufficient low-cost capacity entering the market to displace

all of the high-cost mineral conversion capacity. The lithium market will therefore continue to

be reliant on supplies of lithium compounds from higher-cost producers in China through to

2017, and this effectively puts a floor under pricing. Retaining some higher-cost production

in the supply chain is also advantageous for lower-cost producers, because despite

potentially losing some market share its means low-cost producers can operate at very

healthy margins on commodity lithium products (carbonate and hydroxide in particular).

Lithium carbonate prices appear to have reached a floor of US$4,600/t CIF for technical-

grade and US$4,830/t CIF for battery-grade in 2011. Cost inflation for both brine-based and

mineral-based producers is forecast at 4.5%py and will be the main underlying driver for

increased prices in the long-term. Assuming a 4.5%py rise in operating costs, the floor price

in 2017 would be US$6,000/t CIF (US$5,702/t in constant 2012 dollars) (Table 241). This

forms the basis for the low-case scenario for pricing.

A US$250-500/t CIF (~10%) increase is considered likely in the base-case scenario for

2013, given the 20% increase already pushed through for 2012 contracts and increased

supply entering the market during 2013. Under the base-case scenario, average prices for

technical-grade lithium carbonate are expected to rise by 4.5%py to around US$6,900/t CIF

(US$6,558/t in constant 2012 dollars) in 2017.


Roskill


With current and forecast capacity more than sufficient to meet demand, it is unlikely prices

will test 2007 highs of US$6,500/t CIF, but if demand was to accelerate as per the optimistic

growth forecast (15.8%py, to 312,725t LCE by 2017) then prices would likely rise on

tightening capacity. In this scenario, prices are likely to trend around US$800-900/t above

the base-case to reach US$7,800/t by 2017.

Table 1: World: Forecast nominal and real prices for technical-grade lithium carbonate,

2012 to 2017 (US$/t CIF)

Nominal Prices Constant 2012 Prices

High Base Low High Base Low

2012 5,800 5,300 4,800 5,800 5,300 4,810

2013f 6,575 5,800 5,025 6,516 5,748 4,980

2014f 6,850 6,050 5,250 6,730 5,944 5,158

2015f 7,100 6,300 5,500 6,897 6,120 5,343

2016f 7,450 6,600 5,750 7,158 6,342 5,525

2017f 7,800 6,900 6,000 7,413 6,558 5,702 Source: Roskill forecast Note: Real prices adjusted to constant US dollars using World GDP deflator data from the International Monetary Fund's


In reality, prices are likely to move within the low-high range over the forecast period, rather

than follow the base-case, as year-on-year growth in demand and supply is rarely

consistent. Given a projected large rise in capacity being commissioned and supply ramped

up in 2013, prices in 2014 are forecast to trend towards the low-case pricing point on

increased competition between producers. This could result in some high-cost capacity

being idled during 2014. The impact of this on 2015 should be a return to a more balanced

market, but for prices it could take a couple of years before they converge back at the base-

case, gradually increasing to meet it in 2016. In real-terms (inflation adjusted), prices in the

base-case scenario would increase to around US$6,560/t CIF in 2017 (Figure 5).


Roskill



2012 to 2017 (US$/t CIF)

Source: Table 243, Roskill estimates Note: Real prices adjusted to constant US dollars using World GDP deflator data from the International Monetary

Fund's World Economic Outlook Database

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

2012 2013f 2014f 2015f 2016f 2017f

High-case Base-case Low-case Forecast


Roskill


2. Lithium Mineralogy, Occurrences and Reserves

Lithium is the lightest and least dense solid element in the periodic table with a standard

atomic weight of 6.94. In its metallic form, lithium is a soft silvery-grey metal, with good

heat and electric conductivity. Although being the least reactive of the alkali metals,

lithium reacts readily with air, burning with a white flame at temperatures above 200oC

and at room temperature forming a red-purple coating of lithium nitride. In water,

metallic lithium reacts to form lithium hydroxide and hydrogen. As a result of its reactive

properties, lithium does not occur naturally in its pure elemental metallic form, instead

occurring within minerals and salts.

Table 2: Properties of lithium

Atomic number 3

Atomic weight 6.94

Melting point (oC) 180.54

Boiling point (oC) 1347.0

Density (g/cm3) 0.53

Oxidation states (valence) +1

Colour Silvery-grey

Thermal conductivity (W•m-1

•K-1

) 84.8

Electrical resistivity (nΩ•m) 92.8

Stable isotopes Li, Li Source: Wikipedia, Chemistry Daily,

A. Białobrzeski et.al., Ultralight Magnesium-Lithium Alloys, Archive of Foundry Engineering, Vol. 7 Iss. 3, 2007 Notes: W•m-1•K-1 = Watts per metre kelvin nΩ•m = nano Ohm metres

2.1 Occurrence of lithium

The crustal abundance of lithium is calculated to be 0.002% (20ppm), making it the 32nd

most abundance element in the crust. Typical values of lithium in the main rock types

are 1-35ppm in igneous rocks, 8ppm in carbonate rocks and 70ppm in shales and clays.

The concentration of lithium in seawater is significantly less than the crustal abundance,

ranging between 0.14ppm and 0.25ppm.

There are five naturally occurring sources of lithium, the most developed of which are

lithium pegmatites and continental lithium brines. Other sources of lithium include oilfield

lithium brines, geothermal lithium brines and hectorite clays.

2.1.1 Lithium minerals

In comparison to many of the other cations which occur in magmas, lithium preferentially

remains in the fluid phase of the melt. As a result of this higher solubility, lithium

minerals occur mainly within late stage intrusives such as pegmatites and alkaline


Roskill


intrusives. Lithium minerals also occur within hydrothermal deposits which have been

derived from magmatic fluids.

There are around 250 identified lithium bearing minerals, although many of these only

contain minor amounts of lithium in their composition. According to Garrett, 145

minerals contain lithium as a major component, with 25 containing over 2% Li2O (Table

3).

Spodumene is the most commonly mined mineral for lithium, with historical and active

deposits exploited in China, Australia, the USA and Russia. The high lithium content of

spodumene (8% Li2O) and well defined metallurgical process, along with the fact that

spodumene typically occurs in larger pegmatite deposits, makes it an important mineral

in the lithium industry.

Lepidolite is a monoclinic mica group mineral typically associated with granite

pegmatites, containing approximately 7% Li2O. Historically lepidolite was the most

widely extracted mineral for lithium; however its significant fluorine content made the

mineral unattractive in comparison to other lithium bearing silicates.

Petalite comparatively contains less lithium than both lepidolite and spodumene, with

approximately 4.5% Li2O. Like the two aforementioned lithium minerals, petalite occurs

associated with granite pegmatites and is extracted for processing into downstream

lithium products or direct use in the glass and ceramics industry. Upon heating, petalite

converts to beta spodumene-quartz in the solid solution phase.

Lithium minerals such as amblygonite and eucryptite occur in more minor amounts,

accessory to the more common spodumene/petalite/lepidolite minerals. Inclusions of

these minerals however can significantly increase the lithium content of the rock mass

(Table 3).

Table 3: Significant lithium minerals

Name Formula Theoretical maximum Li2O

content (%)

Average Li2O% of

ores

Spodumene LiAlSi2O6 8.0 2.9-7.7

Petalite LiAl(Si4O10) 4.5 3.0-4.7

Lepidolite K(Li,Al)3(Si,Al)4O10(OH,F)2 7.7 3.0-4.1

Amblygonite (Li,Na)Al(PO4)(F,OH) 7.4 …

Montebrasite LiAl(PO4)(OH,F) 10.2 7.5-9.5

Eucryptite LiAlSiO4 11.8 4.5-6.5

Bikitaite LiAlSi2O6•H2O 7.3 …

Cookeite LiAl4 (AlSi3O10)(OH)8 2.9 …

Virgilite LiAlSi2O6 4.1 … Source: webmineral.com, mindat.org, Garrett 2004 – Handbook of lithium and natural calcium carbonate


Roskill


2.1.2 Lithium clays

Lithium clays are formed by the breakdown of lithium enriched igneous rock which may

also be enriched further by hydrothermal/metasomatic alteration. The most significant

lithium clays are members of the smectite group, in particular the lithium-magnesium-

sodium end member hectorite. Hectorite ores typically contain lithium concentrations of

0.24%-0.53% Li and form numerous deposits in Nevada, California, Utah, Oregon,

Wyoming, Arizona and New Mexico in the USA. As well as having the potential to be

processed into downstream lithium compounds, hectorite is also used directly in

aggregate coatings, vitreous enamels, aerosols, adhesives, emulsion paints and grouts.

Other lithium bearing members of the smectite group are detailed in Table 4.

Table 4: Major lithium bearing smectite group members

Name Formula Theoretical Li2O content (%)

Hectorite Na0.3(Mg,Li)3Si4O10(OH)2 1.17

Salitolite (Li,Na)Al3(AlSi3O10)(OH5) 1.65

Swinefordite Li(Al,Li,Mg)4((Si,Al)4O10)2(OH,F)4•nH2O 3.76 Source: webmineral.com, mindat.org, Garrett 2004 – Handbook of lithium and natural calcium carbonate

2.1.3 Lithium brines

Lithium enriched brines occur in three main environments, evaporative saline lakes and

salars, geothermal brines and oilfield brines. Evaporative saline lakes and salars are

formed as lithium bearing lithologies are weathered by meteoric waters forming a dilute

lithium solution. Dilute lithium solutions percolate or flow into lakes and basin

environments which can be enclosed or have an outflow. If lakes and basins form in

locations where the evaporation rate is greater than the input of water, lithium and other

solutes are concentrated in the solution, as water is removed via evaporation.

Concentrated solutions (saline brines) can be retained subterraneously within porous

sediments and evaporites or in surface lakes, accumulating over time to form large

deposits of saline brines.

Salars and saline lakes are exploited in North and South America, as well as in China,

and have provided significant amounts of lithium to the global market since the mid-

1990s. Lithium brine extraction from saline lakes and salars was first undertaken

commercially in 1966 at the Silver Peak deposit in Nevada, USA. Lithium had previously

been extracted from the Searles Lake deposits in the USA, although only as a by-

product of potassium production between 1936 and 1978.

In the late 1960s, exploration by the Chilean Instituto de Investigaciones Geologicas

identified elevated lithium concentrates in brines at the Salar de Atacama in northern

Chile. Commercial production of lithium carbonate from the Salar de Atacama began in

1986 by Sociedad Chilena de Litio. FMC began production of lithium chloride from the

Salar de Hombre Muerto, Argentina in 1994, shortly before Sociedad de Quimica (SQM)

began production of lithium carbonate at the Salar de Atacama in 1995.


Roskill


Significant production of lithium from saline lakes in China began in 2004, with

production at the Zabuye salt lake in Tibet and West Taijiner saline lake in Qinghai

province. The Qaidam basin area of Qinghai province is the most abundant location for

lithium bearing saline lakes in China, with three companies operating lithium brine plants

in the area. The Zabuye Salt Lake is also of particular interest as it is the only known

location where Zabuyelite (Li2CO3) is precipitated naturally from saline brines.

The chemistry of saline brines is unique to each site, with brines even changing

dramatically in composition within the same salar. The overall brine composition is

crucial in determining a processing method to extract lithium, as other soluble ions such

as magnesium, sodium and potassium must be removed during processing. Brines with

a high lithium concentration, low lithium: magnesium ratio and low lithium: potassium

ratio are considered most economical to process. Brines with lower lithium contents can

be exploited economically if evaporation costs are low. Lithium concentrations at the

Salar de Atacama in Chile and Salar de Hombre Muerto in Argentina are higher than the

majority of other locations, although the Zabuye Salt Lake in China has a more

favourable lithium: magnesium ratio (Table 5).

Table 5: Brine concentrations at selected deposits

Source Location Na K Li Mg Ca Cl

SO4 (wt%) (wt%) (wt%) (ppm) (ppm) (ppm) (wt%)

Salars and saline lakes

Clayton Valley USA 4.69 0.4 163 190 450 7.26 0.34

Salar de Atacama Chile 9.1 2.36 1,570 9,650 450 18.95 1.59

Salar de Hombre Muerto Argentina 9.90-

10.30 0.24-0.97 680-1,210 180-1,410 190-900

15.80-

16.80 0.53-1.14

Salar de Uyuni Bolivia 7.06 1.17 321 6,500 306 5 -

Searles Lake USA 11.08 2.53 54 - 16 12.3 4.61

Great Salt Lake USA 3.70-8.70 0.26-0.72 18

5,000-

9,700

260-360 7.00-

15.60 0.94-2.00

Dead Sea Israel 3.01 0.56 12 30,900 12,900 16.1 0.061

Sua Pan India 6 0.2 20 - - 7.09 0.83

Bonneville USA 8.3 0.5 57 4,000 57 14 -

Zabuye China 7.29 1.66 489 26 106 9.53 -

Taijinaier China 5.63 0.44 310 20,200 200 13.42 3.41

Geothermal brines

Salton Sea USA 5.00-7.00 1.30-2.40 100-400 700-5,700 22,600-

39,000

14.20-

20.9 42-50

Cerro Prieto Mexico 7.00 3.6 393 - 9,400 15.9 -

El Taito Springs Chile 0.44 0.05 46 - 15 0.8 0.003

Paradox basin USA 2.52 2.67 110 30,900 43,500 20.1 0.022

Oilfield brines Smackover Oilfield brine

(1976) USA 5.96 0.24 146 2900 29,100 14.45 0.03

Smackover Oilfield brine

(1984) USA 6.7 0.28 170 3500 34,500 17.17 0.04

Source: Garrett, 2004, Handbook of Lithium and Natural Calcium Chloride (original data from various sources)

The potential to produce lithium from geothermal brines continues to be assessed by

exploration and development companies. Simbol Materials are working towards


Roskill


commercial production of lithium, zinc and manganese from waste streams of a

geothermal power plant near to the Salton Sea in southern California, USA.

A number of oilfield brines are enriched in lithium, with localized areas of the Smackover

oilfield brines in Arkansas, USA, considered to possess the highest lithium

concentrations. Brines of the Smackover oilfields are described as being derived from

concentrated seawater enriched in calcium by dolomitisation of oolitic limestone in which

brines are hosted, and in lithium by interaction with geothermal fluids. Albemarle extract

bromine from the Smackover oilfield brines in Arkansas and are developing a method to

recover lithium from extracted brines.

2.2 Lithium reserves

Lithium reserves predominantly occur within lithium brine deposits located in the Andean

Altiplano regions of Chile, Argentina and Bolivia, along with the Qaidam Basin of Qinghai

province China and lithium brines in Tibet. Although the brines contain only low

concentrations of lithium, their large size allows for substantial reserves of lithium, with

brines estimated to account for 90% of global lithium reserves. Lithium contained within

sea water, although significant, is not considered to be a reserve, as concentrations are

too low. Lithium mineral reserves, typically associated with pegmatite and alkaline

intrusives, have been identified on every populated continent and form approximately

10% of global lithium reserves.

In 2013, the USGS reported global lithium reserves of 13.0Mt Li, with Chile and China

accounting for almost 85% of global reserves. The USGS estimate excluded reserves

identified in Bolivia at the Salar de Uyuni, considered by some to be the largest single

lithium reserve at 5.5Mt Li. Roskill estimates global lithium reserves to be 20.8Mt in

2013, as the continued exploration and development of lithium projects has significantly

increased global reserves since Garrett’s estimate of 17.8Mt Li in 2004 (Table 6). In

1985, the National Research Council (NRC) reported estimated combined lithium

reserves and resources to total 28.5Mt Li, which Roskill estimate have increased to

>30Mt Li in 2013.

Evans, in “An Abundance of Lithium, Part Two”, released in July 2008, reported global

lithium reserves and resources at 29.8Mt Li, with lithium brine depostis accounting for

19.3Mt Li and lithium mineral deposits accounting for the remaining 10.5Mt Li.


Roskill


Table 6: Lithium reserves by country (000t Li)

USGS Roskill Garrett NRC

Reserves Reserves Reserves

Reserves & Resources

Afghanistan … 150 … …

Argentina 850 2,700 800 2,710

Australia 1,000 505 150 263

Austria … … 10 100

Bolivia … 5,500 5,000 5,500

Brazil 46 50 3 85

Canada … 204 240 256

Chile 7,500 7,300 3,000 6,900

China 3,500 3,900 2,500 3,350

DRC … 310 309 2,300

Finland … 6 … 14

Israel … … 2,000 …

Mali … … 26 …

Namibia … … 10 …

Portugal 10 10 10 …

Russia … … 130 1,000

Serbia … … 850 …

Spain … <1 … …

USA 38 169 2,703 5,936

Zimbabwe 23 25 23 57

Total (rounded) 13,000 20,800 17,800 28,500 Source: USGS - Mineral Commodity Summaries, 2013; Roskill – Section 4; Garrett, 2004 – Handbook of Lithium and

Natural Calcium Chloride (reserves from various sources); National Research Council (NRC) - 1985.


Roskill


3. Lithium mining and processing

Techniques used in the commercial mining and processing of lithium can be subdivided

into three broadly different categories, dependent upon the nature of the lithium

occurrence:

Hard rock occurrences produce lithium mineral concentrates including

spodumene, petalite, lepidolite and amblygonite. Hard rock lithium ores

require size reduction and typically some form of physical, magnetic or

electrostatic concentration. Mineral concentrates may be consumed directly in

industry, or used for the production of downstream lithium compounds through

mineral conversion.

Lithium bearing brines are a major source of global lithium compounds supply.

Brines typically undergo solar evaporation or ion-exchange to produce a lithium

brine concentrate, which can be processed further into lithium compounds.

Extraction and processing of hectorite-bearing mineral clays to produce lithium

products is being explored by some parties, although commercial production

has not yet been achieved. Mineral clays would be processed in a similar

fashion to hard-rock lithium ores, although without the need for initial crushing

and grinding.

An overview of lithium production from mine to major lithium end-products is shown in

Figure 6.

Figure 6: Overview of lithium production

Source: Adapted from SQM

Minerals &

Clays

Brines

Lithium

carbonate

Lithium

hydroxide

Low sodium

Lithium Chloride

High sodium

Lithium Chloride

Low sodium

Lithium metal

High sodium

Lithium metal

Butyl lithium Speciality

organic

High-grade

Lithium

carbonate


Roskill


3.1 Extraction and processing of lithium brines

Lithium is extracted from brine deposits in Argentina, Chile, China and the USA. At

operations in Chile, China and the USA, brines are first pumped to the surface to be

concentrated by solar evaporation in a series of evaporation ponds. Concentrated

brines are then transferred to a processing facility where reagents are added to remove

impurities and produce a lithium compounds by precipitation. In Argentina, at FMC

Lithium’s Salar del Hombre Muerto property, lithium brines are first concentrated by ion-

absorption onto polycrystalline alumina, before solar evaporation and extraction. At the

Zabuye salt lake in Tibet, China, Tibet Lithium New Technology are believed to have

developed a process utilising the freezing temperatures experienced at the property

when the evaporation rate is very slow, along with conventional solar evaporation when

evaporation rates are higher. The process involves alternate freezing and evaporation

stages to concentrate the brines and extract lithium carbonate, although few specific

details have emerged on the exact nature of the process.

Other methods to extract lithium from brines have been studied and developed with

varying success, for example the use other absorbent materials such as spinel,

magnesium dioxide or sodium phosphate during ion-absorption, or the use of ultrasonic

generators to promote precipitation of lithium from brines in Canada. The extraction and

processing of lithium at commercial operations in Chile, Argentina, China and the USA

are described in more detail below.

Rockwood Lithium (Salar de Atacama, Chile and Clayton Valley, USA) and SQM

(Salar de Atacama, Chile)

The method used by Rockwood Lithium at Clayton Valley and SQM at the Salar de

Atacama is based upon solar evaporation of extracted brines within a series of

evaporation ponds, concentrating brines to a level where lithium can be precipitated via

the addition of a reagent. This method is also often referred to as the ‘Silver Peak’

method. Brines in the evaporation ponds are maintained within a certain depth range to

allow maximum evaporation. At Rockwood Lithium, evaporation of brines in evaporation

ponds 1, 2 and 3 allows crystallisation of minor amounts of calcite and gypsum, followed

by crystallisation of halite. Brine is transferred to evaporation pond 4, where lime is

added to precipitate magnesium hydroxide and gypsum in pond 5. In ponds 6 and 7,

halite, sylvenite and glaserite are precipitated before the concentrated brine is

transferred to evaporation ponds 8 and 9 where final precipitation of halite, potash and

glaserite occurs. The resultant brine concentrate contains around 6% Li, which is

pumped to the lithium carbonate plant at Silver Peak. At the Silver Peak plant, the brine

concentrate is mixed with lime to precipitate any residual magnesium and/or minor

amounts of sulphate and boron. Soda ash is then added to the solution to precipitate

calcium, before being filter pressed and finally heated with soda ash to 93oC to

precipitate lithium carbonate. Waste water from the lithium carbonate production

process are put back into the evaporation ponds as they still contain at least half of the

feed brine’s lithium content.

Rockwood Lithium also uses a similar process to the Silver Peak method at the Salar de Atacama and La Negra plant in Chile. One notable difference is the boron content of brines at the Salar de Atacama is higher than at Clayton Valley in the USA, which


Roskill


requires concentrated brines to be acidified and undergo solvent extraction to remove boron from solution. Alternatively, the La Negra plant can produce lithium chloride by heating the filtered brine concentrate, after the addition of lime and soda ash, to 110

oC

causing lithium chloride to crystallise out of solution. The precipitate is thickened, filtered and washed at 130

oC before being dried at 170

oC to produce a saleable lithium chloride

product.

Figure 7: Extraction and processing of brines from the Salar de Atacama, Chile and

Silver Peak, Nevada by Rockwood Lithium

Source: Adapted from the Handbook of Lithium and Natural Calcium Chloride, Garrett, 2004.

At the Salar de Atacama and Salar de Carmen plant in Chile, SQM use a processing

flow sheet similar to Rockwood Lithium’s method. Extracted brines are pumped into

ponds where concentration by evaporation causes precipitation of firstly halite and later

sylvinite. Brines are drained from the evaporation ponds once concentration of lithium in

the brines reaches ~6% Li, or the saturation point of lithium chloride, and transported to

the Salar de Carmen plant via truck.

Once at the Salar de Carmen plant, the brines undergo solvent extraction to remove

boron as sodium borate, and reduce the boron content of the brine concentrate from

around 0.8% B to 0.0005% B. The boron-depleted brine is transferred to an on-site

chemical facility where soda ash is added to precipitate and filter out magnesium

carbonate. Finally, the concentrated brine is heated and reacted with additional soda

ash to precipitate lithium carbonate, which is filtered, washed and dried in a rotary drier.

Solar evaporation ponds

LiCl-

MgCl

NaCl NaCl

-KCl

NaCl

-KCl

KCl –

MgCl

MgCl

Brine from salar CaO +

H2O

Brine (4-6% Li)

Magnesia and calcia

precipitation Sedimentation

Filtration

Solids Precipitation of MgCO3,

Mg(OH)2, CaSO4 + CaCO3

Liquids

Lithium carbonate

precipitation

Sedimentation

Dryer (130-160°C) Cooler Precipitation of Li2CO3

Solids

Filtration

Liquid

from plant

Liquids


Roskill


Figure 8: Flow sheet showing the processing of brines at Salar de Carmen by SQM

Source: Adapted from the Handbook of Lithium and Natural Calcium Chloride, Garrett, 2004.

FMC Lithium (Salar del Hombre Muerto)

FMC Lithium has not publically reported details of the processing flow sheet used at the

Salar del Hombre Muerto, although patent applications by FMC Lithium focusing on the

selective absorption of lithium onto alumina are believed to be relevant to the process.

The process described in a patent filed by FMC Corporation in February 1997, involves

extracted brines being passed through a series of columns containing prepared

polycrystalline hydrated alumina (PHAl). The PHAl is prepared by initially reacting

alumina with lithium hydroxide (LiOH), which is then neutralised using dilute hydrochloric

acid (HCl) in a sodium bicarbonate (NaHCO3) bearing solution. Neutralisation causes

the crystallisation of ‘lithium chloride-aluminium hydroxide’ (LiCl-Al(OH)3), which is

stripped of lithium by water washing leaving PHAl with a capacity to absorb lithium

chloride in strongly ionic solutions (such as extracted brines).

As the brines are passed through the columns, lithium dissolved in the brine solution is

absorbed onto the surface of the PHAl. Once saturated in lithium, columns are removed

and lithium is eluted from the PHAl by washing with water. To ensure all lithium has

been removed the columns are washed with saturated sodium chloride solution, a

process which also returns the PHAl’s capacity to accept lithium from brine solution.

The elutant solution is believed to contain up to 1% Li, which is pumped into evaporation

ponds to concentrate lithium further. When brines reach the optimum lithium

concentration in the evaporation ponds, they are pumped back to FMC Lithium’s on-site

processing plant at the Salar del Hombre Muerto, where lithium is extracted using a

similar process to that by Rockwood Lithium and SQM in the USA and Chile (Figure 8).

Brine storage Brine from salar

evaporation ponds

Organic

Organic

Waste pond Dilute sodium borate

Water Soda ash

Lime Soda ash Rotary dryer Belt filter

Recycle to salar To 1st wash

Magnesium

hydroxide

Magnesium

carbonate

Frame filter Rotary filter

Screens and

compactor Storage

Microniser

Shipping

Fines

Oversize

Solvent extraction

Li2CO3


Roskill


Tibet Lithium New Technology (Zabuye Salt Lake, Tibet, China)

The altitude of the Zabuye salt lake in Tibet, China, means that conditions are such that

solar evaporation, especially in winter, is low. As a result, a new method of brine

concentration based on combining natural freezing and solar evaporation is thought to

have been developed. Although few details of the method have emerged, water and

certain salt crystals are understood to be separated from the brine during freezing, the

brines subjected to solar evaporation and the process repeated. The results of one

experiment showed that the concentration of lithium increases from 0.957g/l (957ppm Li)

in the initial brine to 7.97g/l (7,970ppm Li), more than double the highest value (2.8g/l

2,800ppm) achieved by natural solar evaporation; the carbonate content decreased

from 20.2% to 11-14%. This sequence of freezing and evaporation makes it possible to

produce brine suitable for extraction of lithium carbonate (Li2CO3).

3.1.1 Other methods of brine extraction

Lithium Exploration Group (LEG) is developing a method of extracting lithium and other

salts from saline brines using an ultrasonic generator. The ultrasonic generator

technology is patented by Glottech-USA, a division of Swiss based TECH-RUS GmbH,

to who LEG are providing financial assistance. LEG reports that the process relies upon

ultrasound cavitation reactions which increase the temperature and pressure of the brine

solution to levels necessary to separate dissolved salts. Test work remains on going to

identify an effective operating flow sheet. Glottech-USA states each ultrasonic

generator has a capacity to desalinize sea water at a rate of 25-35m3/hr producing pure

water and precipitated salts.

Bateman Lithium Projects, a division of Bateman Litwin Group, have developed their

patented (pending) Li SX™ method which involves solvent extraction to extract lithium

compounds from lithium brine solutions or post-leach solutions from lithium mineral

processing. A pre-treatment stage (known as LiP™) which removes Ca/Mg from

solutions without the need for chemical precipitation has also been developed by

Bateman Lithium to treat lithium brines. Brines are initially mixed with an organic solvent

in which lithium ions are preferentially dissolved, effectively impregnating the organic

solvent with lithium. The pregnant organic solvent is separated from the aqueous brine

and stripped of lithium with the addition of a strong acid (hydrochloric acid, sulphuric

acid, nitric acid, phosphoric acid, etc.), producing a lithium salt and stripped solvent

which can be reused.

The Li SX™ process is reported to be effective on aqueous solutions containing lithium

concentrations as low as 5ppm Li, with recoveries of around 95%. The process also

allows lithium to be extracted from solutions within a period of hours and minutes,

compared with at least several months in conventional solar evaporation methods.

Bateman Lithium also state that the process may be tailored within hours to produce

different lithium end products (carbonate, chloride, hydroxide) at high purity battery

grade and above.


Roskill


Figure 9: Simplified flow sheet of the Li SX™ method patented by Bateman Lithium

Projects

Source: Bateman Lithium Projects presentation

3.2 Mining and processing of lithium minerals

The majority of lithium bearing pegmatites mined at present are near surface lending

themselves to open-pit mining methods. Hard rock lithium mines in Australia, Zimbabwe,

Brazil, China and Spain all use open pit drill and blast methods, whilst a small number of

mines in China and the Bernic Lake mine (currently on care and maintenance) in

Canada, use underground room and pillar methods to extract lithium ores.

In a typical process to produce lithium mineral concentrate, mined ore initially undergoes

size reduction by a combination of primary and secondary jaw crushers and tertiary cone

crushers (Figure 10). Crushed ore is concentrated by heavy media separation, milling

and classification, floatation and/or magnetic separation, and final filtering, washing and

drying. The exact process varies between operations dependant on the ore

composition, for example heavy media separation is not undertaken at Talison Lithium’s

Greenbushes mine and only a simplified heavy media separation stage is undertaken by

Bikita Minerals in Zimbabwe.

Brine

Feedstock

Solvent extraction

Organic

(loaded)

Organic

(stripped)

Strong Acid

(e.g. HCl)

Lithium salt

(e.g. LiCl)

Waste

brine

Storage Lithium

chloride

product

Lithium

hydroxide

product

Lithium

carbonate

product

Electrolysis Precipitation and

washing

Soda ash

(Na2CO3)

Spent

solution


Roskill


Figure 10: Simplified mineral concentrate production flow sheet for a typical hard rock

lithium operation

Source: Roskill

Lithium mineral concentrates include a range of mineralogies which are extracted and

processed at different operations around the world. Spodumene concentrate is the most

common mineral concentrate, mined and processed at Greenbushes and Mt. Cattlin in

Australia, various mines in China and the Cachoeria mine in Brazil. Petalite is mined

predominantly at the Bikita and Al Hayat quarries in Zimbabwe and in lesser amounts at

Itinga in Brazil. Other lithium mineral concentrates include lepidolite, mined at the

Guarda mine in Portugal, La Fregeneda in Spain and Yichuan Huili in China, and

Amblygonite, previously mined in Lake Bernic in Canada and the Rubicon mine in

Namibia. Compositions for the various lithium mineral concentrates are shown in Table

7.

Table 7: Composition of standard lithium concentrates (%)

Spodumene Petalite Lepidolite

Canada

(TANCO)

Australia

(Greenbushes)

China

(Maerkang)

Zimbabwe

(Bikita)

Brazil

(Itinga)

China

(Yichun)

Li2O 7.28 5.00 6.00 4.45 4.35 4.65

Fe2O3 0.06 0.10 1.80 0.04 <0.01 1.29

SiO2 65.76 75.00 62.00 76.50 78.37 55.33

Al2O3 26.00 18.50 27.00 16.50 17.06 23.64

K2O 0.30 0.35 1.00 0.26 <0.01 8.35

Na2O 0.30 0.25 1.00 0.70 <0.01 1.13

P2O5 0.30 - 1.00 - <0.01 - Source: Industrial Minerals Handy Book IV; Talison Minerals; Sichuan Guorun; Beijing Oncoming (Zimbabwe Petalite);

Handbook of Lithium and Natural Calcium Chloride, Garrett, 2004 (Brazil and Yichun, China)


Roskill


3.3 Processing lithium mineral concentrates to lithium compounds

There are two main methods used to convert lithium mineral concentrates to lithium

compounds. These are the acid- roast method, based around the acid digest of

spodumene, and the lime-roast method which requires heating spodumene with lime.

The acid-roast method was developed by Lithium Corporation of America, now FMC

Lithium, in the 1940s to convert spodumene concentrates from the Cherryville mine,

North Carolina. The lime-roast method was developed later during the 1950s by Foote

Mineral Company, now Rockwood Lithium, and was used to process spodumene

concentrates extracted from the Kings Mountain mine in North Carolina.

FMC Lithium’s acid-roast method (Figure 11) requires spodumene concentrates to

initially be heated to between 1,050-1,150oC for 10-20min, causing the restructuring of

α-spodumene to its β-spodumene form. The conversion at temperature is essential to

the process as unlike α-spodumene, β-spodumene is readily dissolved in acid. The

concentrate is cooled and ground before being transferred to a mixer where it is reacted

with sulphuric acid at between 200-250oC to form a lithium sulphate slurry. The slurry is

mixed with water in which lithium sulphate readily dissolves, before calcium carbonate is

added to remove impurities such as iron and aluminium and neutralize the solution prior

to filtration. After an initial stage of filtration, soda ash and lime are added to create an

alkaline solution containing calcium and manganese carbonate before being re-filtered.

After neutralisation with sulphuric acid the solution is treated to remove any remaining

impurities and concentrated in an evaporator to 200-250g/l Li2SO4. The solution is

mixed with soda ash to precipitate lithium carbonate upon heating to 90-100°C and the

remaining sodium sulphate is washed, evaporated and sold as a by-product.


Roskill


Figure 11: Simplified flow sheet for lithium carbonate production from spodumene

mineral concentrate using the acid-roast method

Source: Roskill, Handbook of lithium and Natural Calcium Chloride, Garrett, 2004

In the lime-roast process, spodumene mineral concentrate is mixed with lime and

heated to between 1,030-1,040oC (Figure 12). Roasting causes α-spodumene to

convert to its β-spodumene structure, which reacts with the lime to form dicalcium

silicate (Ca2SiO4) and lithium oxide (Li2O). The clinker is cooled and ground before

being leached with hot water to form a lithium hydroxide solution. The solution is

thickened before dicalcium silicate is removed as an underflow and transported to

tailings. The remaining lithium hydroxide solution is concentrated in an evaporator-

crystalliser into a slurry which is either steam dried to produce a lithium hydroxide

monohydrate product or vacuum dried to produce a lithium hydroxide product.


Roskill


Figure 12: Simplified flow sheet for lithium hydroxide and lithium hydroxide

monohydrate production from spodumene mineral concentrate using the lime-roast

method

Source: Roskill, Handbook of lithium and Natural Calcium Chloride, Garrett, 2004

American Lithium Chemicals constructed a plant in San Antonio, Texas in the 1950s to

process imported lepidolite from Zimbabwe into lithium hydroxide monohydrate under a

government contract; however this plant closed following the termination of the contract

in the 1960s. The process was similar to the lime-roast operation at Kings Mountain

described above. In China, Xinyu Ganfeng, was thought to use a similar method of

production to that used by American Lithium Chemicals to extract lithium carbonate from

lepidolite produced as a by-product of tantalum and niobium mining. Other plants in

China are thought to use variations of the lime-roast and acid-roast processes; although

there is indication that some have switched to the acid-roast process to enable them to

produce lithium carbonate more cost effectively. The Cia Brasileira do Litio (CBL) plant

in Brazil uses an acid-roast process to produce lithium carbonate and chloride from

spodumene and, prior to its closure, the JSC Krasnoyarsk Chemical Metallurgical Plant

in Russia used the lime-roast process to produce lithium hydroxide.

Keliber Oy and Outotec Oy in Finland have developed a tailored version of the lime-

roast method to incorporate its supply of biogas (a mixture of chiefly carbon dioxide and

methane) as both a reagent and an energy source. Spodumene concentrate is roasted

(using bio-methane fuel) converting it to its β-spodumene form, before being mixed with


Roskill


sodium carbonate (Na2CO3) solution to produce lithium bicarbonate. The lithium

bicarbonate bearing solution is crystallised, filtered, washed and dried to produce a

lithium carbonate product, before further micronization is undertaken if required. Lithium

carbonate is refined by mixing with carbon dioxide from the adjacent biogas plant to

produce a final product.

3.4 Processing lithium bearing clays into lithium compounds

A standard, cost effective method for the extraction of lithium from clays is under

development by a number of companies holding projects in the USA, Mexico and

Turkey. Western Lithium has developed a flow sheet to process hectorite bearing clay

from the King’s Valley lithium project with assistance from Hazen Research Inc. in the

USA, K-UTEC Salt Technologies and Outo Tech in Germany, and the Centro de

Investigación Cientίfico Tecnológico para la Minerίa (CICITEM) in Chile. The process

initially requires clays to be mixed with anhydrite (CaSO4) and limestone (CaCO3),

before being granulated (3-5mm). The mixed granules are calcined in a rotary kiln at

1,050oC to form alkali -metal sulphates ((Li, K, Na)2 SO4) and silica (SiO2), which reacts

with limestone to form wollastonite (CaSiO3). Calcined material is cooled and leached

with 75-90oC water to dissolve the alkali-metal sulphates and form brine. Brines are

sent to an evaporator-crystalliser to crystallise glaserite (K2SO4) and glauber salt

(Na2SO4), before the remaining brine is mixed with soda ash (Na2CO3) to precipitate

lithium carbonate (Li2CO3). Lithium carbonate precipitate is filtered, washed and dried to

produce a final product, which can be purified by ion-exchange with carbon dioxide

(CO2) if required.


Roskill


Figure 13: Simplified flow sheet for lithium carbonate production from hectorite clay

developed by Western Lithium

Source: Western Lithium

3.5 Lithium compounds and chemicals

Lithium carbonate is the most widely produced and consumed lithium compound, with

lithium hydroxide and lithium bromide the second and third most consumed lithium

compounds respectively. A number of specialty lithium chemicals such as butyl-lithium,

lithium metal and organo-lithium compounds are also produced by some processors,

however only in smaller volumes, using lithium chloride as a feedstock.

Lithium carbonate (Li2CO3) is a fine white powder which is less soluble in hot than cold

water. Lithium carbonate can be produced directly from brines, minerals and clays, or

from other lithium compounds like lithium chloride and lithium hydroxide. Lithium

carbonate is not hygroscopic and is generally stable when exposed to the atmosphere,

although the compound reacts readily with strong acids and is frequently used for the

manufacture of other lithium salts. Specifications of lithium carbonate produced by the

leading suppliers, SQM and Rockwood, are shown in Table 8 and from selected other

suppliers in Table 9.


Roskill


Table 8: Specifications for lithium carbonate produced by SQM and Rockwood

Lithium (% max.)

Company: SQM Rockwood Lithium

Type: Powder Granular Battery Fines Granules Battery

Li2CO3 (% min) 99.00 99.00 99.20 99.00 99.00 99.80

Cl 0.02 0.02 0.01 0.015 0.015 0.015

Na 0.12 0.18 0.06 - 0.08 0.04

K 3ppm 3ppm 5ppm 1ppm - 1ppm

Ca 0.04 0.068 0.01 0.016 0.018 0.016

Mg 0.011 0.025 0.01 0.01 0.025 7ppm

SO4 0.10 0.10 0.03 0.05 0.054 0.05

B 10ppm 10ppm - - - -

H2O 0.20 0.20 0.2 - - 0.35

LOI 0.70 0.80 0.5 0.75 0.85 -

Insolubles 0.02 0.02 0.01 - 0.02 - Source: SQM and Rockwood Lithium

Table 9: Specifications for lithium carbonate produced by other suppliers (% max.)

Company: FMC Tianqi Lithium Sichuan Guorun China Non-Ferrous

Grade: Technical Battery Standard Battery Industrial Battery Technical

Li2CO3 (min) 99.0 99.5 99.0 99.5 99.0 99.99 99.0

Cl- 0.02 0.01 50ppm 50ppm 0.05 1ppm 0.05

Na+ - 0.05 - 0.025 0.14 2ppm -

Na2O 0.2 - 0.2 - - - 0.2

Ca2+

- 0.04 - 50ppm 8ppm 5ppm -

CaO 0.06 - 0.05 - 0.05 - 0.05

SO4 0.1 0.1 0.35 0.08 0.35 0.02 0.35

H2O 0.6 0.5 0.6 0.4 0.6 0.2 0.6

Insolubles 0.02 0.02 0.015 - 0.015 - 0.02

Source: FMC Lithium, Tianqi Lithium, Sichuan Guorun, China Non- Ferrous Metal Import and Export Xinjiang Corp.

Lithium hydroxide (LiOH) may be directly recovered from spodumene or other ores by

a high-temperature process employing lime. It can also be produced by reacting lithium

carbonate with lime and water at or near boiling point. It is a white, fine powder with

relatively low solubility in water. The main application of lithium hydroxide is in lithium

grease, although an increasing number of producers are planning or have introduced

production of battery-grade lithium hydroxide, used in the production of Li-ion battery

cathodes. Product specifications for the leading suppliers of battery grade lithium

hydroxide are shown in Table 10.


Roskill


Table 10: Battery grade lithium hydroxide product specifications of major producers

(% max.)

Rockwood

Lithium FMC Lithium

Tianqi

Lithium

Sichuan

State

Sichuan

Ni & Co

Chengdu

Chemphys

Bat. Bat. Elec. Bat. Bat. Bat. Bat.

LiOH % 56.5 56.5 56.5 56.5 54.8 56.5 56.5

Ca% … 0.0015 0.0007 0.002 0.01 0.005 0.007

Na% 0.0025 0.002 0.0003 0.05 0.04 0.05 0.025

K% 0.0025 0.001 0.0002 0.005 0.004 0.005 0.025

Fe% 0.001 … … 0.0007 0.0008 0.0008 0.0021

Al% … 0.001 0.0005 … … … …

CO2% 0.3 … … 0.3 0.3 0.035 0.35

Cl% 0.005 … … 0.003 0.003 0.003 0.01

SO4% 0.02 … … 0.01 0.005 0.01 0.03 Source: Roskill Notes: Bat. = Battery Grade Elec. = Electrolyte grade

Lithium chloride (LiCl) is prepared by the reaction of hydrochloric acid with either

lithium carbonate or lithium hydroxide. After evaporation and crystallisation, the crystals

are isolated and dried to yield anhydrous lithium chloride. Lithium chloride can also be

produced directly from lithium brines. It is very hygroscopic and highly soluble in water.

In contrast to other alkali metal chlorides, it is soluble in many organic liquids, such as

alcohols. The main markets are welding rods and dehumidifiers.

Butyl lithium is an organolithium compound which is widely-used as a reagent because

of its high reactivity, versatility and low cost. Uses lie in reducing agents in organic

chemistry and catalysts for polymerisation, pharmaceuticals and agricultural chemicals.

Lithium metal can be produced by the electrolysis of a molten lithium chloride-

potassium chloride mix at between 400 and 500°C using a graphite electrode.

Other lithium compounds produced from lithium carbonate or lithium hydroxide

monohydrate are listed below:

Chemical Formula

Lithium acetate LiC2H3O2.2H2O

Lithium aluminate LiAlO2

Lithium aluminium hydride LiAlH4

Lithium amide LiNH2

Lithium metaborate LiBO2

Lithium tetraborate LiBO4

Lithium bromide LiBr

Lithium borohydride LiBH4

Lithium iodide LiI.3H2O

Lithium nitrate LiNO3

Lithium nitride Li3N

Lithium sulphate Li2SO4.H2O

Lithium silicate Li2O.2SiO2


Roskill


Lithium stearate Li2(C17H35CO2)

Lithium phosphate Li3PO4

3.6 Production costs

During the late 1990s to the mid 2000s, the production costs of lithium carbonate

extracted from brine operations in Chile was typically less than US$1,600/t Li2CO3. This

is calculated from the unit value of lithium carbonate exported from Chile by SQM and

Rockwood lithium who supplied much of the global demand for lithium carbonate during

this period. Production costs at FMC’s plant in Argentina were believed to be higher,

associated with increased energy consumption by the selective absorption process. The

unit values of Argentine exports between the early to mid-2000s was US$2,400/t Li2CO3,

which with an assumed profit margin of around 25%, estimates production costs to be

approximately US$1,800/t Li2CO3.

Hard rock lithium mineral operations typically have higher production costs when

compared to lithium brine operations and clay projects with similar production capacities.

This is mainly a result of costs incurred during mineral extraction (mining) and ore size

reduction/mineral concentration (milling), both of which are energy and fuel intensive

and require a specialised labour force. Mining and milling costs vary dependent upon

location, availability of equipment, deposit geology and numerous other criteria,

however, most lithium hard rock mines estimate mining and milling costs of between

US$20-50/t milled ore (Figure 14). Mining and milling costs are usually dominated by

labour, energy and fuel costs, and equipment maintenance and parts.

Multiple tonnes of lithium mineral ore are needed to be mined and milled in order to

produce a single tonne of lithium compound. To produce 1t of lithium carbonate from an

ore with an initial 2.0% Li2O content, assuming 90% recovery during each of the mining,

milling and processing stages, would require 28t of ore to be mined. If a cost of US$50/t

milled ore is applied, total mining and milling costs would total US$1,400/t Li2CO3, before

processing costs have been considered.


Roskill


Figure 14: Mining and milling costs for hard rock lithium mineral operations/projects

Source: Company press releases and technical reports, Roskill estimates Notes: ** = Taken from January 2009 DFS

Chilean brine producers form the lower end of the cost curve, with production costs of

less than US$2,500/t Li2CO3 (Figure 15). Although brines must be pumped to the

surface to undergo concentration and processing, the lack of mining and milling costs is

an advantage over competing lithium mineral operations. Production costs for lithium

brine operations are dominated by the cost of reagents, energy and fuel used in the

hydrometallurgical process. The favourable chemistry of lithium brines at the Salar de

Atacama in Chile also makes them amenable to low cost processing by solar

evaporation and precipitation without the need for additional processes to remove

impurities.

Production costs in Argentina are estimated to have increased to US$3,000/t Li2CO3 in

2012. Production costs at Chinese lithium brine operations are probably similar or

slightly higher than Argentine brine operations, at between US$3,000-3,300/t Li2CO3 in

2012, as high magnesium concentrations in brines result in higher consumption of

reagents during processing.

In comparison to production of lithium carbonate from lithium brines, the cost of

converting lithium minerals to lithium carbonate is much greater. After brine projects in

Chile began production of lithium carbonate during the mid-1990s, lithium mineral

conversion became uncompetitive and continued only in Brazil and China. The main

cost in lithium mineral conversion is the procurement of raw materials, with

approximately 7-8t of mineral concentrate required to produce one tonne of lithium

carbonate. Production costs for Chinese mineral conversion plants are most likely in the

range of US$4,000-4,500/t Li2CO3, forming the top end of the cost curve and making

these producer the most sensitive to changes in the lithium carbonate price.

0

10

20

30

40

50

60

70

Altura Mining CriticalElement Corp.

Glen Eagle Talison Lithium GalaxyResources**

CanadaLithium

Min

ing

/Mil

lin

g C

os

ts (

US

$/t

mil

led

ore

)


Roskill


Figure 15: Lithium carbonate cash operating costs, 2012

Source: Company press releases and technical reports, Roskill estimates Notes: Blue: lithium brine operatons Red: hard rock lithium mineral operations

A cost curve of potential lithium carbonate producers shows a similar arrangement to

existing lithium carbonate suppliers, with production costs for lithium brine projects, at

this stage, estimated to be US$1,500-2,000/t Li2CO3. Potential hard rock lithium projects

form the top end of the cost curve in Figure 16, with estimated production costs of

between US$3,100-3,500/t Li2CO3. Intermediary to brine and hard rock, production costs

for lithium clay projects range between US$1,950-3,000/t Li2CO3. The large range in

costs is probably a consequence of project location, and the variability of energy, labour

and reagent costs.

SQ

M (

Chile

, b

rin

e)

Rockw

oo

d (C

hile

, b

rin

e)

Tib

et

Za

bu

ye

(C

hin

a, b

rin

e)

FM

C (

Arg

en

tin

a, b

rin

e)

CIT

IC G

uo

an

(C

hin

a, b

rin

e)

Qin

gh

ai L

an

ke

(C

hin

a, b

rin

e)

Min

fen

g L

ith

ium

(C

hin

a, m

ine

ral)

Oth

er

(Ch

ina

, m

ine

ral)

Ge

ne

ral L

ith

ium

(C

hin

a, m

ine

ral)

Tia

nq

i L

ith

ium

(C

hin

a, m

ine

ral)

Xin

jian

g H

ao

xin

g (

Ch

ina

, m

ine

ral)

G

an

fen

g L

ith

ium

(C

hin

a, m

ine

ral)

Ga

laxy L

ith

ium

(C

hin

a, m

ine

ral)

CB

L (

Bra

sil,

min

era

l)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Pro

du

cti

on

co

sts

(U

S$

/t L

CE

)

Capacity (tpy LCE)


Roskill


Figure 16: Potential new producers production costs

Source: Company press releases and technical reports, Roskill estimates Notes: Blue: lithium brine projects Red: hard rock lithium mineral projects Green: lithium clay mineral projects * = average production cost of battery grade LiOH and battery grade Li2CO3 expressed as US$/t LCE

Lith

ium

Am

eri

ca

s (

Arg

en

tin

a, b

rin

e)

Weste

rn L

ith

ium

(U

SA

, cla

y)

Ca

na

da

Lith

ium

(C

an

ad

a, m

ine

ral)

Ne

ma

ska

Lith

ium

* (C

an

ad

a, m

ine

ral)

Oro

co

bre

(A

rge

ntin

a, b

rin

e)

Ga

laxy R

eso

urc

es (

Arg

en

tin

a, b

rin

e)

Ba

nco

ra M

ine

rals

(M

exic

o,

cla

y)

Ro

din

ia L

ith

ium

(A

rge

ntin

a, b

rin

e)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Pro

du

cti

on

Co

st

(US

$/t

Li2

CO

3)

Capacity (tpy LCE)


Roskill


4. Production of lithium

In 2012, world production of lithium was estimated to be around 168,300t LCE.

Discounting a fall in global lithium production in 2009 associated with the global

economic downturn, lithium production since 2001 has grown year-on-year, increasing

on average by 8%py. The continued growth has been driven by increased production

mainly within Australia, Chile and China (Figure 17).

Figure 17: World: Production of lithium by country, 2000 to 2012 (t LCE)


Expansion of production capacity at the Greenbushes mine in Australia in 2011-2012

meant Chile was no longer the largest producing nation for the first time since before

2000. In 2012, the three largest producing nations, Australia, Chile and Argentina,

accounted for over 85% of global production.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Argentina Australia Brazil Canada Chile China Portugal Spain USA Zimbabwe


Roskill


Table 11: Production of lithium by country and company, 2005 to 2012 (t LCE)

Country Company 2005 2006 2007 2008 2009 2010 2011 2012

Argentina FMC 14,709 15,311 14,463 18,073 12,634 17,537 13,398 13,200

ADY Res. - - - - - - 100 300

Sub-total 14,709 15,311 14,463 18,073 12,634 17,537 13,498 13,500

Australia Talison Lithium 21,000 25,000 37,000 33,000 31,000 49,108 53,044 59,185

Galaxy - - - - - 244 9,471 8,914

Sub-total 21,000 25,000 37,000 33,000 31,000 49,352 62,515 68,099

Brazil CBL 216 208 194 72 191 158 32 30

Arqueana de

Minérios 154 160 160 37 99 155 - -

Sub-total 370 368 354 109 290 313 32 30

Canada TANCO 3,978 3,978 4,067 3,890 1,768 - - -

Sub-total 3,978 3,978 4,067 3,890 1,768 - - -

Chile SQM 27,800 30,400 28,600 27,900 21,300 32,400 40,700 45,700

Rockwood 16,395 20,520 22,711 24,532 13,305 21,229 20,700 20,500

Sub-total 44,195 50,920 51,311 52,432 34,605 53,629 61,400 66,200

China Brines 160 230 330 1160 5,500 4,510 5,025 3,830

Mineral 3,657 3,700 3,200 3,100 3,900 4,100 6,250 6,200

Sub-total 3,817 3,930 3,530 4,260 9,400 8,610 11,275 10,030

Portugal Pegmatites 1,619 1,762 2,149 2,157 2,310 2,479 2,320 2,500

Sub-total 1,619 1,762 2,149 2,157 2,310 2,479 2,320 2,500

Spain Duero 83 103 128 116 53 97 96 70

Sub-total 83 103 128 116 53 97 96 70

USA Rockwood 3,400 3,800 3,500 3,600 - - 1,000 2,500

Sub-total 3,400 3,800 3,500 3,600 - - 1,000 2,500

Zimbabwe Bikita 3,700 4,200 4,400 4,450 5,100 5,300 5,400 5,400

Sub-total 3,700 4,200 4,400 4,450 5,100 5,300 5,400 5,400

Total 96,871 109,372 120,902 122,087 97,160 137,317 157,536 168,329

Of which from minerals 34,407 39,111 51,298 46,822 44,421 61,641 76,613 82,299

Of which from brines 62,464 70,261 69,604 75,265 52,739 75,676 80,923 86,030

Source: Roskill estimates, 5 Notes: Production is expressed as lithium carbonate equivalent and does not represent actual Li2CO3 production

4.1 Lithium production by source

There are two main sources of lithium production in the world:

Lithium minerals such as spodumene, petalite and lepidolite, produced from the

mining of hard rock deposits (Australia, Brazil, China, Portugal, Spain, India,

Zimbabwe)

Lithium brine extracted to produce lithium carbonates and chlorides (Argentina,

Chile, China, USA)

In addition, a small amount of lithium is contained within clays extracted in France and

within bauxite produced in Greece. These ores are not extracted to produce lithium


Roskill


mineral concentrates or compounds, but are used directly in the glass and aluminium

smelting industries replacing other lithium containing materials such as spodumene or

lithium carbonate. Exploration for lithium-bearing clay deposits is on-going at projects in

Mexico and the USA, which are intended to be extracted for lithium compound

production.

Lithium production from the recycling of lithium-bearing products, although at this stage

relatively small scale, is showing strong growth as an increasing number of

organisations have become focused on increasing their consumption efficiency and

improving their environmental impact. Facilities recycling primary and secondary lithium-

ion batteries to produce lithium compounds are owned by Toxco in the USA and

Canada, Umicore in Belgium, METAL-TECH in Israel and various companies in Japan.

In 2009, the German Ministry of Environment (Bundesministerium für Umwelt,

Naturschutz und Reaktorsicherheit) funded a project called ‘LithoRec’, in which ten

German based companies including Rockwood Lithium and Audi AG researched and

constructed a pilot facility to recycle lithium from electric vehicle batteries and use it to

produce new cathode materials.

In 1996, the start-up of lithium production by SQM from brine deposits in Chile began,

changing the entire structure of the lithium industry. Lithium compounds from brines

were able to be produced at lower costs than the existing lithium mineral based

operations. Subsequently, the large volume of lithium produced by SQM in the mid-late

1990s forced a number of lithium mineral miners in the USA, Australia, China and

Russia to shut-down.

Since 2000, the dominance of lithium production from brine operations has fluctuated, as

production capacity at lithium mineral operations has been expanded, only to be

followed by increased production capacity at brine operations. In 2008, production from

lithium brine operations accounted for 61% of global lithium supply. The global

economic downturn in 2009 resulted in a sharp drop in lithium demand, and supply was

reduced as a result, particularly from the lithium brine producers. Increased production

from lithium mineral producers in recent years however has lowered this to 51% in 2012

(Figure 18).


Roskill


Figure 18: Production of lithium from mineral and brine sources, 2005 to 2012 (t LCE)


4.1.1 Production of Lithium Minerals

Since 2005, the supply of lithium minerals has grown by 13%py, totalling around 83,000t

LCE in 2012. The majority of this production originates from the Greenbushes mine

operated by Talison Lithium in Western Australia, which accounted for just over 70% of

global lithium mineral production in 2012 (Figure 19). High grade spodumene (>5.0%

Li2O) produced by Talison Lithium is mainly used in the glass, ceramics and metals

casting industries. Lower grade spodumene is not used directly in the glass and

ceramics industries as its iron content is too high, and is instead widely used to produce

lithium compounds at mineral conversion plants in China. Galaxy Resources in Australia

accounted for 11% of global lithium production in 2012, a similar volume to the collective

production of lithium mineral mines in China.

In 2009, production of spodumene concentrate from Talison Lithium fell to 31,000t LCE

in a second consecutive year of decreasing production. The fall in production between

2008 and 2009 was attributed to reduced demand for lithium as a result of the global

economic downturn. Production from Talison Lithium recovered strongly in 2010 as

demand for lithium minerals returned and the company subsequently increased

production capacity at the Greenbushes mine and processing facilities.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2005 2006 2007 2008 2009 2010 2011 2012

Lithium Minerals Lithium Brine Total Production


Roskill


Figure 19: Production of lithium minerals by company, 2012 (t LCE)

Source: Roskill estimates Notes: Chinese producers = Jiangxi Western, Rongda Lithium, Sichuan Ni&Co, Sichuan Aba, Maerkang Jinxin,

Xinjiang Haoxing and Yichun Huili Other = Minera del Duero and CBL

In China, lithium mineral production showed its strongest period of growth between 2008

and 2011, increasing by 26%py. Chinese mineral production remained stable at 6,200t

LCE in 2012, mainly from Rongda Lithium and lithium mineral producers in Sichuan

province. The majority of lithium mineral concentrates produced in China are used

directly in the glass and ceramics industries.

Since 2010, the availability of cheap lithium mineral concentrates in China used in the

ceramics industry has led to a fall in imports of lithium-bearing ceramics from other

producers such as Brazil. This has forced Brazilian lithium mineral producers to reduce

or cease production of lithium mineral concentrates, with output decreasing from 312t

LCE in 2010 to 30t LCE in 2012 (Table 12), a fall of over 90%. Mineral production in Spain, Portugal and Zimbabwe is predominantly used directly in the glass and ceramics industries.

72%

11%

7%

7%

3% 0.1%

Talison Lithium Galaxy Resources Bikita Minerals Chinese Producers Pegmatites Other


Roskill


Table 12: Capacity and production of lithium minerals by company, 2011 to 2012

(t LCE)

Country Company Product Capacity

Production

2011 2012 2011 2012

Australia Talison Lithium Spodumene 47,000 110,000 53,044 59,185

Galaxy Resources Spodumene 15,000 20,600 9,471 8,914

Brazil CBL Spodumene 1,200 1,200 32 30

Arqueana de Minérios Petalite 700 700 - -

China Jiangxi Western Spodumene 1,000 1,000 100 100

Sichuan Ni&Co Spodumene 3,000 3,000 1,000 1,100

Sichuan Aba Spodumene 3,750 3,750 1,200 1,100

Minfeng Lithium Spodumene 3,500 3,500 1,000 1,000

Xinjiang Non-Ferrous Spodumene 5,000 5,000 500 500

Yichun Huili Lepidolite 1,250 1,250 250 200

Pingjang Non-metal Lepidolite 2,000 2,000 200 200

Rongda Lithium Spodumene 5,000 7,000 2,000 2,000

Portugal Pegmatites Lepidolite 2,500 2,500 2,320 2,500

Spain Minera del Duero Lepidolite 1,200 1,200 96 70

Zimbabwe Bikita Minerals Petalite 6,200 6,200 5,400 5,400

Total 98,300 168,900 76,613 82,299


4.1.2 Production from Lithium Brines

Since 2005, the production of lithium compounds from brine operations has increased by

4.7%py, reaching a total of over 86,000t LCE in 2012 (Table 13). Four countries

produce lithium compounds from brine deposits: Chile, Argentina, China and the USA,

with a combined production capacity in 2012 of over 127,000t LCE. China has shown

the strongest growth since 2005, with an average increase of 57%py in lithium

compound production from brine operations. Strong growth in Chinese lithium supply

has been driven by the start-up of new production and expansions of brine operations in

the Qiadam Basin region of Qinghai province, notably by CITIC Guoan at the West

Taijiner (Xitai) saline lake.

Chilean lithium brine production accounted for over 75% of global lithium brine

production in 2012, and with the exception of 2009, showed a steady growth in supply of

5.9%py since 2005. Production in 2009 fell by almost 30% as a result of reduced

demand for lithium at the peak of the global economic downturn. In 2012, SQM

accounted for almost 70% of Chilean lithium brine production from the Salar de

Atacama, with Rockwood Lithium accounting for the remaining 30%.


Roskill


Table 13: Capacity and production of lithium compounds from brine-based producers,

2011 to 2012 (t LCE)

Country Company Capacity

Production

2011 2012 2011 2012

Argentina FMC 19,000 22,000 13,398 13,200

Rincon Lithium 1,200 1,200 100 300

Chile Rockwood Lithium 34,000 34,000 20,700 20,500

SQM 48,000 48,000 40,700 45,700

China Tibet Zabuye 3,750 3,750 2,215 1,500

CITIC Guoan 10,000 10,000 2,000 1,300

Qinghai Lithium 3,000 3,000 800 1,000

Qinghai Salt Lake 200 200 10 30

USA Rockwood (Silver Peak) 5,000 5,000 1,000 2,500

Total 124,150 127,150 80,923 86,030 Source: Roskill estimates

Lithium brine production in Argentina was only 13,500t LCE in 2012 (Figure 20), as

production was affected by adverse weather conditions during 2011 and 2012, as well

as on-going plant expansion at FMC’s Salar del Hombre Muerto facility. The USA

remains a minor producer of lithium brines from the Silver Peak plant in Nevada,

operated by Rockwood Lithium. Production from the Silver Peak plant was suspended

between 2009 and 2010, but was restarted in 2011 with approximately 1,000t LCE being

produced. Production from the Silver Peak plant increased to around 2,500t LCE in

2012, although this is below production levels prior to 2009.

Figure 20: Production of lithium from brines by country, 2005 to 2012 (t LCE)


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2005 2006 2007 2008 2009 2010 2011 2012

USA Chile Argentina China


Roskill


4.1.3 Production of lithium compounds from mineral conversion

The conversion of lithium minerals to lithium compounds is only undertaken

commercially in China and Brazil, with much of the material converted in China sourced

from Australia. Mineral conversion in Brazil is undertaken on domestically sourced

lithium mineral concentrates only.

Prior to the commercialisation of lithium production from brines in the 1980s, production

of lithium compounds, and therefore downstream lithium chemicals, came almost

entirely from the conversion of lithium minerals. Lower cost production of lithium

compounds from brine operations (US$1.1/kg in 1992) compared to minerals

(US$2.43/kg), and the subsequent drop in prices as a result of SQM in Chile entering

the market in 1998, rendered production of lithium compounds from lithium minerals

uneconomic. This caused a number of plants in Australia, Russia, Canada, China and

the USA converting lithium minerals to close down in the late 1990s, or instead switch to

producing downstream lithium chemicals from lithium carbonate imported from South

America. The only plant known to have sustained production of lithium compounds from

minerals during this period was CBL in Brazil, probably because of restrictions on

imports of lithium carbonate into Brazil.

During the late 1990s, production from lithium brine operations was forecast to meet

demand for downstream lithium industries for the foreseeable future. What was

unknown at that point was the rapid increase in lithium demand which would take place

during the early 2000s as lithium-ion batteries were incorporated into more electronic

devices and the rise of China as a key market for lithium market. Brine production was

unable to respond quickly enough to the sudden increase in demand for lithium

carbonate, as brine production relies heavily upon natural evaporation rates, and lithium

carbonate prices increased threefold between 2004 and 2007, peaking at US$6,500/t

CIF in 2007. As prices for lithium carbonate increased, Chinese mineral converters

began converting spodumene mineral concentrates imported from Australia into lithium

compounds, mainly as lithium carbonate. Production from mineral conversion plants has

supplied the rapid growth in China’s domestic demand for lithium observed since the

mid-2000s.

Chinese mineral conversion plants have continued to increase production, sourcing

mineral concentrates from Australian imports and domestic producers. Lithium

carbonate prices have stabilised at around US$4,600/t CIF since 2010, which in

conjunction with increased production capacity at Talison Lithium’s Greenbushes mine

and plant in Australia to 110,000tpy LCE in 2012, has ensured Chinese lithium mineral

converters are able to operate economically and can maintain a stable supply of lithium

compounds.

In 2012, global supply of lithium compounds from mineral conversion was 42,054t LCE,

an increase of 29% from the previous year (Table 14 and Table 15). Chinese mineral

conversion has increased from 17,500t in 2005 to 41,454t in 2012, a compound annual

growth rate of 13%py, accounting for over 98% of global lithium mineral conversion in

2012. Sichuan Tianqi was the largest mineral converting company in 2012, representing


Roskill


33% of global production from mineral conversion with 17% of global mineral conversion

capacity.

After beginning production in early 2012 at the Jiangsu Lithium Carbonate Plant, Galaxy

Resources became the largest mineral converter in China with a production capacity of

17,000tpy. Upon start-up, raw materials were initially sourced from the company’s Mt.

Cattlin mine in West Australia, however in March 2013 the company signed an

agreement with Talison Lithium in Australia to purchase spodumene concentrate for

mineral conversion.

In 2012, mineral conversion was undertaken exclusively in China and at CBL in Brazil.

CBL holds the capacity to produce 1,000tpy LCE, however this represented less than

2% of global production capacity from mineral conversion in 2012 (Table 14). In China

where the majority of lithium mineral conversion takes place, production is currently

running at only around half of available capacity.

Table 14: Capacity and production of lithium mineral converters, 2011 to 2012 (t LCE)

Country Company Capacity Production

2011 2012 2011 2012

China

Sichuan Tianqi 12,000 12,000 11,000 14,000

Sichuan Aba 5,000 5,000 3,000 3,000

Sichuan Changhehua 5,000 3,000 3,000 3,000

Sichuan Ni&Co 7,000 7,000 4,000 5,000

Sichuan State 2,500 2,500 … …

General Lithium 6,000 6,000 4,000 4,000

Minfeng Lithium 3,000 3,000 1,500 2,000

Jiangxi Western 5,000 5,000 500 1,000

China Non-Ferrous 6,000 6,000 4,000 6,000

Jiangxi Ganfeng Lithium 6,500 6,500 1,000 2,000

Galaxy Resources 15,000 17,000 - 1,454

Brazil

CBL 1,000 1,000 578 600

Total 74,000 74,000 32,578 42,054 Source: Company reports, Roskill estimates


Roskill


Table 15: Production of lithium compounds from minerals, 2005 to 2012 (t LCE)

2005 2006 2007 2008 2009 2010 2011 2012

Global Production of Lithium minerals (t LCE)

34,407 39,111 51,298 46,822 44,421 61,641 76,613 82,299

Lithium minerals consumed in mineral conversion1 (t LCE)

20,900 16,000 15,500 21,600 25,700 34,600 43,800 51,800

Production of lithium (t LCE)

China 7,809 13,407 16,272 14,200 16,600 23,500 32,000 41,454

y-o-y % - 71.69% 21.37% -12.73% 16.90% 41.57% 36.17% 29.54%

Brazil 678 625 737 572 508 558 578 600

y-o-y % - -7.82% 17.92% -22.39% -11.19% 9.84% 3.58% 3.81%

Total 8,487 14,032 17,009 14,772 17,108 24,058 32,578 42,054

y-o-y % - 65.34% 21.22% -13.15% 15.81% 40.62% 35.41% 29.09%

Lithium Carbonate price (US$/t)2

2,998 4,236 6,513 5,916 5,663 4,595 4,640 5,323 Source: Roskill estimates Notes: y-o-y % = Year on year change

1-Base on a loss of 15% during mineral conversion 2-Average value of exports from Argentina, Belgium, Chile, China, Germany and the USA

4.1.4 Production of downstream lithium chemicals

The production of downstream lithium chemicals is predominantly undertaken at plants

in the USA, Europe and Asia. The most commonly produced downstream lithium

chemicals are lithium hydroxide, butyllithium, lithium bromide and lithium metal.

Rockwood Lithium produces lithium carbonate and lithium chloride from the Salar de

Atacama in Chile and at Silver Peak, Nevada in the USA. The lithium compounds

produced in Chile and the USA are processed into downstream lithium products at

plants in the USA, Germany, Taiwan and India. At the Langelsheim plant in Germany,

Rockwood Lithium produces a range of over 80 lithium products, mainly organic

products used in the chemical and pharmaceutical industries. Rockwood’s plants in the

USA, Taiwan and India produce mainly butyllithium, also used in the chemical and

pharmaceutical industries.

FMC Lithium produces lithium carbonate and chloride from the Salar del Hombre Muerto

in Argentina through its subsidiary Minera del Altiplano. Lithium compounds are mainly

exported to FMC’s processing facility at Bessemer City in North Carolina, USA, which

produces a large range of both organic and inorganic lithium chemicals and lithium

metal. FMC’s other subsidiaries in the UK, China, Japan and India produce mainly

butyllithium, with the exception of FMC’s joint venture with Honjo Chemical at the

Naoshima Island plant in Japan, which has the capability to produce lithium metal.


Roskill


In 2005, SQM opened a lithium hydroxide plant at the Salar de Carmen with a

production capacity of 6,000tpy LiOH. Prior to completion of the Salar de Carmen

lithium hydroxide plant, SQM exported lithium carbonate to the JSC Chemical and

Metallurgical Plant in Russia for toll processing into lithium hydroxide. Exports of lithium

carbonate to Russia fell sharply in 2006 when the Salar de Carmen plant was

completed. In 2011, SQM restarted toll processing of lithium carbonate in Russia as

demand for lithium hydroxide exceeded production capacity in Chile.

The downstream production of lithium chemicals in China is mainly undertaken by

specialist chemical companies. Historically, Chinese lithium mineral converters have

been considered to produce only the basic lithium chemicals such as lithium carbonate,

hydroxide and chloride, however a number of companies such as Sichuan State Lithium

Materials, China Non-Ferrous Metal Import & Export Xinjiang Corp. and Jiangxi Ganfeng

Lithium have widened their product range to include specialist lithium chemicals

including n-butyllithium, lithium phosphate and lithium sulphate. Chinese chemical

companies continue to produce specialty lithium chemicals and lithium metal, such as

Dalian Honjo Chemical, Liaoning province and Jinan Sigma Chemical Co. Ltd.,

Shandong province, which both produce lithium bromide for the manufacture of

absorption chillers.

Downstream lithium chemicals and lithium metal are also produced from imported lithium

compounds in India, Japan, Israel and the Ukraine, along with other small volume

specialist chemical companies located worldwide.

4.2 Outlook for production capacity of lithium to 2017

In 2012, available production capacity for lithium totalled approximately 291,050t LCE,

however, actual production only reached 58% of this. Capacity utilisation was low

compared with available capacity as Talison Lithium in Australia, the largest producer of

lithium minerals, more than doubled its production capacity between 2011 and 2012 and

was yet to ramp-up production. Since 2007, capacity utilisation has typically been

between 70-75%, with the exception of 2009 where production fell at a number of major

producers.

Lithium brine operations in 2012 utilised around 70% of available capacity, producing

86,030t LCE. The majority of unused brine capacity came from Chinese brine

operations in the Qaidam Basin area of Qinghai Province, but also from FMC in

Argentina, which cut production in order to undertake plant debottlenecking and

expansion at the Salar del Hombre Muerto.

Production capacity of lithium mineral producers increased by over 72% in 2012,

compared with the previous year. As mentioned above the rise in production capacity

by Talison Lithium is mainly accountable for the increase, along with the commissioning

of new production capacity in China. As a result, utilisation of production capacity by

lithium mineral producers fell to 49%, the lowest since 2001, as actual production is yet

to be ramped-up.


Roskill


Total planned lithium production capacity is forecast to reach 452,000tpy LCE by 2017

an increase of 9%py from 2012 (Figure 21), although a significant portion of this capacity

is likely to be unused. Brine production capacity is forecast to increase by 14%py to

2017, as a number of new projects are scheduled to come on-stream along with

expansions at the major lithium brine producers. After a small decrease in lithium

mineral production capacity in 2013, caused by Galaxy Resources temporarily

suspending production at the Mt. Cattlin mine in July 2012, production capacity of lithium

minerals is forecast to increase by 5%py to 2017.

Figure 21: Planned production capacity and consumption for lithium, 2012 to 2017f

(t LCE)


4.2.1 Outlook for production capacity of lithium minerals

Production capacity at lithium mineral producers in 2012 was approximately 183,000tpy

LCE. In the years to 2017, a total of 6,450tpy LCE in additional production capacity is

scheduled to come on-stream from existing producers, almost exclusively from Chinese

mines. The main reason for the lack of expansions is many of the plants are operating

at far below their production capacity in 2012 and therefore increasing capacity further is

not economically attractive (Table 16).

In 2012, the largest producer of lithium minerals Talison Lithium in Australia, increased

production capacity at its Greenbushes plant from 47,000tpy LCE to 110,000tpy LCE.

Increasing production at the Greenbushes plant is expected to satisfy much of the

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Existing brine Existing Brine expansion New Brine Capacity

Existing mineral Existing Mineral expansion New Mineral Capacity

Base-case scenario High-case scenario Low-case scenario


Roskill


growth in demand for lithium minerals in the coming years; however, expansions at other

existing producers or the start-up of new lithium mineral mines will be required to

completely satisfy demand.

Galaxy Resources, which brought the Mount Cattlin mine in Western Australia to production in 2010 with a capacity of 20,600tpy LCE, announced in July 2012 that the mine would be temporarily suspended. Instead, Galaxy Resources will source lithium mineral concentrates from Talison Lithium for a three year period (July 2013-2016), effectively idling production capacity for this period. In China, Rongda Lithium plans to increase production capacity at their Xiajika spodumene mine to 35,000tpy LCE, an increase of 5,000tpy LCE. Sichuan Aba Guangsheng also intends to increase production capacity at the Guanyinqiao mine to 2,750tpy LCE by end-2013.

Table 16: Planned expansions as reported by existing lithium mineral producers to 2017 (t LCE)

Country Company Operation

Additional

capacity

Total

expanded

capacity Products Completion

Australia Talison Lithium Greenbushes - 110,000 Spodumene N/A

Galaxy Resources Mt. Cattlin - 20,600 Spodumene N/A

Brazil CBL Mina da Cachoeira - 1,200 Spodumene N/A

Arqueana de

Minérios Itinga - 250

Petalite,

Spodumene N/A

China Jiangxi Western Heyuan - 1,000 Spodumene N/A

Sichuan Ni&Co Maerkang - 3,000 Spodumene N/A

Sichuan Aba Guanyinqiao 750 2,750 Spodumene 2013

Minfeng Lithium

Dilaqiu, Gao’erda

and Lamasery - … Spodumene N/A

Xinjiang Haoxing Kokotay - 15,000 Spodumene N/A

Yichun Huili Yichun Huili - 1,250 Lepidolite N/A

Sichuan Hidili Lijiagou - 3,600 Spodumene N/A

Pingjang Non-

metal Pingjiang - 2,000 Lepidolite N/A

Rongda Lithium Xiajika 5,000 35,000 Spodumene 2014

Portugal Pegmatites Barroso-Alvao - 2,500 Lepidolite N/A

Spain Minera del Duero Mina Feli - 1,200 Lepidolite N/A

Zimbabwe Bikita Minerals Bikita 700 6,200 Petalite,

Lepidolite 2015

Total 6,450 205,550

Source: Company reports, Roskill estimates

The majority of new production capacity in the years to 2017 will most likely come from the start-up of new lithium mineral projects in Canada and China. A total of 175,500tpy LCE in new production capacity is planned to come on-stream from lithium mineral projects which are at various stages of development (Table 17). Canada Lithium began


Roskill


mine production at the Quebec Lithium project in Canada during 2013, with a capacity of 21,000tpy lithium carbonate. Nemaska Lithium at the Whabouchi project in Quebec, plans to enter full scale production of lithium hydroxide and carbonate in late-2015, with a production capacity of 35,000tpy LCE. Several other Canadian based companies including Avalon Rare Metals and Perilya are scheduled to come on-stream by 2017, producing lithium mineral concentrates.

Table 17: Potential lithium mineral producers to 2017 (t LCE)

Country Company Project Capacity Product Stage

Australia Reed Resources Mt. Marion 13,500 Spodumene Concentrate Evaluation

Altura Mining Pilgangoora 22,000 Spodumene Concentrate Exploration ,

Feasibility

Austria Global Strategic

Minerals

Wolfsberg

Lithium 3,700 Spodumene Concentrate

Feasibility,

Exploration

Brazil CIF/AMG Mibra mine 5,800 Spodumene Concentrate Evaluation

Canada Canada Lithium Quebec

Lithium 21,000 Lithium Carbonate

Construction,

Commissioning

Nemaska

Exploration Whabouchi 35,000

Lithium Hydroxide, Lithium

Carbonate Construction

Avalon Rare

Metals

Separation

rapids 6,000

Petalite and Spodumene

Concentrates

Permitting,

Feasibility

Perilya Moblan

Lithium 4,000 Spodumene Concentrate Exploration

Rock Tech Georgia

Lake … Spodumene Concentrate Exploration

Glen Eagle

Resources Autheir 12,000 Spodumene Concentrate Exploration

China Fujian Huamin Taiyanghe 7,500 Spodumene Concentrate Evaluation

Sichuan Tianqi Cuola 15,000 Spodumene Concentrate Construction

Lushi Guanpo Lushi … … Exploration

Daoxian County Daoxian … … Exploration

Finland Keliber Oy Länttä 4,000 Spodumene Concentrate Feasibility

USA Western Lithium Kings Valley 26,000 Lithium Carbonate Financing,

Feasibility

Total 175,500 Source: Company reports, Roskill estimates

In 2012, exploration and development work at both AMG’s Mibra Mine property in Brazil

and Reed Resources’ Mt. Marion project exploration and project development had been

temporarily suspended. If development work were to restart, these projects could

potentially reach production by 2017.

Sichuan Tianqi Lithium plans to begin production at the Cuola spodumene mine by

2014, with a capacity of 15,000tpy LCE spodumene concentrate. The company also

operates a mineral conversion plant in Chengdu, Sichuan Province, China and intends


Roskill


to supply raw materials to this plant from the Cuola mine; however, it is not clear with

Tianqi’s recent (2013) purchase of Talison Lithium whether development of the Cuola

mine will continue. Another Chinese company Fujian Huamin has invested in

assessing the feasibility of a 7,500tpy LCE spodumene mine at Taiyanghe Village,

Sichuan Province, although the project remains under evaluation.

In the USA, a lithium-bearing clay deposit is being developed by Western Lithium at the

Kings Valley project, Nevada. Western Lithium intends to process the clays extracted to

produce lithium carbonate, but has more recently concentrated on producing by-product

gel and organo-clay products used in certain drilling applications.

4.2.2 Outlook for lithium production capacity from brines

Much of the increasing demand for lithium products in the years to 2017 will be satisfied

by increased production from existing brine producers and new brine production

capacity coming on-stream, particularly in Argentina and Chile. Existing brine producers

plan to bring online a further 88,050tpy LCE production capacity by 2017, mainly from

projects in Chile, Argentina and China.

In the years to 2017, Chile is expected to witness a large increase in production capacity

by existing lithium brine producers to 110,000tpy LCE, an increase of 33,000tpy LCE on

2012. Rockwood Lithium and SQM both plan capacity increases at their respective

Salar de Atacama operations. Rockwood Lithium intend to construct and bring to

production a new 20,000tpy lithium carbonate plant by end-2013, whilst SQM are

understood to be planning a rise in processing capacity to 60,000tpy LCE (Table 18).

Rockwood Lithium also plans to increase production capacity of its brine ponds and

lithium carbonate processing facilities at Silver Peak in Nevada, USA to 10,000tpy LCE.

Debottlenecking and expansion at FMC’s Salar del Hombre Muerto operation, Argentina

is set to increase production capacity at the site to 30,000tpy LCE by the end of 2013.

Production capacity in Argentina is also planned to be increased by ADY Resources,

who intend to ramp up production capacity at the Salar del Rincón, which began small-

scale commercial production of lithium carbonate in 2010, to 10,000tpy LCE. Within the

next 20 years, ADY Resource intends to increase production capacity at the Salar de

Rincón to over 100,000tpy LCE.


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Table 18: Planned expansions by existing lithium brine producers to 2017 (t LCE)

Country Company Operation

Additional

capacity

Total

expanded

capacity Products Completion

Chile Rockwood

Lithium Salar de Atacama 21,000 50,000 Li2CO3, LiCl 2013

SQM1 Salar de Atacama 12,000 60,000 Li2CO3, LiCl 2013-2015

Argentina FMC Lithium Salar del Hombre

Muerto 8,000 30,000 Li2CO3, LiCl 2013

ADY Resources Salar del Rincón 8,800 10,000 Li2CO3 …

USA Rockwood

Lithium Silver Peak 5,000 10,000 Li2CO3 2015

China Tibet Lithium Zabuye 6,250 10,000 Li2CO3,

LiOH 2013

CITIC Guoan West Taijinar (Xitai) 20,000 30,000 Li2CO3 2014

Qinghai Lithium

East Taijinaier

(Dongtai) 7,000 17,000 Li2CO3, LiCl 2014-2017

Total 88,050 217,000

Source: Company reports as of March 2013, Roskill estimates Notes: 1-Includes pond capacity only, not additional capacity for lithium carbonate/hydroxide production

A number of Chinese lithium brine operations have capacity expansions planned by

2017. Qinghai CITIC Guoan Technology Development plans to increase capacity at

the Xitai lithium carbonate plant to 30,000tpy LCE by 2014. Inclement weather and

flooding at the brine operation during 2011, however, may have delayed these

expansion plans. Both Tibet Lithium New Technology Development at their Zabuye

Salt Lake operation and Qinghai Salt Lake Industry Group at their Dongtai Salt Lake

operation, plan to increase production capacity to 10,000tpy LCE and 17,000tpy LCE

respectively. In addition to existing brine producers expanding their production capacity, a number of new lithium brine producers could enter production in the years to 2017. A further 132,000tpy LCE of potential lithium supply from new brine projects is planned, which if combined with planned expansions to production capacity by existing producers, totals 349,500tpy LCE of potential new production capacity by 2017 (Table 19).


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Table 19: Potential new lithium brine projects to 2017 (t LCE)

Country Company Project Capacity Product Stage

Chile Li3 Salar de Maricunga … Li2CO3 Feasibility

Talison Lithium Salares 7 … … Exploration

CODELCO Salar de Maricunga … … Evaluation

Argentina Lithium Americas Cauchari-Olaroz 24,000 Li2CO3 Permitting

Orocobre Olaroz 17,500 Li2CO3 Construction

Rodinia Lithium Salar de Diablillos 15,000 Li2CO3 PEA

Galaxy Lithium Sal de Vida 25,000 Li2CO3 DFS

China Tibet Sunrise Dangxiongcuo 5,000 … Evaluation

China MinMetal Yi Liping 10,000 Li2CO3 Feasibility

USA Simbol Materials Salton Sea 16,000 Li2CO3 Construction

Albemarle Magnolia 20,000 Li2CO3 Feasibility

Total 132,500

Source: Company reports as of March 2013, Roskill estimates

Over 50% of potential new production capacity is planned at Argentine brine projects,

with Lithium Americas, Orocobre, Rodinia Lithium and Galaxy Lithium all with

projects at various stages of development. Orocobre are in the construction phase of

developing the Salar de Olaroz lithium property, which is scheduled to be completed in

early-2014. The Salar de Cauchari-Olaroz project owned by Lithium Americas, received

permit approval for construction of plant and evaporation pond facilities at the project in

December 2012. Dependent on acquiring necessary funding, construction is scheduled

to begin in 2013 with completion in mid-2015.

In the USA, specialist chemicals company Albemarle are assessing a project at their

Magnolia Plant, Arkansas, to extract lithium from oilfield brines. Albemarle constructed a

pilot plant facility in 2011, and plans to construct and operate a full scale 20,000tpy LCE

capacity facility at the plant by 2015. In California, USA, Simbol Materials operate a

lithium carbonate demonstration plant processing extracted brines from the

Featherstone geothermal plant. Simbol Materials plan to increase production capacity at

the demonstration plant to 1,500tpy LCE by end-2013, and construct a full scale

16,000tpy LCE plant by the end of 2014.

New brine projects in Chile remain on stand-by, as no new special operating licences to

extract and process lithium have been awarded to exploration companies. Chilean state

owned mining company CODELCO has reported an interest in forming a partnership to

exploit its lithium assets, which it can with only presidential approval. CODELCO is

evaluating four different offers for co-operation and reports that it has the potential to

enter production by end-2016.


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Two new brine operations in China, owned by Tibet Sunrise Mining Development and

China MinMetal Non-Ferrous, are planned to enter production with the next 5 years.

Combined production capacity at these projects is planned to reach 15,000tpy LCE.

A number of known projects remain at the exploration or scoping study phase and as of

yet have not released estimated production capacity, time-scale or costs. It is unlikely

that these brine projects will be commissioned before 2017, as a result of the timescale

involved with establishing a new brine operation (estimated at >5 years) from DFS to

operation.

4.2.3 Outlook on lithium compound production from mineral conversion

Production capacity for lithium compounds from mineral conversion is likely to increase

in the future as numerous new lithium mineral projects with associated conversion plants

are scheduled to enter production by 2017 (Table 20).

Table 20: Planned expansions to production capacity for existing and potential

mineral conversion plants (t LCE)

Company

Capacity

2012

Planned Capacity

2017 Products

Existing Producers

Sichuan Tianqi 12,000 40,000 Lithium carbonate, Lithium hydroxide,

Lithium chloride, Lithium metal, Lithium di-

hydrogen phosphate

Sichuan Ni&Co 7,000 8,000 Lithium carbonate, Lithium hydroxide

General Lithium 6,000 10,000e

Lithium carbonate

Minfeng Lithium 3,000 6,500 Lithium carbonate, Lithium hydroxide

Jiangxi Western 5,000 12,000 Lithium carbonate

Jiangxi Ganfeng Lithium 6,500 23,000 Lithium carbonate, lithium fluoride, Lithium

chloride, organic lithium compounds and

lithium metal

Potential Producers

Canada Lithium - 22,000 Lithium carbonate

Nemaska Lithium - 28,000 Lithium hydroxide, Lithium carbonate

Western Lithium - 18,000 Lithium carbonate

Henan Huazhong - 4,000 Lithium carbonate Source: Company reports, Roskill estimates Notes e-estimated

Sichuan Tianqi Lithium plans to increase production capacity to 40,000tpy LCE by

2017, as more raw materials becomes available from international and domestic sources

owned by the company. Total Chinese mineral conversion capacity is expected to

increase from 72,000tpy LCE in 2012 to 120,800tpy LCE by 2017, as the majority of

other mineral conversion plants are scheduled to increase capacity and broaden their

product range over the coming years.


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Canada Lithium are commissioning a lithium carbonate plant to convert spodumene

concentrate extracted at the Quebec Lithium project, scheduled for completion in April

2013. The facility is planned to have capacity to produce 22,000tpy LCE, the majority of

which is likely to be shipped to China. Nemaska Lithium is also developing its

Whabouchi project in Quebec, including a lithium hydroxide/carbonate production facility

to process mineral concentrate from the mine. Construction and commissioning of the

full scale 28,000tpy LCE plant is scheduled to be completed in 2015. In the meantime,

Nemaksa Lithium intends to operate a 426tpy capacity demonstration scale plant,

producing lithium hydroxide and carbonate.

Future production of lithium compounds is ultimately dependent upon maintaining high

prices of lithium carbonate (>US$5,000/t) to ensure the process is economically

attractive using current methods. Mineral conversion companies are becoming

increasingly integrated upstream, to ensure a secure supply of raw materials and protect

themselves against increasing lithium mineral concentrate prices.

4.3 Forecast production of lithium to 2017

Global production capacity in 2012 is capable of supporting forecast base-case scenario

growth in demand for lithium to beyond 2017. A significant amount of lithium production

capacity, however, is not utilised by current producers. Lithium mineral producers need

to ramp up their production and Chinese brine projects must overcome difficulties with

logistics, the local climate and unfavourable brine chemistry.

Therefore new lithium compound producers or expansions by existing producers will be

required to meet base-case consumption through to 2017.

The consumption of technical grade minerals in applications including glass, ceramics

and metallurgical uses is forecast to increase by 3.6%py to 2017 in the base-case

scenario. This is equivalent to additional consumption of 8,700t-10,100tpy of mineral

concentrate grading 5% Li2O. In a high-case scenario, consumption is forecast to

increase by 5.2%py equivalent to an additional 12,500t-15,000tpy mineral concentrate

grading 5% Li2O. Production capacity at existing lithium mineral producers including

Talison Lithium in Australia and various lithium mineral producers in Sichuan province,

China, is expected to support high-scenario growth in consumption of lithium minerals.

New lithium mineral producers not integrated with downstream lithium converters or end-

users will be dependent upon securing a market for their product or being able to

compete on price and specifications with existing producers.

In 2012, production capacity for lithium compounds from both mineral conversion and

brine sources was 190,650t LCE, although only 67% of this capacity was utilised. Much

of the unused capacity is accounted for by Chinese brine producers. Consumption of

lithium compounds in 2012 was 120,175t LCE, supported by production from brine

operations (64%) and the remainder supplied by mineral conversion plants (36%) in

China and Brazil. Compound annual growth in consumption of lithium compounds is

forecast to be 10.6%py in the base-case demand scenario, on average equivalent to

16,500tpy LCE of additional consumption to 2017. In the high-case demand scenario,


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growth of 17.2%py is forecast, on average equivalent to additional consumption of

30,900tpy LCE between 2013 and 2017, although this growth is strongly weighted

toward the later years in this period.

Lithium production from lithium brine producers in Chile and Argentina is forecast to

support much of the growth in lithium compound demand, with production in 2017

forecast at over 130,000t LCE from brine operations alone. SQM and Rockwood Lithium

both plan to increase production capacity to a combined total of 110,000tpy LCE by

2015. Existing production could be boosted further by ADY Resources plans to ramp-up

production at their Salar del Rincon in Argentina after starting commercial production in

2012. New lithium brine projects in Argentina are set to enter production in the coming

years with Orocobre in Argentina expected to begin production at the Salar de Olaroz in

2013 with a capacity to produce 17,500tpy LCE, and Lithium Americas at the Salar de

Cauchari-Olaroz also in Argentina planning to begin production during late-2015 with a

20,000tpy LCE capacity. Brine projects outside South America such as those in the

USA could support supply although likely not on the same scale.

Chinese lithium brine producers have the capability to increase production significantly,

although it is believed to be unlikely at existing brine operatons as difficulties in

processing are on-going and logistics continue to restrict production.

In the base-case demand scenario, mineral conversion is forecast to account for around

a third of lithium compound supply to 2017. Production from new mineral conversion

projects in Canada including Canada Lithium (planned 2013) and Nemaska Lithium

(planned 2015) along with existing Chinese mineral conversion plants, which are

forecast to maintain steady production. If consumption of lithium compounds is higher,

as in the high-case demand scenario, brine projects are likely to meet the increased

demand in the long term, however mineral conversion plants are likely to provide any

necessary increase in short term production.


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Figure 22: Forecast production and consumption of lithium, 2012 to 2017 (000t LCE)


0

50

100

150

200

250

300

350

2012 2013f 2014f 2015f 2016f 2017f

Brine Production Mineral Conversion

Technical-grade Minerals Base-case scenario

High-case scenario Low-case scenario


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5. Review of lithium producing countries

5.1 Afghanistan

Previous mineral exploration by soviet geologists in the early-1990s and more recent

exploration by the USGS in the late 2000s and early 2010s have identified significant

mineral resources of lithium and other industrial minerals in the country. The current

political and economic situation, however, means the development of these projects is

highly unlikely in the short term, although there is potential for future development in a

more stable environment.

Both hard rock lithium and lithium brine deposits have been identified in Afghanistan.

Lithium bearing pegmatites have been identified in central and eastern Afghanistan,

within Badakhshan, Nuristan, Lagman and Oruzgan provinces. The Lagman zone,

which extends through the Badakhshan, Nuristan and Lagman provinces hosts the

largest single intrusive known as the Alingarski Intrusive, with outcrop dimensions of 10-

50km width and 200km strike. Exploration during Soviet-Afghan exploration identified

that albitic pegmatites typically showed greater rare metal mineralisation (1.5-2.5% Li2O)

when compared to more microcline dominated intrusives.

The identified pegmatites are polymetallic targets, displaying not only elevated lithium

concentrates in samples but also tantalum, niobium, caesium and rubidium. Identified

pegmatites are listed in Table 21, along with their properties and grades.

Table 21: Afghanistan: Spodumene bearing pegmatites identified in Nuristan,

Badakhshan, Nangarhar, Lagman and Uruzgan provinces

Deposit

Name

Deposit size and grade Comments

Pasghusta Samples returned grade of 1.96 %

Li2O over 70m, and 2.14 % Li2O over

20 m in three dykes, along with

0.007-0.022 % Ta2O5

The largest individual dykes are 600–800m strike and

20–30m wide, containing disseminated columbite-

tantalite and cassiterite

Jamanak Reserve estimation of 450,000t Li2O

along a 6km strike with grades of

<1.5 % Li2O

Yaryhgul Resource estimation of 130,000t Li2O

for five spodumene bearing

pegmatites. Mineralised intrusives

grade around 1% Li2O on average.

Pegmatite intrusives are 500–3,500m in strike, 1.5–5 m

in thickness and contain 15–25 % spodumene

Lower

Pasghushta

Average grade of 2.2% Li2O with a

maximum value of 2.31 % Li2O.

Reserves estimation of 124,000 t Li2O

to a depth of 100 m.

Up to 30 % spodumene in pegmatites

Table continued….


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….Table continues

Deposit

Name

Deposit size and grade Comments

Paskhi Consists of two dykes grading on

average 1.46 % Li2O and 1.56 % Li2O

respectively. Dykes also returned

0.01–0.02 % Rb and Cs, 0.002–0.008

% Ta2O5. Reserve estimation for

both dykes of 127,000 t Li2O to a

depth of 100 m

Dykes extend over kilometres in strike and 10s of

metres in thickness. One of the dykes outcropping is

reported to contain 15-25% spodumene.

Tsamgal Samples returned grades of 1.5 %

Li2O on average with a maximum

grade of 2.32 % Li2O. Reserve

estimation of 187,500t Li2O to 100 m

depth.

Drumgal Samples returned grades of between

1.38–1.58% Li2O. The thickest part of

the pegmatite also contains 1.38–

1.58% Ta2O5. Reserve estimate of

253,000t Li2O to a depth of 100 m.

Source: BGS; Minerals in Afghanistan Notes: Reserve estimations are speculative and do not conform to NI 43-101 or JORC standards

Lake Sar-i-Namak in Takhar province is a saline lake containing up to 0.02% Li in

mineralised salt deposits and 350ppm in lake brines. Other saline lakes in Herat

province and clay deposits in Ghazni province have also been highlighted to contain

reserves of lithium.

Mineralised spring deposits containing elevated concentrations of lithium, rubidium,

caesium and boron have been identified during exploration, primarily in the Main and

Helmand-Argandab zones west of Kabul. Precipitation from these spring waters could

form deposits of rare metals, including lithium, which may be a target for future

exploration.

5.2 Argentina

Argentina is believed to hold significant reserves of lithium, with the majority of reserves

located in the Salta, Jujuy and Catamarca Provinces in the north of the country. In

2012, the USGS estimated that Argentina held the fourth largest reserve of lithium

behind Chile, China and Australia, with total reserves of 850,000t Li (4.5Mt LCE). A

separate estimation by Argentina’s mining geological service in 2005 reported reserves

to be as much as 6.0Mt Li (31.9Mt LCE).

FMC Lithium is the sole commercial producer of lithium chemicals in Argentina, although

Rincon Lithium has begun production of battery grade lithium carbonate mainly for test

work purposes. FMC operate a brine extraction and processing plant at the Salar del

Hombre Muerto through its subsidiary Minera del Altiplano S.A., which began production


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of lithium carbonate and chloride in 1997. Lithium chloride has been produced

uninterrupted since 1997; however lithium carbonate production was suspended for a

brief period in the early 2000s, during which the company was reliant on imports from

Chile.

In June 2012, Argentina’s lithium carbonate production capacity was 19,000tpy LCE

exclusively from the FMC Lithium plant. Along with a planned 7,000tly LCE expansion at

FMC’s Salar del Hombre Muerto plant, other producers such as Rincon Lithium are

expected to ramp up or bring online additional production capacity, which could increase

production capacity in the country to over 100,000tpy LCE in the coming years.

The USA is the main destination for Argentine exports of lithium carbonate, to FMC

Lithium’s facilities based in Bessemer Plant, North Carolina. In 2012, exports reached

9,399t, a small increase from the previous year although around 17% less than in 2010.

The fall in production during 2010 and 2012 is mainly because of adverse weather

conditions and the on-going capacity expansion disrupting brine output from the Salar

del Hombre Muerto (Table 22). Since 2010, the Asian market, especially Japan and

Taiwan, have grown rapidly to become major importers of Argentine lithium carbonate

fuelled by growth in their lithium battery industries. Japanese imports from Argentina in

2012 accounted for 16% of total exports, compared with just 3.8% in 2007 and 2.1% in

2009. As a domestic producer of lithium carbonate, Argentina imports only small

quantities totalling 78t in 2010, and 109t and 131t in subsequent years. Imports of

lithium carbonate are almost exclusively from Chile.

Table 22: Argentina: Exports of lithium carbonate, 2004 to 2012 (t)

2004 2005 2006 2007 2008 2009 2010 2011 2012

U.S.A 5,344 4,654 7,128 7,434 9,495 7,533 8,625 7,848 5,461

Japan 360 810 378 297 - 180 1,304 1,152 1,507

China 36 1,836 522 - 270 828 692 70 1,297

Taiwan - - - 63 18 36 432 521 531

Belgium - - - - - - 117 134 187

Other - - - - 972 1 126 171 416

Total 5,740 7,300 8,028 7,794 10,755 8,578 11,296 9,898 9,399 Source: GTIS

Table 23 shows Argentinean trade in lithium chloride. Total exports fell by over 40% in

2011 compared to 2010, as Japan and China both imported reduced amounts of lithium

chloride. Exports volumes in 2012 remained similar to 2011 values showing a small 3%

increase overall. After stabilising in 2009, exports to the U.S.A. continued to grow

reaching 3,860t in 2011, however, exports to the USA fell sharply in 2012 as a result of

disrupted production in Argentina. Exports to United Kingdom ceased in 2009 after FMC

Lithium discontinued lithium metal production at their Bromborough facility in

Merseyside, shifting production to the U.S.A. Imports of lithium chloride, with the

exception of 2008 which saw Argentina import 41t of lithium chloride, have not exceeded

6t since 2001.


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Table 23: Argentina: Exports of lithium chloride, 2004 to 2012 (t)

2004 2005 2006 2007 2008 2009 2010 2011 2012

USA 5,614 5,262 5,792 1,594 2,132 2,064 3,042 3,860 2,528

Japan - - - 880 448 144 1,048 208 240

China 256 2,444 1,648 2,812 3,968 1,568 3,116 156 1,616

UK 706 800 832 1,406 1,324 728 - - -

Others - - 90 959 488 16 16 1 -


5.2.1 FMC Litihum (Minera del Altiplano S.A.)

FMC Lithium began developing the Salar del Hombre Muerto site in the early 1990s and

purchased the deposit in 1995 via the fully owned subsidiary Minera del Altiplano. The

Salar del Hombre Muerto deposit is situated in the Catamarca Province of Argentina at

4,000m elevation. The salar is underlain by a massive >50m thick salt body, which

hosts lithium brines in its porous upper sections (15-20m depth). The brine shows a

high concentration of lithium (680-1,210ppm); along with a low average magnesium to

lithium ratio of 1.5:1. The salar is estimated to contain 800,000t Li (4.25Mt LCE) (Table

24), which would allow production at the current rate to continue for over75 years.

Table 24:FMC: Brine reserves at the Salar del Hombre Muerto

Concentration Estimated Reserves (000t)

Lithium (Li+) 680-1,210ppm 800

Boron (B2O3) 750ppm 1,100

Potassium (K+) 0.51wt% 80,000

Source: Handbook of lithium and natural calcium chloride, D. Garrett 2004

Production from the Salar del Hombre Muerto site began in 1997, providing raw

materials for FMC’s Bessemer lithium salt plant. The brine is extracted from six large-

scale wells in the centre of the salar and pumped into pre-evaporation ponds. A

selective absorption process is used to concentrate the solution in lithium chloride,

reducing the residence time in the evaporation ponds so brines reach optimum

concentration and produce high purity lithium brine. (Section 3.1). Concentrated brine

is pumped back into post-evaportation ponds at the Salar del Hombre Muerto where lime

and soda ash are added to remove magnesium carbonate and hydroxide. The purified

and concentrated lithium solution is transported to FMC’s Fénix plant in Salta to be

processed into lithium carbonate and chloride products.

When first constructed in 1997, the Salta plant had a capacity of 20,000tpy LCE

(11,000tpy Li2CO3 and 5,500tpy LiCl) and produced 6,182t lithium carbonate and 2,640t

lithium chloride in its first year. Increased competition from Chilean producers and

financial problems in Argentina led to the suspension of lithium carbonate production at

the plant in 2000 and FMC sourced lithium carbonate from SQM in Chile instead.

Lithium carbonate production resumed in 2003 and showed sustained growth until 2008


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(Table 25). Production in 2009 dropped because of reduced demand for lithium

products at the height of the global economic downturn. Heavy rain and snow at the

Salar del Hombre Muerto in 2011 and early 2012 reduce production from FMC’s Salta

plant to approximately 13,000t LCE, down 36% compared to production in 2010. FMC

announced an expansion program at Salar del Hombre Muerto in mid-2012, which was

scheduled to increase the plants capacity to 30,000tpy LCE by the end of 2013.

Complications with lithium processing related to the capacity expansion were identified

by FMC in late 2012, which could delay the expansion program although FMC has not

annouched any changes to the expansions schedule at this time.

Table 25: FMC: Production and value of lithium carbonate and chloride at the Salta

plant, Argentina 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Lithium carbonate 7,300 8,028 7,794 10,755 8,578 11,296 9,718 9,399

Lithium chloride 8,506 8,362 7,651 8,400 4,500 7,188 4,225 4,384

Total (tLCE) 14,709 15,311 14,458 18,071 12,498 17,557 13,398 13,217

Value (US$M) 53.8 62.8 59.5 83.5 56.2 70.9 53.6 57.0 Source: GTIS, based on Argentine exports

FMC exports the majority of its lithium chloride production to China (43%) and the USA

(42%). Exports of lithium chloride to China in the past have been mainly processed into

lithium metal by companies such as Xinyu Ganfeng. Argentine exports of lithium

carbonate to China fell nearly 90% in 2011 compared to 2010, mainly because of

reduced brine output at the Salar del Hombre Muerto. Lithium chloride exported to the

USA is most likely processed at the Bessemer plant to produce other downstream

lithium products.

The majority of FMC’s lithium carbonate output is exported to the USA and used in the

production of downstream lithium products, particularly lithium hydride. Since 2009,

Japan has imported increased amounts of lithium carbonate from FMC most probably

because of the rapid growth in the domestic Li-ion battery industry. Total exports of

lithium carbonate in 2011 are lower than in the previous year as a result of reduced

output from brine operations in Argentina.

5.2.2 ADY Resources

ADY Resources, a business unit of the Enirgi Group Corporation, operate the Salar del

Rincón project located in the Salta province of Argentina. After purchasing the project

from Sentient Asset Management, Enirgi Group Corp. renamed the company ADY

Resources Ltd. from Rincon Lithium Ltd. in 2012.

The Salar del Rincón sits at an elevation of 3,700m covering an area of approximately

250km2 within the Antofalla-Pocitos volcanic rift valley of the high Andean plains. The

salar is capped by a halite crust, under which saline brines are intercepted. The brines

are enriched in lithium and potash, which ADY Resources process to produce lithium

carbonate.


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A reserve estimation for the project was released by ADY Resources in 2007 (Table 26).

More recent drilling campaigns undertaken in 2010 and 2012, however, covered a much

larger area, increased drilling depths and decreased drill hole spacing which is expected

to improve the resource size and level of confidence of the estimation.

Table 26: ADY Resources: Salar del Rincón reserve estimation, 2007

Reserves (Mt)

Lithium metal 1.40

LCE 7.46

Potash 50.80 Source: ADY Resources

Modelling of the salar, undertaken in accordance with recommendations made by the

Canadian Institute of Mining, Metallurgy and Petroleum (CIM), showed that brines are

hosted in a closed basin fed by multiple brine aquifers.

Since acquiring the project, ADY Resources has consolidated the original Sentient Asset

Management concessions and acquired new tenements to cover approximately 95% of

the salars evaporative surface. ADY Resources has also attained tenements covering

areas associated with surrounding brines aquifers and tenements which have been

explored for water supply suitable for use in processing. Other tenements held in

Argentina by ADY Resources include concessions covering the Cauchari, Olaroz,

Pocitos, Salinas Grandes and Arizaro salars, all of which are under exploration by other

companies for lithium and potash. Additional tenements on the Salar de Grande have

been acquired to secure sodium sulphate production from the site, used in ADY

Resources’ lithium carbonate processing method.

In 2009, ADY Resources constructed and began operations at an on-site lithium

carbonate pilot plant. Successful production from the pilot plant led to a 1,200tpy LCE

capacity commercial demonstration plant including integrated solar evaporation and

brine concentration, bulk impurity removal, carbonation and purification facilities being

constructed, commissioned and brought into production in 2010. The demonstration

plant has been used to refine the processing flow sheet, reducing reagent consumption

and improving product grade. Lithium carbonate from the demonstration plant has been

sent to prospective customers for product evaluation and subsequently a number of

commercial shipments of lithium carbonate under the tradename ‘Rincon Lithium’ have

been made.

ADY Resources completed a feasibility study at the Salar del Rincón which assessed

the potential for a 20 year operation with a production capacity increasing incrementally

up to 100,000tpy LCE. Multiple external producers of reagents used in processing the

brines such as lime, sodium sulphate and sodium carbonate have been located and

secured to maintain constant security of supply. Development of the projects production

capacity is planned to correlate with ADY Resources’ forecast increase in demand for

lithium chemicals. Although potash production in not incorporated into the

demonstration plant in its current design, ADY Resources are assessing the potential for

introducing a potash production circuit.


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5.2.3 Lithium Americas

Lithium Americas holds a 100% stake in the Cauchari-Olaroz property located in the

Salta province of Argentina. The project covers an area of 1,650km2 encompassing

completely or partially five saline lakes. The main area of the property is the Cauchari-

Olaroz saline lake which covers an 825km2 area comprised of 84 separate mineral

licences. Lithium Americas attained environmental permits for the project in 2009, and

renewed them in December 2011 with the submittal of environmental and social impact

and baseline reports. Contracts between the local aboriginal community and Lithium

Americas have been in effect since 2009, allowing exploration of the Cauchari-Olaroz

area for lithium. In January 2012, Lithium Americas signed an agreement with the

aboriginal community to develop the Cauchari-Olaroz project to production stage.

A PEA was completed by Lithium Americas in April 2011 which looked at production

costs, potential processing capability and metallurgical flow sheet at the Cauchari-Olaroz

salar. Lithium Americas released a DFS in July 2012, which included an updated

mineral resource estimate and mineral reserve estimate (Table 27 and Table 28).

Measured and indicated lithium resources at the Cauchari-Olaroz property were reported

to be 11.75Mt LCE, using a 354ppm Li cut-off grade. Mineral reserves were estimated

to contain 2.71Mt Li and 7.95Mt potash.

Table 27: Lithium Americas: Lithium and potash resource estimation for the Cauchari-Olaroz property, July 2012

Li (ppm) Li (t) LCE (Mt) Brine Vol. (m3)

Measured 630 576,000 3.03 9.14 x 108

Indicated 570 1,650,000 8.71 2.89 x 109

Total 586 2,226,000 11.75 3.80 x 109

K (ppm) K (t) KCl (Mt) Brine Vol. (m3)

Measured 5,156 4,714,000 9.00 9.14 x 108

Indicated 4,753 13,755,000 26.27 2.89 x 109

Total 4,856 18,469,000 35.27 3.80 x 109

Source: Lithium Americas feasibility study July 2012 Notes: cut-off 354ppm Li

Table 28: Lithium Americas: Lithium and potash reserve estimation for the Cauchari-Olaroz property, July 2012

Li (ppm) Li (t) LCE (Mt) Brine Vol. (m3)

Proven 679 37,000 0.19 5.50 x 107

Probable 665 477,000 2.51 7.16 x 108

Total 666 514,000 2.71 7.71 x 108

K (ppm) K (t) KCl (Mt) Brine Vol. (m3)

Proven 5,483 302,000 0.57 5.50 x 107

Probable 5,395 3,863,000 7.37 7.16 x 108

Total 5,401 4,165,000 7.95 7.71 x 108

Source: Lithium Americas feasibility study July 2012 Notes: cut-off 354ppm Li


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Infrastructure at the Cauchari-Olaroz project in January 2012 included evaporation and

pilot plant testing facilities, four pumping wells, a 100m x 100m evaporation pond and

general facilities and accommodation. Brine extracted from the pumping wells is

pumped into the first 100m x 100m evaporation pond for approximately 2 hours per day

at 110l/min in the summer months and near half this amount between June-September.

The brine depth in the pond is maintained at 18cm, to achieve efficient evaporation and

concentration. Concentrated brine from the 100m x 100m evaporation pond is next

pumped into a separate smaller pond to concentrate magnesium, before being

transferred to a third pond to precipitate magnesium with addition of lime. Precipitated

magnesium hydroxide is removed from the pond and the remaining brines are

evaporated further to precipitate potash, borates and sulphates before being pumped

into large containers. Lithium Americas had previously transported containers of

concentrated lithium brines to SGS Mineral Services in Lakefield, Canada for use in

designing its pilot plant and metallurgical flow sheet. The pilot plant has produced 120kg

lithium carbonate since it became operational in November 2011, with a capacity of 30kg

LCE/day. SGS has completed development of a flow sheet for lithium carbonate

production (Figure 23), and in early 2012 the pilot plant was shipped in its entirety to the

Cauchari-Olaroz project.

Figure 23: Pilot plant flow sheet developed for Lithium Americas at SGS Mineral

Services

Source: Lithium Americas

In the July 2012 DFS, Lithium Americas detailed their plan to construct brine extraction

and concentration infrastructure and an on-site lithium carbonate plant with a design

capacity of 24,000tpy lithium carbonate. Construction of the lithium carbonate plant is

scheduled to begin in Q1 2014, with first production in Q4 2015. A potash plant is also

NaOH

solution

High Boron

solution

Concentrated

Brine Extraction

Stripping

Mg

removal

Soft

Water

Mg(OH)2

CaCO3 Waste Mother

Liquor

Ca

removal

Li

Carbonation

Moist

Product

Drying

Classification

Milling

Li2CO3 Final

Product


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scheduled to be constructed at the Cauchari-Olaroz property in Q4 2015, after lithium

carbonate production has been achieved.

After lithium carbonate and potash production have started-up at the Cauchari-Olaroz

property, Lithium Americas plans to expand production capacity at both the lithium

carbonate and potash plants between 2017 and 2022. Capacity at the lithium carbonate

plant is scheduled to increase to 40,000tpy lithium carbonate by end-2020, and

production capacity at the potash plant is scheduled to double, reaching 80,000tpy

potash by end-2022.

Lithium Americas estimated capital costs for the planned 20,000tpy LCE operation at the

Cauchari-Olaroz property to be US$268.9M, with further capital costs of US$44.8M to

construct the planned 40,000tpy potash plant. Planned production capacity expansions

are not considered in the July 2012 capital and operating cost estimates. The main

expenditure for lithium carbonate production is estimated to be construction of

evaporation ponds and construction of the lithium carbonate plant, which combined

account for approximately 70% of total capital costs for lithium carbonate production

(Table 29).

Table 29: Lithium Americas: Estimated capital costs for Lithium carbonate production

at the Cauchari-Olaroz project, July 2012

US$000

Brine extraction wells

Wells drilling 6,005

Road and platform 1,555

Pumps 1,700

Piping 3,927

Assembling 3,971

Total 17,158

Evaporation ponds

Total production ponds 91,783

Pumps and piping 776

Liming plant 20,030

Total 112,589

Lithium carbonate plant

SX boron plant & brine storage 7,773

Purification, carbonate precipitation & washing 5,346

Soda ash 5,783

Drying and filtering 14,333

Granulation 3,227

Product packaging & warehouse 2,793

Water supply, storage and distribution 4,012

Electric supply and distribution 6,641

Air for plant instrumentation 1,872

Fuel supply and distribution 1,260

Table continued….


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….Table continues

US$000

Thermic unit 130

Acid wash system 550

Discard process management system 272

Fire protection system (SX) 1,706

Offices and laboratory 911

Maintenance workshop 1,344

Weighing yard 224

G & A 4,821

Spare parts 2,337

Freight and customs expenses 6,960

Total 72,296

Infrastructure & general

Combined heat and power unit 15,634

Gas delivery, storage and distribution 7,831

Water supply wells 145

Camp 2,641

Total 26,251

Sub-total direct cost 228,293

Sub-total indirect cost 16,172

Contingencies 24,446

Total capital costs 268,912 Source: Lithium Americas DFS July 2012

Operating costs are estimated in the July 2012 DFS to be US$1,876/t lithium carbonate

and US$249/t potash (Table 30). These costs are dominated by reagent costs which

account for over 60% of costs incurred during litihum carbonate production. The

consumption of reagents per tonne of product produced was based upon pilot plant

studies, undertaken by Lithium Americas since late 2011. Costs which contributed to the

production of both lithium carbonate and potash were split 75%-25% between US$/t

Li2CO3 and US$/t KCl.


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Table 30: Lithium Americas: Estimated operating costs for Cauchari-Olaroz project,

July 2012

US$/t Li2CO3 US$/t KCl

Reagents Evaporation ponds Calcium oxide(lime) 314 52

Flocculant 6 1

Lithium carbonate plant Sodium carbonate(soda ash) 632 -

Suphuric acid 18 -

Extractants 9 -

Dilutants 29 -

Boron removal 1 -

Hydrochloric acid 62 -

Sodium hydroxide (caustic soda) 94 -

Potash plant Foaming agent - <1

Collectors - 2

Flocculant - 2

Hydrochloric acid - 2

Total 1,163 60

Salt removal and transport

124 38

Energy

191 29

Manpower

134 33

Cat. and camp services

44 11

Maintainence

103 19

Transportation

62 50

G & A

56 9

Total operating costs 1,876 249

Source: Lithium Americas DFS July 2012

In December 2012, Lithium Americas announced plans to invest ARG$3Bn

(US$813.7M) in the Cauchari-Olaroz project to further develop the site and undertake

construction of extraction and processing facilities. The investment is to be partnered by

state owned JEMSE Argentina, who will assist with raising finance and developing the

property.

Mitsubishi Corporation and Magna International Inc. are both strategic investors in

Lithium Americas collectively holding a combined 17% shareholding. The two investors

have off-take agreements which entitle them to purchase 37.5% of production form the

Cauchari-Olaroz property, reliant on Mitsubishi and Magna financing 37.5% of capital

costs incurred during development of the property.


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5.2.4 Galaxy Resources (Lithium 1)

Lithium 1 held a 70% interest in the Sal de Vida lithium brine project at the Salar de

Hombre Muerto, Argentina and the James Bay spodumene project in Canada. On

March 30th 2012, Lithium 1 announced that it was to merge with Galaxy Resources

(Section 5.3.2) which has lithium production and processing facilities in Western

Australia and China. The merger deal valued Lithium One at CAN$112M as of the 11th

April 2012 and was completed on the 4th July 2012.

5.2.4.1 Sal de Vida Project

The Sal de Vida project covers the eastern half of the Salar del Hombre Muerto, located

175km south west of the city of Salta on the boundary between Salta Province and

Catamarca Province. The salar is at an altitude of approximately 4,000m and the Sal de

Vida licence areas cover 420km2 of the salar. Lithium 1 acquired the licences in 2009,

before which no significant exploration had been undertaken on the lithium potential of

the eastern portion of the salar. By April 2012, Lithium 1 had drilled the salar to a

maximum depth of 280m and remained within lithium bearing brines.

In March 2011, Lithium 1 released its initial resource estimation for the project, which

estimated an inferred resource of 5.4Mt LCE and 21.3Mt KCl. The resource estimation

was updated in January 2012 with the availability of new data. The new estimation

reported measured and indicated resources of 4.05Mt LCE and 16.07Mt KCl, with an

average lithium concentration in the brines of 782ppm (Table 31). The brines also

displayed a Mg:Li ratio of 2.2:1, lower than that observed at the Salar de Atacama

(6.6:1), and a SO42-

:Li ratio of 10.76:1.

Table 31: Galaxy Resources: Resource estimation for the Sal de Vida project, January

2012

Brine Volume

(m3)

Avg. Li (ppm) LCE (Mt) Avg. K (ppm) KCl Contained

(Mt)

Measured 7.2x108

787 3.0 8,695 11.9

Indicated 2.6x108

768 1.0 8,534 4.1

Inferred 8.3x108

718 3.1 8,051 12.7

Total 1.8x109

753 7.1 8,377 28.7 Source: Lithium One Notes: Cut-off grade 500ppm Li

In April 2013, an initial reserve estimate for the Sal de Vida project was completed by

Montgomery and Associates and Galaxy Resources, estimating a contained reserve of

1.1Mt LCE and 4.2Mt KCl (Table 32). Galaxy stated that the identified reserves could

sustain production of 25,000tpy LCE at the project for a 40 year LOM.


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Table 32: Galaxy Resources: Reserve estimate for the Sal de Vida project, April 2013

(t)

Li LCE KCl

Proven 34,000 181,000 633,000

Probable 180,000 958,000 3,564,000

Total 214,000 1,139,000 4,197,000 Source: Galaxy Resources ASX Announcement

In April 2013, Galaxy Resources released a DFS which assessed both the lithium and

potash potential of the Sal de Vida project. The study was headed by Taging S.A.

Ingenieria Inteligente, with assistance from Hatch Engineering, Calder Maloney Pty Ltd

and Galaxy’s own sources, and required US$13M in financing to complete. Based on

an operation with a capacity to produce 25,000tpy LCE and 95,000tpy KCl for a 40 year

period, the study modelled the project’s hydrology with brines being extracted from a

total of 24 well field pumps.

The processing flow sheet for lithium brines was defined in the April 2013 DFS.

Extracted brines are first mixed with a lime-solution to precipitate magnesium hydroxide,

before being pumped into a settling pond to allow magnesium hydroxide to settle out of

solution and the clarified brine to overflow into a pumping well. The limed-brines are

next pumped into a series of ponds to allow evaporation causing the precipitation of

halite and potash which can be harvested from the pond floors. After passing through

both the halite and potash precipitation ponds, brine concentration is expected to have

reached a minimum of 2% lithium. Concentrated brines are transferred to a surge pond

before being pumped to the on-site lithium carbonate plant. A surge pond is necessary

to ensure a constant supply of concentrated brines is pumped to the lithium carbonate

plant year-round.

The lithium carbonate plant is designed to accept a feed of 33m3/hr concentrated brines,

which undergo a seven stage process to produce a bagged battery grade (>99.5%)

lithium carbonate product. The seven stages include boron removal via solvent

extraction, calcium and magnesium precipitation and removal, lithium carbonate

precipitation, purification, dewatering and drying, micronisation by jet milling and final

bagging of the product.

Capital expenditure for construction of mining and processing infrastructure, services

and reagents are estimated at US$369.2M including a 10% contingency (Table 33).

Planned infrastructure at the site includes 24 production wells, evaporation ponds and a

25,000tpy LCE and 107,000tpy KCl capacity processing plant.


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Table 33: Galaxy Resources: Estimated capital costs for Sal de Vida project ,

October 2011 (US$M)

General 7.0

Brine Extraction 26.2

Evaporation Ponds 88.4

Lithium Carbonate Plant 61.8

Potash Plant 26.0

Reagents 6.0

Power plant and On-site infrastructure 50.2

Indirect Costs 60.0

Contingency (10%) 33.5

Total 369.2 Source: Galaxy resource April 2013 DFS

A breakdown of annual operating costs for the Sal de Vida project in the April 2013 DFS

is yet to be released, although a PEA study undertaken by Galaxy in October 2011

estimated these annual operating costs to be US$57.8Mpy. The cost of lithium

carbonate production was estimated at US$2,200/t net of potash production credits, with

reagents (42%), power generation (17%), transport (16%) and labour (15%) being the

major contributors.

In June 2010, Lithium 1 signed a co-operation agreement with a Korean Consortium

(KC) comprised of KORES, LG International and GS Caltex. The KC funded US$15M to

Galaxy Resources to complete a feasibility study at the Sal de Vida project. In return the

KC has an option to acquire a 30% interest in the project and provide a project

completion guarantee for Galaxy Resources’ portion of the debt financing until

completion. The KC will also have a right and obligation to purchase 30% of lithium

products, and have first refusal to a further 20% of lithium products from the project once

it enters production, planned for 2015. The KC will market the lithium production in the

Chinese, Japanese and Korean markets, however, Galaxy Resources retains the right to

market potash products worldwide.

5.2.4.2 James Bay Hard-rock Lithium Project

The James Bay Hard-rock Lithium Project (James Bay) is located in Quebec, Canada,

approximately 380km north of the town of Matagami. Lithium 1 acquired an interest in

the project after signing a letter of intent with Société de Développement de la Baie

James in April 2008. Lithium 1 undertook drilling between 2008 and early 2010 working

towards a mineral resource estimate which was released in November 2010 by SRK

Consulting (Canada) Inc. The James Bay project was estimated to contain 22.22Mt at

1.25% Li2O (689,000t contained LCE) (Table 56).

Galaxy Resources (Section 5.3.2) acquired a 20% stake in the James Bay project in

May 2011, with an option to increase their interest in the project to 70% if a feasibility

study was completed by end-2012 and Galaxy invested at least CAN$3M in the project.


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Galaxy fully acquired the James Bay project in its merger agreement with Lithium 1,

completed on 4th July 2012.

5.2.5 Orocobre Ltd.

Australian mining and exploration company Orocobre are exploring four saline brine

projects in North West Argentina for lithium, potash and boron. The four projects are:

Salar de Olaroz, Jujuy Province

Salinas Grandes (Cangrejillo), Jujuy-Salta Province boarder

Guayatoyoc Project, Jujuy Province

Cauchari Project, Jujuy-Salta Province boarder

Orocobre owns a 72.68% stake in its subsidiary Sales de Jujuy Pte. Ltd. (Singapore)

(SJS), which in turn holds a 91.5% share of the Olaroz, Salinas Grandes, Guayatoyoc

and Cauchari projects through its Argentinian base subsiduary Sales de Jujuy S.A.

(SDJ). The remaining 8.5% share in SDJ is held by Jujuy Energia y Mineria Sociedad

del Estado (JEMSE), a company set up by the provincial Jujuy government in 2012.

JEMSE is required to fufill its responsibilities with funding the projects construction and

will also take a leading role liaising with municipal, provincial and national government

departments and customs authorities.

In June 2012, Orocobre received approval from Jujuy Province for its Salar de Olaroz

project, after a meeting with representatives from Argentine national and regional

government. Approval by an expert committee responsible for assessing lithium

projects in the country was also granted to Orocobre.

In August 2012, Orocobre announced the acquisition of Borax Argentina S.A. from Rio

Tinto PLC. Borax Argentina operates three borate projects at Tinacalayu, Sijes and

Porvenir in Salta and Jujuy provinces along with refinery facilities at Campo Quijano,

producing approximately 35,000tpy of boron based products and concentrates. In the

agreement, Orocobre are required to pay Rio Tinto US$8.5M in total with an upfront

payment of US$5.5M and a further US$1.0M payable annually for the following three

years.

Parallels between borate and lithium extraction and the proximity to Orocobre’s Salar de

Olaroz project are believed to be the main reasons behind the acquision; however Borax

Argentina also held a number of pre-existing agreements with lithium companies in the

local area. Orocobre will take over these pre-exisitng agreements which refer to the

tenure of local projects, requiring some local lithium companies to make annual

payments or pay royalties on future production (Table 34).


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Table 34: Orocobre: Agreements between Borax Argentina and other lithium

companies

Company Project

name

Type of

contract

Start

date

End date Remaining

payments

Royalty

payable

Comments

Lithium

Americas

Cauchari 3 year

exploration

and option to

usufruct

09/07/09 None None Option exercised

Lithium

Americas

Cauchari Usufruct 19/5/11 18/5/41 US$5.8M None US$200,000py

irrespective of

production

Rodinia

Lithium

Diablillos 3 year

exploration

and option to

usufruct

14/1/10 None N/a

Rodinia

Lithium

Diablillos Usufruct 40 years

+ 40

years

None 1.5% Rodinia can purchase

royalty for US$1.5M

Rodinia

Lithium

Centenario

and

Ratones

Purchase 14/1/10 Indefinite None 1.0% Rodinia can purchase

royalty for US$1.5M

Rodinia

Lithium

Los

Ratones

Purchase 14/1/10 Indefinite None 1.0% Orocobre retains right

to mine borates, royalty

can be purchased by

Rodinia for US$1M

Galaxy

Resources

Sal de Vida Exploration

and usufruct

6/6/10 Indefinite None 1.0% Galaxy can purchase

royalty for US$1.5M

Lithea Inc Pozuelos Purcahse 14/1/10 Indefinite None 1.0% Orocobre retains right

to mine borates, royalty

can be purchased by

Lithea for US$1M

Source: Orocobre press release Notes: Royalties only payable on brine extracted during contract period

Toyota Tsusho Corporation (TTC) purchased a 27.32% stake in SJS in September

2012, giving them a 25% share of SDJ. TTC will provide project financing for the Salar

de Olaroz through a loan from Mizhuho Corporate bank and a debt guarantee

authorized by JOGMEC. TTC and Orocobre have already jointly undertaken a feasibility

study at the Salar de Olaroz, assessing lithium brine extraction at the project. Once the

Salar de Olaroz project enters production, TTC will act as the sole sales agent with a

right to sell the final product. Targeted production has also been increase after TTC’s

acquisition and is now planned to be 17,500tpy LCE from 2014.


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5.2.5.1 Salar de Olaroz

The Salar de Olaroz is Orocobre’s most advanced project with production of lithium

carbonate products expected in Q3 2013, subject to governmental approval of the

project and receipt of project financing. The salar is located in Jujuy province, 230km

northwest of the city of San Salvador de Jujuy city. The salar is at an elevation of

3,900m and covers an area of 140km2, of which Orocobre’s mining and exploration

concessions span 63km2.

A mineral resource estimation released in May 2011 as part of the project’s DFS,

reported a measured and indicated mineral resource of 6.4Mt LCE and 19.3Mt KCl

(Table 35). Lithium concentration in samples from the Salar de Olaroz brines used in

the estimation reached up to 690ppm Li, with a magnesium to lithium ratio of 2.4:1 and

sulphate to lithium ratio of 25:1.

Table 35: Orocobre: Resource estimation for the Salar de Olaroz project, May 2011

Brine Volume (m

3) Li (ppm) K (ppm) B (ppm) Li (Mt) K (Mt) B (Mt)

Measured 4.2 x 108 632 4,930 927 0.27 2.08 0.39

Indicated 1.3 x 109 708 6,030 1,100 0.94 8.02 1.46

Total 1.7 x 109 690 5,730 1,050 1.21 10.1 1.85

Source: Orocobre

Orocobre began initial processing test work on brines from the Salar de Olaroz in 2008,

which identified that a modified ‘Silver Peak’ method (Section 3.1) would be effective

based on the reported magnesium and sulphate to lithium ratios. The high sulphate

content of the brines is beneficial as it will promote precipitation of calcium sulphate after

the addition of lime to remove magnesium. The early test work focused on determining

efficient evaporation rates, magnesium removal with addition of lime, boron removal with

solvent extraction and final purification of brine.

In September 2010, Orocobre produced its first batch of lithium carbonate from a pilot

plant situated at the Universidad de Jujuy. The first battery grade (>99% Li2CO3) lithium

carbonate product from Salar de Olaroz brine was achieved in April 2011 with the

characteristics shown in Table 36.


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Table 36: Orocobre: Assay results of first battery grade lithium carbonate product

from the Orocobre pilot plant

Battery Grade Specification Assay 1 Assay 2

Li2CO3 % 99.4 99.17 100.07

Na ppm 600.0 5.5 4.0

Fe ppm 5.0 1.4 1.0

Ca ppm 100.0 1.8 3.0

SO4 ppm 300.0 50.0 173.0

K ppm 10.0 0.5 1.0

Cl ppm 100.0 50.0 17.0

Mg ppm 60.0 1.6 1.0

B ppm 10.0 0.7 1.0

Si ppm 10.0 50.0 2.0

H2O % 0.2 0.05 0.477

Insoluble in HCl % 0.01 0.01 -

LOI % 0.5 0.3 0.317

Purity based on assay impurities % Li2CO3 99.878 99.982 99.979

Inc. moisture, LOI and insolubles % Li2CO3 99.168 99.622 99.185 Source: Orocobre

Secondary test work has been conducted on recovering potash and boric acid products

from brines. Potash recovery has been developed, using flotation of mixed halite-potash

precipitates as an effective way to separate a potash product. Further test work is

required to form an efficient method to separate and recover boric acid.

The DFS released in May 2011, estimated capital expenditure of US$206.7M for

construction of an operation to produce 16,400tpy LCE (Table 37). This was revised

upwards to 17,500tpy LCE after TTC acquired a 25% share of SDJ in September 2012,

with first production expected towards the end of Q2 2014. Estimated capital costs were

also increased from US$206.7M to US$229M to allow the increased production capacity.

The new capital expenditure cost includes addtional project design costs, construction of

a 20,000tpy potash production facility and higher land holding costs because of delays in

necessary approvals for the project.


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Table 37: Orocobre: Capital costs for 16,400tpy LCE operation at the Salar de Olaroz,

May 2011 (US$M)

Direct Costs: Brine Production wells and pipeline 7.1

Evaporation ponds 38.0

Processing plant 26.5

Utilities (power generation, gas, water, communication) 27.3

Infrastructure 11.9

Contractors distributables 15.0

Indirect costs: EPCM 22.6

Third party services (freight, camp construction, catering etc.) 18.3

Owners costs to production 17.9

Contingency 22.1

Total 206.7

Additional Costs:

Potash Plant (10,000tpy) 14.5 Source: Orocobre DFS, May 2011 Notes: Capital costs reported here are not applicable for Orocobre’s 17,500tpy facility announced in September 2012

Operating costs for production of battery grade lithium carbonate were estimated in the

May 2011 DFS at US$1,512/t LCE (Table 38). If a 10,000tpy potash production plant

were to be constructed at the site and ran at capacity, estimated operating costs would

decrease to US$1,230/t LCE.

Table 38: Orocobre: Operating costs for battery grade lithium carbonate production

for the Salar de Olaroz, May 2011

Annual Cost (US$Mpy) US$/t Li2CO3

Fixed Costs

Personel Charges 5.5 335

Other 2.4 147

Variable Costs

Supplies 15.6 951

Energy 1.3 78

Materials Handling - -

Total 24.8 1,512 Source: Orocobre DFS, May 2011

Construction of the designed processing plant at the Salar de Olaroz project began in

November 2012, although an official opening of the projects construction was held in

March 2013. During February 2013, the projects construction was reported as being on

schedule for completion in early 2014 and remains within budget.

In January 2010, Toyota Tsusho Corp. (TTC) signed an agreement with Orocobre to

jointly develop the Salar de Olaroz. TTC provided US$4.5M towards the completion of


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the May 2011 DFS. As part of the agreement TTC had the option to acquire a 25%

share in the Salar de Olaroz project upon securing a low cost debt facility for at least

60% of estimated CAPEX (US$124.02M) from JOGMEC. In September 2012, TTC

purchased a 22.8% stake in the Olaroz project, in return providing project financing

through a loan from Mizhuho Corporate bank and a debt guarantee totalling US$192M

and authorized by JOGMEC. With debt financing secured, Orocobre began

construction of the 17,500tpy LCE processing plant at the Salar de Olaroz in November

2012, which is scheduled to be completed in early 2014. In November 2012, Orocobre

also completed a placement of 12.3M common shares to investors, raising AUS$21M

(US$20.9M) to continue development of the Salar de Olaroz

5.2.5.2 Salinas Grandes (Cangrejillo)

Orocobre holds an 85% stake in the Salinas Grandes project via SDJ. The project is

located approximately 70km east of the Salar de Olaroz project on the border between

the provinces of Salta and Jujuy.

A total of 12 holes have been drilled at the salar, with a maximum depth of 180m.

Drilling identified the highest lithium concentrations (>600ppm) occurred in the upper 10-

15m of the salar, below which lithium concentrations decline to irregular horizons of

<500ppm. The maximum grade recorded by Orocobre at the salar is 3,117ppm Li taken

from the western edge of the concessions. The magnesium to lithium ratio of the brine

was reported as 2.73:1 and a sulphate to lithium ratio of 10.6:1.

In April 2012, Orocobre released a PFS on the Salinas Grade project, which included a

resource estimation incorporating (on average) the upper most 13.3m of the salar. An

inferred mineral resource of 44,900t Li (239,000t LCE) and 1.03Mt potash was reported

(Table 39).

Table 39: Orocobre: Resource estimation for the Salinas Grande project, April 2012

Brine Volume (m3) Li (ppm) K (ppm) B (ppm) Li (t) K (t) B (t)

Inferred Resource 5.65 x 107 795 9,547 283 44,960 539,850 12,100

Source: Orocobre PFS, April 2012

Initial evaporation test work on brine from the Salinas Grande project began in late 2010.

This revealed that the chemistry of the brines attributed themselves to concentration via

a similar process to that used at the Salar de Atacama by SQM (Section 5.9.4).

5.2.5.3 Guayatoyoc Project

The Guayatoyoc project, located in the Jujuy province of Argentina, is primarily a potash

project. Orocobre holds concessions over 330km2 of the salar through its subsidiary

SDJ, and is currently undertaking pit sampling of brines. Samples returned on average

low lithium concentrations (<100pm) when compared to brines from Orocobre's other


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projects (Table 40). Potassium content of the brines however was >2,000ppm K and

Orocobre is looking to develop this potential.

Table 40: Orocobre: Averaged assay results from pit sampling of brine at the

Guayatoyoc project

Li (ppm) K (ppm) B (ppm) Mg:Li

Average Concentration 66.7 2,185.0 144.0 1.72:1 Source: Orocobre

5.2.5.4 Cauchari Project

The Cauchari project is located 5km south of the Salar de Olaroz on the boundary

between the Salta and Jujuy provinces. Orocobre hold exploration rights covering

300km2 via its subsidiary SDJ.

A number of surface and pit samples were taken of brine at the Cauchari project which

returned an average lithium concentration of 191ppm Li, however the maximum lithium

concentration of one sample was measured at 2,194ppm Li. The magnesium to lithium

ratio was also reported at 2.28:1 in these samples.

In April 2010, Orocobre completed a NI 43-101 compliant technical report, which

estimated the dimensions of the aquifer to be 250km2 in area and between 100 and

500m in depth. A maiden mineral resource estimation was made for the salar in October

2012, reporting a contained inferred resource of 470,000t Li2CO3 and 1.62Mt potash

(Table 41). Lithium and potassium concentrations in brine samples used in the

estimation at the Salar de Olaroz averaged 380ppm Li and 3,700ppm K . The

magnesium to lithium ratio of the brines was reported at 2.8:1.

Table 41: Orocobre: Maiden resource estimation for the Salar de Cauchari project,

October 2012

Brine Volume (m

3) Li (ppm) K (ppm) Li (t) Li2CO3 (t) KCl (Mt)

Northern 204 400 3,800 81,497 433,562 1.49

Southern 26 260 2,500 6,851 36,447 0.12

Total 230 380 3,700 88,348 470,009 1.62 Source: Orocobre, October 2012

In September 2011, Orocobre received necessary permitting to undertake a drilling

campaign at the Cauchari project, which was initiated in late 2011. Orocobre released

results from the campaign in January 2012 after six holes had been drilled to a

maximum depth of 249m. Three of the drill holes returned average concentrations of

between 400-600ppm Li, one drill hole returning grades of <100ppm Li. Magnesium to

lithium ratios ranged between 2.1:1 and 4.9:1, and sulphate to lithium ratios ranged

between 44:1 and 176:1 in the drill hole samples. It was noted the sulphate content of

the brines increase towards the southern edge of the Cauchari project.


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5.2.6 Rodinia Lithium Inc.

Rodinia holds interests in five saline brine projects in Argentina and the USA. The Salar

de Diablillos is the companies most advanced project, located 145km south of the city of

Salta, near the Salta-Catamarca province boarder in Argentina. Rodinia’s other lithium

interests in Argentina are at the Salar de Salinas Grandes in Jujuy province, and the

Salar de Centenario and Salar de Ratones in Salta province. In the USA, Rodinia is

exploring the Clayton Valley project in Esmeralda County, Nevada, which surrounds

Rockwood Lithium’s (Section 5.39.2) property.

The Salar de Diablillos project area spans 57.8km2 with an average elevation of 4,000m.

Exploration to define a mineral resource identified that saline brines are hosted within

three aquifers at the project, defined by variations in their geological, geophysical,

geochemical and flow properties. In March 2011, Rodinia released a NI 43-101

resource estimation for the project, reporting a contained resource of 2.8Mt LCE, 11.2Mt

KCl and 615,000t B, applying a cut-off grade of 230ppm Li (Table 42). Assayed brines

displayed an average concentration of 556ppm Li, 6,206ppm K and 646ppm B, with a

magnesium-lithium ratio of 3.7:1.

Table 42: Rodinia Lithium: Salar de Diablillos resource estimation, March 2011

Brine Volume

(km3)

Brine concentration (ppm)

Tonnage (Mt)

Li K B Li2CO3 KCl B2O3

Aquifer I 0.041 592 6,298 647 0.13 0.49 0.15

Aquifer II 0.271 471 5,269 540 0.67 2.72 0.83

Aquifer III 0.640 589 6,595 691 2.00 8.05 2.53

Total 0.953 556 6,206 646 2.81 11.2 3.51 Source: Company Website

Rodinia completed hydrological modelling and a PEA at the Salar de Diablillos in

December 2011, which looked at the potential for a 15,000tpy and a 25,000tpy LCE

extraction and processing operation at the property. The PEA reported that

hydrogeological and hydro chemical conditions would not inhibit a 15,000tpy LCE

operation, however increasing production to 25,000tpy LCE may be limited by some

parameters.

In February 2012, Rodinia announced construction of a pilot plant facility to develop a

metallurgical flow sheet to produce battery grade lithium carbonate along with potash

and boric acid. The pilot plant is to be constructed in three phases, with construction of

small evaporation pans to determine evaporation rates and brine chemistry evolution at

the salar. Concentrated brines produced in phase one will be used to undertake bench

scale test work to recover lithium, potassium and boron products. The second phase of

pilot plant construction intends to increase the scale of evaporation ponds at the Salar

de Diablillos and fine tune the processing method defined during phase one. The final

phase involves construction of large evaporation ponds at the salar covering 0.25km2

and construction of a pilot scale (200tpy LCE) processing plant on site to process

concentrated lithium brines.


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Upon production start-up, capital costs for the Salar de Diablillos are estimated in the

PEA study at US$143.6M, increasing to US$222.6M over a mine life of 20 years (Table

43). Rodinia intend to construct the potash treatment circuit on-site at the Salar de

Diablillos project, whereas the planned lithium carbonate and boric acid production plant

would be constructed at Pocitos in Salta province approximately 130km by road away

from the salar. Design production capacity at the two plants is estimated to be

15,000tpy LCE, 52,000tpy KCl and 18,000tpy B2O3 upon completion.

Table 43: Rodinia Lithium: Estimated capital costs for the Salar de Diablillos project

Initial Cost (US$M) LOM Costs (US$M)

Well field and Ponds 69.1 135.0

Potash Treatment Circuit 17.1 17.1

Lithium Carbonate/Boric Acid Plant 22.8 22.8

EPC (10%) 10.6 10.6

Contingency (20%) 23.9 37.1

Total 143.6 222.6 Source: Rodinia Lithium PEA study December 2011

Operating costs for lithium carbonate production were estimated in the PEA study to be

US$2,220/t LCE assuming a 15,000tpy LCE production (Table 44). Potash production is

not included in the aforementioned operating cost, and an additional US$733/t KCl has

been estimated to recover sylvinite from evaporation pond precipitate. Boric acid

production is included in the operating costs as it is considered a by-product of lithium

carbonate processing and production.

Table 44: Rodinia Lithium: Estimated operating costs for the Salar de Diablillos

project (US$Mpy)

Wells and Ponds 9.5

Lithium Carbonate Plant Costs 18.2

Potash Flotation Plant 3.7

Support Services 1.9

Total 33.5 Source: Rodinia Lithium PEA study December 2011

Battery grade (99.45% Li2CO3) lithium carbonate was produced from brines extracted at

the Salar de Diablillos project during October 2012, by SGS Laboratories in Lakefield,

Canada. SGS Laboratories used the process described in Rodinia’s PEA study and

Rodinia reported that with further washing, a 99.75% Li2CO3 product could be achieved.

Rodinia’s other lithium assets in Argentina remain in the early stages of exploration

although lithium concentrations measured in brines at the projects show some potential

(Table 45).


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Table 45: Rodinia Lithium: Other Argentine lithium projects

Salar Province Area Brine Conc.

Salar de Ratones Salta 6.0km2

Previous studies reported average 600ppm Li.

Salar de Centenario Salta 6.8km2

Previous studies reported average 400ppm Li.

Salar de Salinas

Grande

Jujuy 45km2

Rodinia has reported grades of 950ppm Li with

Mg:Li ratio of 1.4:1. Other exploration companies

have reported grades of up to 1,409ppm Li. Source: Company website and presentations

5.2.6.1 Rodinia Lithium USA

Rodinia operates the Clayton Valley project located in Esmeralda County, Nevada

around 55km southwest of Tonopah through its American subsidiary Donnybrook

Platinum Resources, Inc. The licence area covers 72km2 composed of 1,012 individual

claims which almost totally encompass Rockwood Lithium’s Silver Peak operation.

Since acquiring the project in April 2009, Rodinia has completed geophysical surveys

across the majority of the licence areas along with a reverse circulation drilling

campaign. Drilling intercepted brines contained within an ash aquifer a sequence of

sand, ash, tufa and clay strata exhibiting flow rates of more than 303litres/min. Results

of samples from one reverse circulation drill hole returned grades averaging 370ppm Li,

6,800ppm K with a Mg:Li of 1.2:1 over 30m, and 270 mg/L Li and Mg:Li of 1.3:1 over 50

metres.

5.2.7 Marifil Mines Ltd.

Marifil Mines own the Catamarca lithium project in North West Argentina which is

composed of nine separate concession areas across three separate salars:

Salar Concession Name Area

Salar de Antofalla Antofalla 1 52.1km2

Antofalla 2 26.3 km2

Antofalla 3 39.6 km2

Salar de Ratones - 8.5 km2

Salar de Cauchari Pampa Cauchari Pampa 1 13.7 km2

Cauchari Pampa 2 25.7 km2



Fraile 5.6 km2

Total - 310.3 km2


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After signing an agreement with Renholn Holdings Inc. to sell the Catamarca Property in

October 2010, Marafil terminated the agreement in September 2011 after Renholn

Holdings and its majority owner Oblata Resources in their view undertook minimal

follow-up exploration work at the property. Subsequently Marafil purchased the

Cauchari Pampa 4 and Fralie concessions increasing their concenssion area by

11.7km2.

Marifil have budgeted US$1.5M to undertake a two phase exploration program including

drilling on the concession areas to identify anomalous lithium concentrations in brines

and work towards producing a resource estimation for the project.

5.2.8 International Lithium Corporation

International Lithium Corp. (ILC) is a mineral exploration company with lithium projects in

Canada (Section 5.8), Ireland (Section 5.18), the USA (Section 5.39) and Argentina.

The company is owned 25.5% by TNR Gold Corporation and 14.7% by Jiangxi Ganfeng

Lithium Co. Ltd. (Section 5.10.7.6)

ILC’s exploration efforts are mainly focused on the wholly owned Mariana project in

Salta Province of Argentina. The lithium-potash project licence areas cover 160km2,

encompassing the entire salar. ILC began a US$750,000 reverse circulation drilling

program in January 2012, working towards delineating an inferred resource estimation in

late 2012. Results from samples taken from brines during the January 2012 drilling

returned average lithium concentrations of between 255ppm and 345ppm Li, with Mg:Li

ratios ranging between 14.6:1 and 17.4:1. A second US$1.5M drilling campaign is

planned at the Mariana Project in mid-2012 composed of between 10-20 drill holes

which will be used in any future resource estimations.

5.2.9 Other prospects for Lithium Production

Dajin Resource Corp. owns concession covering the Salar de Salinas Grandes and

Salar de Guayatayoc in Salta and Jujuy provinces of Argentina. The concessions held

cover approximately 1,030km2 of which 830km

2 overlies salar and tertiary palaeo-salar.

Chemical analysis of brines at the Salar de Salinas Grandes have returned lithium

concentrations of 700 ppm Li and 10,000ppm K, with a Mg:Li ratio of 3.5:1.

Renholn Holdings Inc. owned 80% by Oblata Resources and 20% by Red Sea

Resources hold concessions covering the Salar de Arizaro in Salta Province and

Catamarca lithium project in Catamarca Province. At the Salar de Arizaro, samples of

the brines have returned concentrations of 700ppm Li, with potassium grades exceeding

8,000ppm K and boron concentrations averaging 750ppm B.

A joint venture between Bolloré and Eramet (Bollore S.A. - Eramet S.A. JV) signed an

agreement with Minera Santa Rita in February 2012, giving the joint venture access to

explore a number of concession in the north of Argentina.


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Leopard Resources is scheduled to purchase a 70% interest in an Argentine company

with an 85% interest in two mining licences overlying salars. The company has planned

to produce 10,000tpy LCE from the projects within three years of an agreement being

signed with the original owners, after which it shall receive a further 15% stake in the

company.

Lacus Minerals is an Argentina-based resource company focused on the exploration

and development of brine projects for their lithium and potash potential. The company

owns claims covering 726km2 in northern Argentina at two separate salars, the Salar de

Centenario and Salar de Pocitos. Geochemical and gravity surveys have been

completed by Lacus on both the Centenario and Pocitos salars, along with an initial drill

campaign to prove the existence of lithium and potash bearing brines at the projects.

Lacus also previously held claims over the Salar de Rincon, however the company sold

these claims to ADY Resources (Section 5.2.2), in July 2011.

5.3 Australia

Since September 2010, Talison Lithium and Galaxy Resources have been responsible

for all of Australia’s lithium mineral extraction and production. In 2011, Australia became

the largest supplier of lithium products producing approximately 66,000t LCE, exceeding

Chilean output for the first time since the early 1990s. A number of other mineral

exploration companies including Reed Resources, Altura Mining and Artemis Resources

are also developing lithium projects based around pegmatite intrusives and saline lakes

in Western Australia and Queensland.

The USGS estimates that Australia contains lithium reserves of 970,000t Li, the third

largest national reserves behind Chile and China. Talison Lithium’s Greenbushes

project and Galaxy Resources’ Mt. Cattlin spodumene mines in Western Australia form

the majority of Australia’s reserves.

Australia’s imports and exports of lithium chemicals are minor; however the country’s

trade in mineral concentrates in notable on a global scale. Exports of mineral

substances are shown in Table 46, excluding natural micaeous iron oxides. The values

in Table 46 include exports of natural magnesium sulphate and vermiculite, however

spodumene mineral concentrates contribute the majority of total exports. This is also

shown by the close correlation with reported sales of spodumene concentrate by Galaxy

Resources and Talison Lithium. Since 2007, China has consistently been the largest

market for Australian spodumene concentrates with exports to the country growing on

average at over 18%py. In 2012, China was the destination for 87% of Australian

mineral substance exports, reaching nearly 450,000t. Other importers of Australian

spodumene material include Germany, the USA and Belgium, importing 14,340t, 13,999t

and 23,330t in 2011 respectively.


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Table 46: Australia: Exports of mineral substances NES (excl. natural micaceous iron

oxides) 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

China 49,124 166,698 182,973 170,067 189,517 247,342 329,171 449,441

Japan 46,7681

214,9981

10,323 6,002 2,570 10,258 7,039 7,205

Belgium 9,100 27,930 31,600 20,318 - 660 31,329 23,330

Germany 12,626 8,702 800 380 6,133 40,982 10,965 14,340

USA 2,401 3,186 4,572 4,660 7,400 11,757 11,743 13,999

Netherlands 2,904 - - 20,000 11,000 - - -

Spain 1,760 2,740 3,840 4,800 1,120 4,040 3,980 1300

Italy 9,923 4,080 1,805 1,260 200 220 220 60

Others 10,864 7,353 7,746 8,951 7,820 8,856 8,237 4,941

Total 145,472 435,689 243,662 236,441 225,761 324,115 402,688 514,620 Source: GTIS Notes: NES = not elsewhere specified

1-Thought to include other minreals based on Japan’s spodumene requirements

Japanese imports of mineral substances in 2006 are anomalous, reaching nearly

215,000t, and are thought to be a result of a large volume of other mineral concentrates

being included. This is also suggested when the unit value of exports are examined,

displaying a fall to approximately US$21/t compared with US$133/t in the previous and

US$180/t in the subsequent year (Table 47).

Table 47: Australia: Unit value of mineral substances NES (excl. natural micaeous iron

oxides) 2005 to 2011 (US$/t)

2005 2006 2007 2008 2009 2010 2011 2012

China 130.5 153.1 189.6 210.9 248.7 217.4 233.2 278.1

Japan 133.8 21.4 180.3 281.3 491.5 338.4 351.6 439.8

Belgium 180.4 158.1 197.9 210.7 n/a 459.5 430.4 451.1

Germany 187.1 174.0 215.3 249.6 150.5 326.4 416.4 480

USA 291.2 189.9 314.1 310.2 329.2 432.7 448.2 526.04

Netherlands 234.4 n/a n/a 214.4 215.2 n/a n/a n/a

Spain 196.2 251.3 286.3 306.9 321.2 439.6 480.0 585.34

Italy 118.1 92.6 263.0 232.0 192.2 504.6 524.9 714.75

Average 183.9 148.7 235.2 252.0 278.4 388.4 412.1 496.4 Source: GTIS Note: NES = not elsewhere specified

As spodumene exports form such a large portion of exported mineral substances, the

unit value of exports gives a representation of the value of Talison Lithium’s and Galaxy

Resources’ prices. As an average, prices of spodumene concentrate from Australia

have increased at approximately 14%py between 2005 and 2011. The price of exports

to the USA and Spain are consistently higher than exports to other countries,

representing higher grade spodumene concentrate for use in certain ceramic, galss and

metallurgical applications. At the other end of the scale, exports to China typically show

a lower unit value; with prices normally 20%-30% lower than the global average. China


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imports a large volume of spodumene concentrate with higher iron content used in

mineral conversion to lithium chemicals, which might explain the lower average price.

5.3.1 Talison Lithium

In August 2007, Talison Minerals was formed after the acquisition of Sons of Gwalia’s

Advanced Minerals Division by a group of five private equity firms. In the takeover,

Talison Minerals gained control of the Greenbushes lithium, tantalum and tin mine in

Western Australia, the Wodgina tantalum mine in the Pilbara region of Western Australia

and exploration leases around the Wodgina project. In 2009, Talison Minerals split into

two companies; Talison Lithium Ltd. which focuses on lithium operations and exploration

projects and Global Advanced Metals, which took control of the tantalum operations and

exploration prospects.

In September 2010, Talison Lithium merged with Salares Lithium Inc. (Salares). Salares

owns the option to purchase a 70% share of Salar de Atacama Sociedad Contractual

Minera who themselves wholly own five brine lakes and partly own a further 2 brine

lakes in Chile. The seven brine lakes are collectively known as the ‘Salares 7’ project.

As part of the merger with Salares, Talison Lithium listed on the Toronto Stock

Exchange.

In August 2012, Rockwood Lithium (Section 5.39.2) announced that they had signed an

agreement to purchase 100% of shares and options in Talison Lithium at a cost of

CAN$6.50 per share, totalling CAN$724M (US$733.7M). In December 2012 however,

Sichuan Tianqi offered to purchase 100% of Talison Lithium’s shares for an improved

price of CAN$7.50/share, valuing Talison Litihum at CAN$847M (US$851.6M). The

Sichuan Tianqi offer was accepted by Talison Lithium shareholders in February and is

awaiting approval by the Federal Court of Australia on 12th March 2013. Further details

of the acquisition and Sichuan Tianqi are detailed in section 5.10.7.1.

5.3.1.1 Resources and Reserves

Greenbushes Mine

Located 250km south of Perth in Western Australia, the Greenbushes operation is the

largest and highest grade resource of lithium minerals in the world. The operation works

a mineralised pegmatite body which extends roughly north west-south east for more

than 3,000m with a width of up to 300m. The morphology of the pegmatite is a main

steeply dipping pegmatite intrusive with multiple smaller pegmatite offshoots and footwall

pods confined within the Donny Brook – Bridgetown shear zone.

The pegmatite contains two distinct economic zones of mineralisation, the sodium zone

and the lithium zone. The sodium zone is characterised by an albite-muscovite-

tourmaline assemblage with associated tantalite and cassiterite. The lithium zone is

enriched in the mineral spodumene, forming around 50% of the total rock mass. A third


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zone is characterised by microcline mineralisation, however this zone is of little

economic importance.

A NI 43-101 compliant resource estimation for the Greenbushes project was released in

December 2012 by Behre Dolbear Australia Pty. Ltd. of Sydney, New South Wales and

Quantitative Group Pty. Ltd. of Perth, Western Australia. Talison Lithium announced a

total measured and indicated resource of 118.4Mt grading 2.4% Li2O (Table 48). A

further 2.0Mt of inferred resource was estimated using a cut-off of 1.0% lithium oxide.

Table 48: Talison Lithium: Resource estimation for the Greenbushes deposit,

December 2012

Tonnes (Mt) Li2O (%) LCE (Mt)

Measured 0.6 3.2 0.04

Indicated 117.9 2.4 7.1

Total (Measured and Indicated) 118.4 2.4 7.1

Inferred 2.1 2.0 0.1 Source: Talison Lithium Ltd. NI 43-101 report December 2012

In December 2012, Talison Lithium also reported proven and probable reserves of

61.5Mt grading 2.8% Li2O (Table 49), an increase of 30.1Mt from the previous March

2011 estimation albeit with a small reduction in the reserve grade. All reported reserves

are contained within the aforementioned resource estimation. The updated lithium

mineral reserve estimation suggests the life of mine will exceed the 22 years reported in

the March 2011 NI 43-101 report (at full capacity of 110,000tpy LCE), and may be

extended further by later increases in resources and reserves.

Table 49: Talison Lithium: Lithium mineral reserve estimation for the Greenbushes

deposit, December 2012

Tonnes (Mt) Li2O (%) LCE (Mt)

Proven 0.6 3.2 0.04

Probable 61.0 2.8 4.2

Total 61.5 2.8 4.3 Source: Talison Lithium Ltd. NI 43-101 report December 2012

In addition to the lithium zones which are included in the resource and reserve

estimations, the sodium (tantalum-cassiterite) zone also contains some spodumene

mineralisation. If the tantalum bearing zones were to be extracted in the future, lithium

could be produced as a by-product to tantalum and tin.

Salares 7 Project

Located in Region III of Chile, the Salares 7 project is comprised of 7 saline lakes which

cover a total of 394km2. The saline lakes which make up the project are:

Salar Grande

Salar de Piedra Parada

Salar de la Isla

Salar de Agua Amarga


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Salar de Las Parinas

Salar de Aguilar

Salar de Maricunga

Talison Lithium holds a total of 142 exploration concessions which cover the seven

salars listed above. The Salar de la Isla is the largest of the seven salars and accounts

for 42% of the total Salar 7 exploration concessions. The Salar Grande and Salar de

Aguilar are held in part by third parties. Soquimich (SQM) S.A and a Mr. Sergio Gomez

Nuñez hold a total of 3.5km2 of exploration concessions at the Salar Grande and

Corporación Nacional del Cobre de Chile (Codelco) hold 3km2 of exploration

concessions at the Salar de Aguilar.

Grades at the Salares 7 project have been reported up to 1,080ppm Li, however each

saline lake displays different brine chemistries (Table 50). The grades displayed in

Table 50 were taken from 71 brine samples collected in 1998 and are not NI 43-101

compliant. A second set of brine samples were collected in 2009 which generally

reported lower lithium content of the brines (Table 51). As of October 2012, no NI 43-

101 compliant resource or reserve estimation has been undertaken for the Salares 7

project.


lakes 1998, (ppm)

Salar Area (km2) Max Li (ppm) Max K (ppm) Max Na (ppm)

Salar Grande 40 123 2,770 40,700

Salar de Piedra Parada 15 103 2,040 22,400

Salar de la Isla 165 1,080 10,800 103,000

Salar de Agua Amarga 31 157 2,490 43,200

Salar de Las Parinas 54 477 7,820 114,000

Salar de Aguilar 88 337 3,990 64,600

Salar de Maricunga 1 916 11,400 86,000

Total (Wt. Avg) 394 624 7,070 51,615 Source: Talison Salares 7 technical report 2009


lakes 2009, (ppm)

Salar Area (km2) Max Li (ppm) Max K (ppm) Max Na (ppm)

Salar Grande 40 51 1,107 29,259

Salar de Piedra Parada 15 … … …

Salar de la Isla 165 220 2,679 60,211

Salar de Agua Amarga 31 145 2,153 60,799

Salar de Las Parinas 54 276 4,158 105,369

Salar de Aguilar 88 … … …

Salar de Maricunga 1 245 2,229 2,679

Total (Wt. Avg) 394 147 1,979 47,413 Source: Talison Salares 7 technical report 2009


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Talison Lithium began an accelerated exploration program on the Salar de la Isla during

late 2011 in a bid to define an NI 43-101 compliant resource estimation. The exploration

program is expected to cost US$5M during the Australian 2012 Fiscal year (July 2011-

June 2012) and will include systematic drilling and sampling of the salar brines.

5.3.1.2 Production

At the Greenbushes operation, spodumene bearing ores are extracted using an open pit

method. In the past underground mining methods were used to extract lithium ores and

dredging had been used to recover surficial deposits. The open pit method requires ore

to be drilled and blasted on 5m or 10m benches. Material is removed from the pit by

excavators and 90t haul trucks before being stored according to grade at a run of mine

pad. Ore at the run of mine pad contains roughly 3.5%-4.5% lithium oxide. At the central

lode, the largest portion of the lithium zone, the ore to waste ratio for mined rock is 1:

1.23. The waste rock includes barren country rock, tantalum mineralisation and

pegmatite with <2% Li2O.

Talison Lithium has two ore processing facilities at the Greenbushes site. One facility

produces technical grade lithium concentrate while the other produces chemical grade

lithium concentrate. Run of mine ore is concentrated at the two plants by gravitational

and heavy media separation followed by flotation and magnetic separation to produce a

range of lithium concentrate products. The processing cost of the lithium concentrate is

determined by the purity of the end product and varies between AUS$21/t – AUS$56/t.

The production capacity of the two Greenbushes plants at the end of 2011 stood at

315,000tpy lithium concentrate (47,000tpy LCE) and the plants have run at 100%

capacity since 2010 (Table 52). In 2011, extra lithium mineral concentrate was

produced off site at Global Advanced Metals tantalum plant, which historically produced

a spodumene concentrate. The capacity of the two Greenbushes plants was upgraded

to 740,000tpy lithium concentrate (approximately 110,000tpy LCE) after an expansion

project was completed in June 2012. Production in 2012 totalled 59,100t LCE, an

increase of 11% from 2011.

Table 52: Talison Lithium: Production and sales of lithium mineral concentrates and

ores, 2005 to 2011 (000t LCE)

2005 2006 2007 2008 2009 2010 2011 2012

Production 21.0 25.0 37.0 33.0 31.0 47.7 53.0 59.1

Sales … … … … … 46.5 51.2 61.1

Capacity 37.0 37.0 37.0 37.0 40.0 47.0 47.0 110.0

Utilisation (%)1

58 68 100 89 78 101 112 53 Source: Talison Lithium Annual and Quarterly reports, Roskill data. Note: 1-Does not allow for capacity at the GAM tantalum plant


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After preliminary engineering and location studies at two sites in Western Australia,

Talison Lithium announced in February 2012 that it intends to construct a lithium

minerals conversion plant producing 20,000tpy lithium carbonate at Kwinana. The

Kwinana site is located approximately 40km south of Perth and was chosen because of

its proximity to water, reagents and energy supply, access to skilled labour and close

location to Fremantle Port. In December 2011, Talison Lithium invested AUS$3.7M in

the mineral conversion plant project to finance a detailed engineering study commencing

in early 2012 on the recommended construction site. The detailed study will work on a

proposed 20,000tpy LCE plant capacity, which would be doubled during a second phase

of construction. Commissioning is anticipated to be completed in 2015 and Talison

Lithium intend to make an investment decision on the project by the end of 2012.

In December 2011, Talison Lithium announced they were in talks with Japanese trading

firm Sojitz Corporation to discuss collaborative marketing and distribution for any lithium

carbonate production from the planned facility.

In February 2012, Talison Lithium signed a non-binding memorandum of understanding

(MoU) with Mitsui & Co., Ltd to discuss marketing future production from the planned

mineral conversion plant in Western Australia. Mitsui will aim to distribute lithium

carbonate in Japan, a major market for lithium-ion batteries and lithium chemicals.

5.3.1.3 Products

Talison Lithium supplies a number of lithium mineral products (Table 53). Product

SC6.0 is produced at the Greenbushes Chemical Grade Plant whilst all other lithium

mineral concentrate products (SC4.8, SC6.4, SC 7.0 and SC 7.5) are produced at the

Greenbushes Technical Grade Plant. SC4.8 grade is mostly exported to Europe and

China for use in glass-ceramics because of its low iron content. Talison Lithium’s

SC6.4, SC7.0 & SC7.5 products are typically used in the glass, ceramics, and foundry

and casting industries because of their high lithium and low iron content.


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Table 53: Talison Lithium: Standard lithium mineral concentrate product

specifications

Product ID

SC4.8 SC6.0 SC6.4 SC7.0 SC7.5

Chemical Properties

Li2O (Min) % 4.8 6.0 6.4 7.0 7.5

Fe2O3 (Max)% 0.1 0.8 0.3 0.2 0.1

MnO (Max)% … … … … 0.1

Al2O3 (Min)% … … … 24.5 25.0

SiO2 (Min)% … … … 63.5 62.5

Na2O (Max)% … … … 0.4 0.4

K2O (Max)% … … … 0.4 0.2

P2O5 (Max)% … … … 0.3 0.3

CaO (Max)% … … … … 0.1

TiO2 (Max)% … … … … 0.0

LOI (Max)% … … … 0.5 0.5

Moisture (Max)% … 6.0 … … …

Physical Properties

% +850μm 0.0 … … … …

% +106μm 95 (min) … … … …

% +8000μm … <0.2 … … …

% +5600μm … <5 … … …

% 5600/4000 μm … 8.0 … … …

% 4000/2000 μm … 14.0 … … …

% 2000/1000 μm … 19.0 … … …

% -1000 μm … 65.0 … … …

% +1000 μm … … >2 … …

% +500 μm … … … … 0.0

% +212 μm … … … … 6 (max)

% +125 μm … … … 3 (max) …

% +75 μm … … … 80 (min) 55/70 (Min) Source: Talison Lithium NI 43-101 report June 2011

5.3.2 Galaxy Resources Ltd.

Galaxy Resources (Galaxy) wholly own the Mt. Cattlin lithium project located near

Ravensthrope in Western Australia. Galaxy acquired the Mt. Cattlin property from Sons

of Gwalia in 2006 and commenced exploration for lithium and tantalum in the following

year. The company listed on the ASX in 2007.

Galaxy also owns the Ravensthrope projects in Western Australia, a group of seven

exploration targets with identified lithium, tantalum, base metal, gold and iron ore

potential. The Jiangsu Lithium Carbonate Plant in Zhangjiagang, China is owned by


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Galaxy and was officially opened in March 2012. The plant has a capacity to produce

17,000tpy battery grade lithium carbonate, all of which will be distributed to long term off-

take partners in Japan and China.

On 30th March 2012, Galaxy announced that it had signed a definitive agreement with

Lithium One to merge the two companies into a single enterprise. The merger will not

only boost the resource base, but also allows Galaxy to develop both brine and

spodumene based lithium projects. The James Bay exploration project, held by both

Lithium One and Galaxy will also become wholly owned by Galaxy. The offer valued

Lithium One at CAN$112M which at the time of the merger agreement held an 80%

stake in the James Bay Project, Canada and 100% owned the Sal de Vida project in

Argentina. On 30th March 2012, Galaxy raised AUS$30M (US$31.2M) in capital via a

share placement, to support its merger with Lithium One. The merger deal was accepted

by both companies’ shareholders in June 2012, and finalised after a final court hearing

to approve the merger on the 3rd July 2012.

In November 2012, Galaxy Resources raised AUS$81M (US$84.5M) through a two

‘tranche’ placement of 162.3M common shares to current shareholder M&G Investments

(30M common shares at AUS$0.50/share) in the first tranche, and East China Mineral

Exploration and Development Bureau (ECME) (132.4M common shares at

AUS$0.50/share) in a second tranche. The first tranche of the share purchase

increased M&G Investments’ interest in Galaxy Resources to 19.3%. M&G Investment’s

shareholding was expected to be diluted to 16.4% by the second tranche of the

placement which would have seen state owned ECME’s gain a 19.8% interest in Galaxy

Resources. ECME however withdrew their intention to invest in Galaxy in January 2013,

indicating that it would consider the investment again when stable production at the

Jiangsu Litihum Carboante Plant was achieved.

5.3.2.1 Reserves and Resources

Mount Cattlin Mine

Located approximately 430km south east of Perth, the Mt. Cattlin operation mines

lithium bearing pegmatites. The morphology of the pegmatite body is flat lying which

allows for a low stripping ratio of 2.4:1. The main lithium bearing minerals are

spodumene and lepidolite, which occur along with tantalum and niobium mineralisation

as tantalite/columbite and sporadic tin mineralisation as cassiterite.

In February 2011, Galaxy released an updated mineral resource estimation completed

by both Galaxy and Hellman and Schofield Pty Ltd. A cut-off grade of 0.4% Li2O was

used for the updated resource and the results are shown in Table 54. As a result of the

increased resource, the life of mine was extended to 18 years, assuming a 1Mt ore/y

mining rate. The February 2011 resource estimate was updated to incorporate depletion

by mining up until December 2011, lowering the estimated remaining mineral resource to

17.15Mt grading 1.09% Li2O and 155ppm Ta2O5.


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Table 54: Galaxy Resources: Mount Cattlin mineral resource estimate, February 2011

Tonnes (Mt) Li2O (%) Ta2O5 (ppm) Contained LCE

(000t)

Measured 3.19 1.17 149 92.3

Indicated 10.61 1.06 168 278.1

Inferred 4.38 1.07 132 115.9

Total 18.18 1.08 156 485.5 Source: Galaxy Resources press release

A mineral reserve estimate was released by Galaxy in December 2011, which is based

on the final limits of the pit design (Table 55). An ore recovery of 95% and ore dilution of

10% is integrated into the estimation.

Table 55: Galaxy Resources: Mount Cattlin mineral reserve estimate, December 2011

Tonnes (Mt) Li2O (%) Ta2O5 (ppm) Contained LCE

(000t)

Proven 2.80 1.09 136 75.5

Probable 7.93 1.03 150 202.0

Total 10.73 1.04 146 276.0 Source: Galaxy Resources annual report 2011 Notes: Reserve estimation is based on a cut-off grade of 0.4% Li2O, recoveries and dilution are integrated in to the

estimation

James Bay Project

In May 2011, Galaxy acquired a 20% stake in the James Bay lithium project for

CAN$3M, which was then majority owned by Lithium One Inc. The merger agreement

completed by Galaxy and Lithium One in July 2012 saw that the James Bay project

became 100% controlled by Galaxy. Galaxy began a definitive feasibility study at the

James Bay project in September 2011 which will assess the construction and operation

of a mine, processing plant and battery-grade lithium carbonate plant.

Lithium at the James Bay project is hosted within spodumene mineralisation which

occurs in outcropping pegmatite bodies. A resource estimation was undertaken in

November 2010 as part of an NI 43-101 document prepared by SRK Consulting (Table

56). The SRK estimation used a cut-off grade of 0.75% Li2O.

Table 56: Galaxy Resources: James Bay mineral resource estimate, November 2010

Tonnes (Mt) Li2O (%) Contained LCE (000t)

Indicated 11.75 1.30 378

Inferred 10.47 1.2 311

Total 22.22 1.25 689 Source: Galaxy Resources and Lithium One press releases, SRK NI 43-101 report


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5.3.2.2 Production

Mount Cattlin Mine

Galaxy commenced pre-strip mining at the Mt. Cattlin project during March 2010.

Overburden stripping was completed in 4 months and mining of ore began in the third

quarter of 2010. Ore is extracted by drilling and blasting using an open cut method.

Blasted ore is removed by excavator and haul truck and transported to a run of mine pad

before crushing and preliminary heavy media separation (HMS). Galaxy intends to

extract 1Mt of ore per year at full capacity.

Production of spodumene concentrates from the Mt. Cattlin plant began in October

2010. Run of mine ore is crushed in a 4 stage circuit which reduces the particle size to

-6mm. Crushed ore is fed into a concentration circuit to produce an approximately 6%

Li2O spodumene concentrate and a tantalum concentrate. The concentration circuit

includes a reflux classifier, two stages of HMS cyclones and a sink-float separation

stage. Finished spodumene concentrate is finally drained and stored for transportation.

The Mt. Cattlin plant has a design capacity to produce 137,000tpy of spodumene

concentrate and a further 56,000lbspy (25tpy) Ta2O5 concentrate. The plant has

gradually increased its production of spodumene concentrate since its start up in late

2010 as shown in Table 57. Production of spodumene concentrate in 2011 was 63,863t

as production was ramped up through the year. Galaxy suspended mining at the Mt.

Cattlin Mine in July 2012, after stockpiles exceeded 12 months supply to the Jiangsu

Lithium Carbonate plant. Mining was expected to resume at the Mt. Cattlin site after

stockpiled material had been cleared, however in March 2013, Galaxy signed a supply

agreement to source spodumene concentrate for the Jiangsu Lithium Carbonate Plant

from Talison Lithium. Galaxy announced that sourcing spodumene feedstock from

Talison Lithium was an economically superior approach than reinstating full operartions

at the Mt. Cattlin mine, and that operations at the Mt. Cattlin mine will remain suspended

until further notice.

Table 57: Galaxy Resources: Mt. Cattlin mine and plant production, Q3 2010 - Q4 2011

2010 2011 2012

Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year

Ore Mined (kt) 97.8 111.0 137.7 157.3 210.4 616.7 217.9 201.7 35.2 - 454.8

Grade (%) 0.99 1.23 1.17 1.0 1.08 1.11 1.2 1.22 1.42 - 1.22

Ore Milled (kt) 61.9 114.7 151.7 192.6 176.7 628.7 191.0 218.8 43.1 - 452.9

Grade (%) 0.96 1.25 1.25 1.1 1.19 1.19 1.22 1.22 1.34 - 1.23

Spod. Conc. (kt) 1.64 6.80 17.79 20.56 18.69 63.85 21.69 26.96 5.38 - 54.03

Produced LCE (t) 244 1,009 2,640 3,052 2,772 9,471 3,220 4,001 799 - 8,019

Source: Galaxy Resource quarterly reports Notes: Mining commenced in July 2010 and concentrate production began in October 2010

James Bay Project

In September 2011, Galaxy commenced a definitive feasibility study with Hatch

Engineering on the construction of mining and concentration facilities at the James Bay


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property. The mine design will aim to extract 1Mtpy of ore which would be processed

into a spodumene concentrate on site at a facility similar to Galaxy’s Mt. Cattlin plant.

Hatch Engineering will also assess construction of a battery grade (>99.5% Li2CO3)

lithium carbonate plant either at James Bay or next to the existing facility in Zhagjiagang,

China.

Li-ion Battery Plant Project

Galaxy completed a feasibility study in late 2010 which looked at the construction of a Li-

ion battery plant in the Jiangsu Eco-Friendly New Materials Industrial Park, Jiangsu

Province in China. Capital costs were forecast to be AUS$134M for the construction of

a plant to produce 350,000 (36V 10Ah) battery packs a year. Construction of the battery

plant would only be considered after the completion of the Jiangsu Lithium Carbonate

Plant. In September 2011, Galaxy announced it had signed off take agreements with 13

Chinese companies for 100% of proposed production from the Li-ion battery plant.

5.3.3 Reed Resources Ltd.

Reed Resources owns a 70% stake holding in the Mt Marion lithium project, located

40km south of Kalgoorlie in Western Australia. The remaining 30% of the project is held

by Mineral Resources Ltd. (MRL), who undertake mineral processing consultancy along

with supplying mining equipment and infrastructure.

Lithium at the Mt Marion project is hosted within spodumene bearing pegmatites which

intrude into the granitoid country rock. In July 2011, Reed Resources released an

updated resource estimation for the project which reported a resource of 14.8Mt grading

1.3% Li2O (contained 495,800t LCE), using a cut-off grade of 0.3% Li2O. The resource

is comprised of six separate deposits which make up the Mt Marion property, named

Deposit 1, Deposit 2, Deposit 2 West, Deposit 4, Deposit 5 and Deposit 6. The strip

ratio of the 6 deposits ranges between 1:1 and 2:1.

Table 58: Reed Resources : Mt Marion resource estimation, July 2011

Tonnes (Mt) Grade (Li2O%) Cont. LCE

Deposit 1 5.21 1.4 180,658

Deposit 2 1.53 1.3 49,284

Deposit 2W 4.96 1.3 159,523

Deposit 4 1.10 1.2 32,703

Deposit 5 0.35 1.3 11,284

Deposit 6 1.70 1.5 63,099

Total 14.86 1.3 496,551 Source: Company press release

Reed Resources intend to construct mine and plant facilities at the project to process

1.2Mtpy of mined ore. Production capacity of the proposed processing plant is planned

to be 200,000tpy spodumene concentrate grading 6.0% Li2O, 60,000tpy muscovite mica

and 30tpy tantalite concentrate. Construction and commissioning of the processing


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plant was originally expected to be covered by MRL, however MRL are believed to have

postposed construction.

In January 2012, Reed Resources were in the process of looking to form a strategic

partnership with a third party to potentially undertake toll processing, form a joint venture

or purchase its spodumene operations. These negotiations however remain at a

preliminary stage.

5.3.4 Altura Mining Ltd.

Altura Mining holds a 100% ownership in the Pilgangoora lithium project located in the

Pilbara Region of Western Australia. The company first identified elevated lithium

grades at the project in October 2009 after a set of grab samples taken by Altura Lithium

(then Haddington Resources Ltd.) returned grades up to 5% Li2O.

Lithium at the Pilgangoora project is hosted within the mineral spodumene, which occurs

within pegmatite dykes outcropping at surface. The company released a JORC

compliant resource estimation in November 2011, which reported 13.2Mt grading 1.21%

Li2O (contained 396,000t LCE). This was upgraded in October 2012 after Altura

reported an 89% increase to the resource at 25Mt grading 1.23% Li2O (contained

767,000t LCE) (Table 59). The October 2012 resource estimation updated use a COG

of 0.7% Li2O.

Table 59: Altura: Mineral resource estimation for the Pilgangoora lithium project,

October 2012

Mt % Li2O Cont. LCE (t)

Indicated 17.29 1.25 535,000

Inferred 7.87 1.2 233,000

Total 25.16 1.23 767,000 Source: Company data

Altura completed a scoping study for the Pilgangoora project in November 2012. The

study assessed a mill throughput of 830,000tpy ore for the project, producing 150,000tpy

spodumene concentrate grading 6.0% Li2O. Capital costs have been estimated at

AUS$96.3M, to construct mining and processing infrastructure, whilst operating costs

are estimated at AUS$16/t ore and AUS$90/t spodumene concentrate. A metallurgical

flow sheet has been developed by Mineral Engineering Technical Services (METS) and

Altura which concluded Pilgangoora ore can be processed to a coarse spodumene

concentrate although the process requires further optimisation. Altura have been

recommended by METS to continue metallurgical test work on samples from the

Pilgangoora project to a pre-feasibility level.


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5.3.5 Artemis Resources

Artemis Resources own the Buchanans Creek rare metal project located in Queensland.

The company purchased the project in January 2010 for a fee of US$450,000 after

conducting initial sampling of the property. Artemis has since increased the size of its

tenements to cover more than 100km2 believed to contain pegmatite dykes and stocks.

Drilling at the project during 2008 returned assays of between 0.71% Li2O and 1.40%

Li2O. Artemis has since begun geological mapping of the tenements and rock chip

sampling to identify and map out the pegmatite dykes.

5.3.6 Amerilithium

Amerilithium holds three projects within Western Australia situated around Lake

Dumbleyung. These are the Bare Rocks Project to the east, Normans Lake Project to

the South and the Hoffmans Hill Project to the North. At all three of the projects lithium

is hosted within saline brines with concentrations at the Bare Rocks Project measured at

530ppm Li.

Amerilitihum’s main exploration focus has been on its projects located in Nevada, USA,

however it plans to start initial exploration at its three Australian projects in 2012 to make

use of government grants to help fund exploratory drilling.

5.3.7 Reward Minerals

Reward Minerals is exploring the Lake Disappointment project located in Western

Australia. The project is being explored primarily for potassium sulphate for which it has

a contained resource estimation of between 24.43Mt and 27.37Mt K2SO4. The Lake

disappointment brines are reported to contain elevated lithium concentrations with a

magnesium: lithium ratio of 23:1. The project may be explored for its lithium content in

the future.

5.4 Austria

Since 2005, Austria has imported and exported minor amount of lithium carbonate,

trading mainly with Germany and Belgium. Imported lithium carbonate is used

domestically in the chemicals and pharmaceutical industries although a large portion of

imports is stockpiled or directly exported back to Germany.

Global Strategic Metals NL control an 80% holding in the Wolfsberg Lithium Project

located in Carinthia state, Austria. The remaining 20% ownership of the project is held

by Exchange Minerals Group, from whom Global Strategic Metals acquired their 80%


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stake in December 2011, in exchange for 116.7 million Global Strategic Metals common

shares.

The Wolfsburg project has an inferred JORC resource estimation of 18Mt grading 1.6%

Li2O (contained 710,000t LCE), which East Coast’s exploration program plans to

increase to 30Mt grading between 1.5% -2.0% Li2O. The project will require

underground mining methods, with a mine and mill output estimated at 150,000tpy ore.

Metallurgical test work on Wolfsburg ore began in 1982, which has produced individual

mica, feldspar, quartz and spodumene (6% Li2O) products through floatation. East

Coast estimate production capacity at the project to be 25,000tpy spodumene

concentrate (6% Li20), 49,500tpy feldspar, 24,500tpy quartz (silica sand) and 3,375tpy

mica. Bench scale test work assessing production of lithium carbonate from Wolfsburg

spodumene concentrate has also been completed by Austroplan Austrian Engineering

GmbH in 1988, achieving 93% recovery.

5.5 Belgium

Although Belgium has no domestic production of lithium compounds and metals, there is

a significant amount of trade between Belgium and the main producing nations such as

Chile, USA and Argentina. This is because SQM’s warehouse is located near Antwerp

in Belgium, storing lithium carbonate and hydroxide produced at the company’s facility in

Chile. Lithium compounds exported from Belgium are predominantly destined for

Germany, France, the Netherlands and other European destinations.

Imports of lithium carbonate fell sharply in both 2008 and 2009, because of reduced

demand for lithium compounds in the European market and financial insecurities during

the onset and peak of the global economic downturn. Lithium carbonate sourced from

Chile has remained the dominant source of imports since 2005, forming 94% of total

imports in 2011 (Table 60). Imports from Chile are expected to contribute to over 90% of

total imports in 2012, with imports from Argentina estimated to be the second largest

source.

Germany was the major destination for Belgian exports of lithium carbonate between

2005 and 2010 although imports fell sharply in 2011, even after a strong recovery in

2010. In 2011, Russian imports increased more than fifteen-fold, making the previously

trivial or absent importer Belgium’s largest export market for lithium carbonate. Lithium

carbonate exported to Russia in 2010-2012 is believed to supply the same consumers

as material previously exported to Germany, as German imports have fallen by a similar

amount.


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Table 60: Belgium: Trade is lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012e

Imports Chile 5,432 4,583 5,493 4,012 3,054 3,589 7,319 6,704

Germany 568 489 301 205 188 267 61 229

Argentina - - - - - 238 179 144

Other 320 270 96 192 167 88 211 127

Total 6,320 5,342 5,891 4,410 3,410 4,181 7,770 7,331

Exports

Russia - - - - - 100 1,528 1,636

Germany 3,029 2,955 2,515 2,023 1,481 2,501 927 1,105

France 399 630 717 492 774 536 686 725

India - - - - - 11 205 317

United Kingdom - 3 20 - 66 263 174 280

Netherlands 963 831 697 325 36 175 120 196

Other 624 543 923 692 673 854 827 762

Total 5,015 4,962 4,872 3,532 3,030 4,440 4,467 5,021 Source: GTIS

In 2011, imports of lithium hydroxide and oxide were almost exclusively from Chile and

the USA (Table 61), jointly contributing around 90% of total imported material. Imports

of lithium hydroxide and oxide from Russia fell sharply in 2006, whilst imports from Chile

increased by more than 300% in the same year. This was a result of SQM starting

production of lithium hydroxide at the Salar de Carmen plant in Chile instead of toll-

processing it in Russia. Imports from Russia reached 349t in 2012 and representing the

restart of SQM toll-processing lithium hydroxide in Russia to satisfy strong growth in

demand. Belgian exports of lithium hydroxide are mainly destined for other European

countries, with the largest market in 2012 being the United Kingdom.


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Table 61: Belgium: Trade in lithium hydroxide and oxide, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

Chile 240 751 1,553 1,533 929 1,458 2,389 1641

USA 543 239 3 1 31 899 526 438

Russia 1,060 72 27 96 - - - 349

Netherlands 46 56 120 114 82 11 8 20

France 1 3 10 6 1 17 14 16

Others 118 79 71 100 136 24 18 52

Total 2,008 1,198 1,785 1,849 1,179 2,409 2,953 2,568

Exports

Germany 288 232 245 265 183 701 380 309

Turkey 102 131 218 214 118 203 215 181

Sweden 38 44 47 106 91 207 188 299

UK 67 28 82 135 124 231 132 360

Russia - - - - - 18 108 18

France 214 283 254 126 64 205 123 182

Netherlands 86 94 65 124 8 163 109 216

Spain 86 175 232 185 78 215 100 228

Others 678 214 211 115 144 296 504 556

Total 1,559 1,200 1,352 1,269 810 2,239 1,856 2,349 Source: GTIS

5.6 Bolivia

Bolivia is believed to hold the world’s largest reserves of lithium, with the USGS placing

Bolivian reserves at 9Mt lithium metal. The Gerencia Nacional de Recursos

Evaporíticos (GNRE), a subsidiary of the state owned Corpoación Minera de Bolivia,

however report a much larger estimation of greater than 100Mt (532.3Mt LCE).

Although much interest has been shown in exploring Bolivia’s lithium reserves, there has

been no production of lithium to date. This is mainly because of the government’s policy

on protecting its natural resources from exploitation by foreign companies.

Potential major deposits of lithium are located in the Bolivian Altiplano, hosted within

salars. The GNRE has identified 13 salars and lagunas in the country (Table 62), three

of which (Salar de Uyuni, Salar de Coipasa and Pastos Grande) are reported to contain

commercial lithium mineralisation.


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Table 62: Salars and Lagunas in Bolivia identified by Gerencia Nacional de Recursos

Evaporíticos

Name Department Surface Area (km2) Altitude (m) Identified minerals

Uyuni Potosί 9,000-10,500 3,653 Lithium, potash, boron, magnesium

Coipasa Oruro 3,300 3,680 Lithium, potash, boron, ulexita

Chiguana Potosί 415 3,650 Boron

Empexa Potosί 158 3,650

Challviri Potosί 155 4,369 Ulexita

Pastos Grandes Potosί 120 4,200 Lithium, ulexita, boron

Lagurani Potosί 92 … Ulexita

Capina Potosί 58 … Boron

Laguna Potosί 33 … Sodium sulphate

Laguna Cañapa Potosί 1.5 4,560

Kachi Oruro … …

Laguna

Colorada Potosί 60 4,278

Collpa Laguna Potosί 0.9 4,700 Source: Gerencia Nacional de Recursos Evaporíticos

5.6.1 Salar de Uyuni

The Salar de Uyuni is located at an elevation of 3,653m around 400km south of the

Bolivian capital La Paz. It is the world’s largest saline playa lake with a surface area of

9,000km2 – 10,500km

2. The Rio Grande de Lipez flows into the southern end of the

salar, which causes surface flooding up to 75cm depth in the rainy season. The average

depth of the salar is recorded as 121m, although a hole drilled at the centre of the salar

reached a depth of 220m and finished in saline brines. Lithium reserves at the Salar de

Uyuni were estimated at 5.5Mt Li (29.2Mt LCE) by the National Research Council in the

1976 report of worldwide lithium reserves, although some believe the salar contains up

to 8.9Mt Li (47.3Mt LCE).

The project is being managed by the Gerencia Nacional de Recursos Evaporíticos

(GNRE), an internal division of the state owned Corpoación Minera de Bolivia (Comibol).

GNRE was originally set up in April 2008 as the Dirección Nacional de Recursos

Evaporíticos, however it was renamed GNRE in June 2010. The task of GNRE is to

manage the development of the Salar de Uyuni, after it was declared a national priority

by presidential decree in April 2008.

The Salar de Uyuni has been associated with several problems in the past which have

deterred foreign investment in developing the project. The ratio of magnesium to lithium

is 21.5:1, much higher than that observed at the Salar de Atacama in Chile (6.6:1), the

Salar del Hombre Muerto in Argentina (2.2:1) or Silver Peak in the USA (1.5:1). High

magnesium concentrations typically lead to higher extraction and processing costs, as a

result of increased reagent consumption and longer processing time. The poor

international rating of Bolivia for foreign investment, relatively low evaporation rates


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compared with other salars, seasonal flooding and the availability of lithium investment

targets in Chile and Argentina were also unfavourable for the deposit.

In 2008, construction of a pilot plant for lithium carbonate production was authorised by

President Evo Morales, to be operated by Comibol. The plant was originally planned to

be completed in December 2009 with an expected capacity of 12,500tpy potassium

chloride and 500tpy lithium carbonate, however completion of the plant was not realised.

Since May 2011, construction of the lithium carbonate pilot plant has been assisted by a

Japanese consortium. The pilot plant was designed to use an evaporation pond

method to concentrate and produce lithium carbonate products from extracted brine.

Construction of the pilot plant was completed in late 2012 and production at the facility

began in January 2013. The pilot plant facility has a capacity to produce 40tpm lithium

carbonate, although actual production is estimated to be approximately 7tpm lithium

carbonate. Comibol have reported an investment of US$120M in infrastructure at Salar

de Uyuni during 2012, including construction of the pilot plant, dykes, and designs and

engineering works for full scale production facility. Investment in the project by Comibol

is expected to continue as the company aims to produce 30,000tpy LCE by 2016.

After declining offers from French company Bolloré, South Korean company LG and

Japanese companies Mitsubishi and Sumitomo, which the Bolivian government felt did

not attempt to develop the lithium industry in Bolivia sufficiently, Comibol signed a

memorandum of understanding with a South Korean consortium in August 2011, to

manufacture Li-ion battery components in Bolivia. The memorandum of understanding

also stated that the South Korean consortium would look to develop the Salar de Uyuni

via potential partnerships with other Asian companies and undertake research on brines

from the Salar de Uyuni. Bolivia however was unable to negotiate partial ownership of

any patents developed in research undertaken by the South Korean consortium to

produce lithium based cathodes from the Salar de Uyuni brine.

KORES and Posco signed a preliminary agreement in early 2012 to build a lithium

based cathode pilot plant in Bolivia in which both companies would each invest

US$1.5M. The partnership with Posco is an interesting development as Posco

announced in February 2012 that it had developed a process to directly extract lithium

from sea water achieving high yields. This technology may be used to extract lithium

directly from brines at the Salar de Uyuni, by-passing the solar evaporation process and

cutting processing times from one year to one month. It is not known whether this would

replace the current plant under construction.

On the 30th March 2012, Comibol signed a contract with Chinese battery manufacturer

Linyi Gelon New Battery Materials to construct a pilot lithium battery production facility in

the South American country. The plant will be funded by Comibol, which is expected to

cost US$2.7M, and Linyi Gelon New Battery Materials will provide the technical

knowledge for lithium battery production. Along with the pilot plant, Comibol will

construct six laboratories to train and instruct employees, which in total will bring costs to

over US$5M. Initially the plant will produce lithium based cathodes at a pilot scale before

increasing production to an industrial scale and finally begin producing electrolytes at the

facility. Comibol expect to import membranes, anodes and housings for lithium

batteries.


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5.6.2 Salar de Coipasa

The Salar de Coipasa is located 160km south west of the city of Oruro near the Bolivian

border with Chile. At an elevation of 3,680m, the salar covers an area of 3,300km2

capped by a 2.5m layer of halite and mirabilite. Saline brines are intercepted at depths

of between 5cm and 20cm below the salar surface. The salar is fed by the seasonal

‘Lauca River’ which flows into the north west of the salar.

Surface and deep brine sampling as part of an academic study in 2002 by the Université

de Liegé (Belgium) and Universidad Tecnica de Oruro (Bolivia) reported lithium

concentrations of between 104ppm and 569ppm, with an average of 319ppm across the

set of 23 samples. Results of this sampling campaign are shown in Table 63.

Table 63: Results of sampling campaign by Université de Liegé and Universidad

Tecnica de Oruro at the Salar de Coipasa, 2002

Mg

2+ (%)

K

+ (%) Li

+ (ppm)

Ca

2+ (ppm) Na

+ (%) SO4

2- (%) Cl

- (%)

Min. 0.41 0.38 104 328 8.0 1.52 17.9

Max. 2.64 1.91 569 4,800 11.8 5.02 19.2

Mean. 1.46 1.06 319 2,200 9.8 3.13 18.7 Source; V.Lebrun, P. Pacosillo; Geochemistry of bitter brines in the Salar de Coipasa – Bolivia, 2002

In September 2011, Chinese state owned CITIC Group signed an agreement with the

Oruro department in Bolivia to finance exploration works at the Salar de Coipasa. In

December the same year it was announced that CITIC Group would manage the

exploration program at Coipasa and define a mineral resource for the area. The Oruro

department had originally given CITIC Group a three month period to delineate a mineral

resource; however delays caused by heavy rain and subsequent flooding at the salar

forced exploration to be postponed until February 2012. After initial exploration work is

completed, CITIC Group will submit a development plan to the Oruro department for

future lithium extraction at the Salar de Coipasa.

5.6.3 New World Resource Corp.

New World Resource (New World) is evaluating the Pastos Grandes Salar located

161km south west of Uyuni, in the Sud Lipez Province of Bolivia. The salar is at an

elevation of 4,200m, covering an area of 120km2 of which New World holds licences for

75.12km2.

New World attained their first concession covering the salar in February 2009, forming a

JV agreement between their wholly owned subsidiary ‘New World Resource Bolivia S.A.’

and Gonzalo Miranda Salles and Maria Elena Gumucio Salles in which New World

acquired a 99% interest in the concession area for a 20 year period. Since this deal was

formed, New World has expanded its concessions covering the Pastos Grande area

through joint venture partnerships. In October 2009, New World signed a JV agreement

with Mr Alberto Silva in which New World would gain a 97% interest in the concession

area for a 15 year period. New World’s concessions were expanded further in May


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2010, when New World Resources Bolivia S.A. entered into a JV with Kellguani, to

acquire a 99% stake in their 7.11km2 of concessions covering the salar for a 20 year

period. Kellguani however retained the right to exploit deposits of Ulexite from the salar.

In late 2011, New World began a 1,500m drilling campaign at Pastos Grandes to

intercept a number of aquifers and measure the flow rate of brines into the boreholes.

Brine samples taken from depths during the drilling campaign returned lithium

concentrations of up to 1,395ppm with an average Mg:Li ratio of 2.58:1 (Table 64).

Table 64: Assay data for brines intercepted during drilling at the Pastos Grandes

Salar, August 2011

Aquifer From (m) To (m) Thickness (m) Li (ppm) Mg: Li SO4: Li

1A 6 15 9 1,118 2.1 1.3

1B 30 46 16 877 2.4 2.3

2A 7.5 37.5 30 182 3.3 3.4

3A 6 36 30 140 2.7 3.2

3B 36 82.5 46.5 71 2.8 4.7

4A 6 12 6 939 2.6 3.8

4 12 42 30 1,395 2.5 1.9

4C 31 48.5 17.5 1,016 2.5 2.1

12A 13.5 20 6.5 1,141 2.8 2.5

12 20 50 30 1,368 2.0 1.6

18 24 53 29 1,243 2.7 1.9 Source: New World Resource Corp.

In January 2012, New World announced that it intended to sell its lithium assets to Li3

Energy Inc. (Li3) for a 22.5% stake in Li3 (Section 5.9.7). Along with the concessions

covering the Pastos Grande Salar, New World also holds a 19% interest in Perfect

Lithium Corp., a research and Development Company based in Florida, USA. Li3

however pulled out of negotiations in April 2012 after the two companies were unable to

agree on transaction terms.

5.7 Brazil

Brazil’s reported lithium mineral reserves are located within the Minas Gervais Region, in

the municipalities of Araçuaí and Itinga. In 2009, the Departamento Nacional de

Produção Mineral (DNPM) reported Minas Gervais region contained a measure resource

of 630,927t Li2O (1.5Mt LCE) (Table 65). Other lithium deposits have been identified in

the north east of the country in the Ceara, Rio Grande do Norte and Pariba regions.

Lithium is hosted within hard rock deposits in the minerals spodumene, lepiodlite and

petalite. Brazil’s Centro de Tecnologia Mineral (CETEM) released a resource estimation

in January 2012, which reported a national resource of 0.9Mt Li (4.7Mt LCE), marginally

less than the USGS’s resource estimation of 1.0Mt Li (5.3Mt LCE) made in the same

month.


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Table 65: Brazil: Lithium resource estimation by mineral type, 2009

Measured Indicated Inferred

Minas Gervais Region

Spodumene (t Li2O) 603,473 12,017,153 1,212,819

Petalite (t Li2O) 27,455 46,967 8,154

Total (t Li2O) 630,928 12,064,120 1,220,973

(t LCE) 1,560,284 29,834,568 3,019,466 Source: Departamento Nacional de Produção Mineral, calculated

The lithium industry in Brazil began in the 1970’s, with the mineral petalite, lepidolite and

spodumene being mined and processed for use in ceramics manufacturing. The state

owned Nuclemon began production of approximately 120tpy of lithium salts in the late

1970 from ores containing the mineral amblygonite, however Nuclemon’s lithium

operations were shut down in 1987 because of irregular feed stock and environmental

issues.

Between 2002 and 2010, production of lithium in Brazil has ranged between 1,000t and

1,600t LCE. Companhia Brasileira de Litio (CBL) is the largest producer of lithium

products in Brazil, responsible for 93.9% of total lithium production in the country during

2009. In recent years, Brazilian lithium production has hovered around 1,100-1,200t

LCE with a small spike in 2008 coinciding with start-up of spodumene-feldspar

concentrates at CBL (Figure 24).

Figure 24: Brazil: Production of Lithium products 2005 to 2010 (t)

Source: Departamento Nacional de Produção Mineral

Brazilian imports of lithium compounds and concentrates have not exceeded 10t since

2006, which saw 27t of lithium chemicals imported mainly as lithium chloride from China

and the U.S.A. (Table 66). Brazil has not exported lithium chemicals since 2006, with

lithium mineral concentrates (spodumene) being the countries only exported lithium

products predominantly to Mexico and China.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2005 2006 2007 2008 2009 2010

LCE Li2O


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Table 66: Brazil: Trade in lithium chemicals and concentrates, 2004 to 2011 (t)

2004 2005 2006 2007 2008 2009 2010 2011

Imports

Chemicals 7 14 27 7 - 2 1 <1

Concentrates - - - - - - 1 -

Exports

Chemicals - - 13 - - - - -

Concentrates - - - - 211 150 30 28 Source: Departamento Nacional de Produção Mineral

5.7.1 Companhia Brasileira de Litio

Companhia Brasileira de Litio (CBL) was formed in 1985 by two companies, Arquenana

de Minéros e Metais and Remetalica, who held a 10% stake. The company extracts

lithium-bearing pegmatites at the Mina da Cachoeira in the Araçuai municipality of Minas

Gerais, Brazil. Lithium is hosted in the mineral spodumene which occurs dispersed in

the pegmatite intrusive. Extracted ore is processed on site to separate a spodumene

concentrate containing approximately 5% Li2O and a feldspar concentrate. Since 2005,

the mine has produced between 1,400t and 9,000tpy of spodumene concentrate, with

drops in production in 2008 and 2011. Production in 2011 was affected by the availibility

of lower cost lithium enriched ceramics from China since late 2010, which caused

demand from domestic ceramics producers to fall (Table 67). Production of lithium

chemicals in 2011 remained similar to 2010 volumes.

Source: Departamento Nacional de Produção Mineral (DNPM) Note: 1-Estimated Li2O content

Spodumene concentrate produced at the Mina da Cachoeira is transported to a plant in

Divisa Alegre, Minas Gerais, which produces powdered feldspar-spodumene, lithium

carbonate and lithium hydroxide-monohydrate products. Production of powdered

feldspar-spodumene began at the plant in 2008 and was typically used in the domestic

ceramics industry. Feldspar-spodumene powder production at the plant ceased in 2010

as a result of ceramics imports from China significantly lowering demand.

Table 67: CBL: Production of lithium concentrates and lithium salts, 2005 to 2011

2005 2006 2007 2008 2009 2010 2011

Mine Production

Li Concentrate (t) 8,924 8,585 7,991 2,927 8,141 7,080 1,419

%Li2O 0.98%1

0.98%1 0.98%

1 1% 0.95% 0.90% 0.90%

Li2O (t) 87.5 84.1 78.3 29.3 77.3 63.7 12.8

Plant Production

Li2CO3 (t) … … … … 144 143.5 177

LiOH (t) … … … … 414 471 456

Total Production (t) 744 686 809 628 558 614.5 633


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The plant began production in early 1989 with a capacity of 1,000tpy spodumene

concentrate. CBL upgraded the plant and flotation facilities at the Mina da Cachoeira in

1998 increasing the potential ore capacity to 72,000tpy. In 2009, the Divisa Alegre plant

produced 177t of lithium carbonate and 456t of lithium hydroxide-monohydrate from

spodumene concentrate produced at the Mina da Cachoeira and spodumene imported

from China.

A 2005 investigation into upgrading the flotation process at Mina da Cachoeira to

produce separate spodumene, quartz, feldspar and mica concentrates from run of mine

ore remains in progress. CBL also intends to increase the production of powdered

feldspar-spodumene at the Divisa Alegre plant.

5.7.2 Arqueana de Minérios e Metais Ltda.

Arqueana de Minérios e Metais Ltda. (Arqueana) holds 29 mineral claims in Brazil,

covering an area of approximately 185.7km2. The company, headquartered in Itinga,

Minas Gerais, runs a number of small artisanal mining camps which extract and

concentrate lithium ores. The lithium concentrate produced is mainly used in the

domestic ceramics industry, however minor amounts of lithium products are exported to

the Netherlands, South Korea and China.

Before 2002, Arqueana operated 10 open pit pegmatite mines in the Araçuai and Itinga

mining districts of Brazil. Output from the multiple pits declined between 2005 and 2008,

from 63t of Li2O in petalite concentrate to 14.8t Li2O in 2008 (Table 68) however showed

a revial in subsequent years with production increasing to 40.1t Li2O in 2009 and 62.5t

Li2O in 2010. In 2011, Arqueana reported no production of lithium concentrates as the

availability of cheaper Chinese lithium enriched ceramics has caused demand from

domestic Brazilian ceramics producers to slow since late 2010.

Table 68: Arqueana: Production of lithium concentrates, 2008 to 2011

2008 2009 2010 2011

Li Concentrate (t) 319 844 1,381 -

%Li2O 4.64 4.75 4.53 -

Li2O (t) 14.8 40.1 62.5 -

LCE (t) 36.6 99.1 154.5 - Source: Departamento Nacional de Produção Mineral (DNPM)

In the 1970s, a period of exploration located 30 mineralised pegmatites within a 600km2

area, 20 of which contained the lithium mineral petalite and the other 10 hosting lithium

in spodumene, lepidolite and amblygonite. The pegmatites discovered were typically

highly kaolinised and showed grades of between 0.9-2.0% Li2O.

In May 2011, Kokomo Enterprises (Kokomo) signed a binding LOI to acquire a 75%

share of Arqueana. The deal involves Kokomo making a staggered payment of

CAN$800,000 and issue of 7M common shares to Arqueana, also Kokomo is required to

incur CAN$8M of expenditure on developing Arqueana’s assets over a 3 year period.


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Wardrop Engineering will undertake a NI 43-101 report on Arqueana’s properties, which

if found to meet certain criteria with regards to reserves, potential development and

profitability, will trigger a further payment of CAN$1M and issue of 3M common shares

by Kokomo.

5.7.3 Advance Metallurgical Group (AMG)

AMG produce spodumene concentrate from a pilot plant at the Mibra mine in Minas

Gerais state, constructed and commissioned in early 2010. The Mibra mine extracts

pegmatite material which is mined primarily as a tantalum, niobium and feldspar deposit.

Formed of multiple intrusive pegmatite ore bodies, the Mibra mine has an estimated

resource of 25.5Mt grading 290ppm Ta2O5. Ore body A is the most developed of the

identified ore bodies at Mibra, returning grades of 375ppm Ta2O5, 92ppm Nb2O5 and

283ppm Sn. Spodumene was identified to form between 10-15% of the mined

pegmatites rock mass in Ore body A, prompting AMG to develop a process to extract

and produce a spodumene concentrate from mine tailings via flotation.

In 2011, AMG estimated that the Mibra mine had an annual output of at least 600,000t mined ore from Orebody A, giving it the potential to produce 36,000tpy spodumene concentrate (at 100% recovery). Spodumene concentrate produced at the Mibra mine could be marketed for use in the ceramic industry or used to produce lithium compounds through chemical conversion. AMG has since undertaken metallurgical test work to produce a processing flow sheet to convert spodumene concentrate into a battery-grade lithium carbonate product, with an estimated production capacity of 2,400tpy. In October 2011, AMG reported a strategic plan for the Mibra mine, which included the design, construction and commissioning of both a full scale spodumene concentrate production facility and lithium carbonate plant. No further developments have been reported since.

5.8 Canada

Until 2010, lithium minerals were mined in Canada at the Bernic Lake project, owned by

Tantalum Mining Corp of Canada Ltd. (TANCO). Production however ceased in

September 2009 when the mine was placed on care and maintenance and Canada

currently has no domestic mining or extraction of lithium minerals or brines.

Throughout the first decade of the 2000s, a number of exploration companies staked

lithium exploration claims in Canada, particularly in Ontario, Quebec and Alberta

provinces. Although the majority of these companies remain at an early stage of

exploration, companies such as Canada Lithium (Section 5.8.4.1) and Nemaska Lithium

(Section 5.8.4.2) in Quebec are expected to begin production of lithium mineral

concentrates and compounds by the end-2013.


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5.8.1 Lithium resources in Canada

Canada contains lithium resources hosted within deposits of both lithium minerals,

typically located within Ontario and Quebec provinces, and lithium bearing brines

located mainly within Alberta province. In Ontario alone, lithium bearing pegmatites

have been identified at Pakeagama, Separation Lake, Seymour Lake, Root Lake, Zig

Zag property, Desrosiers and many other locations.

Quebec province has achieved no production of lithium concentrates since Quebec

Lithium Corp. ceased production from the Val d’Or pegmatite ore body in 1965. Activity

by exploration companies in the province has increased since the early 2000s with

multiple projects at James Bay, Sirmac Lake, Val d’Or and Whabouchi focussing on

lithium bearing pegmatites. Other lithium pegmatite projects are being developed

around Snow Lake in Manitoba, Cantung in North Western Territories, Torp Lake in

Nunavut and Brazil Lake in Nova Scotia.

In Alberta, oilfield brines associated with deposits of oil and gas are the focus of lithium

exploration. Projects at Fox Creek, South Leduc, Silver Creek, Berland River and

Valleyview are being assessed by exploration companies.

In 2012, the USGS identified Canada’s domestic lithium resource to be 360,000t Li

(1.9Mt LCE). Work undertaken by Anstett et al in 1990 identified reserves of 241,000t Li

(1.2Mt LCE), which included 73,000t Li from the Bernic Lake property and 139,000t Li

from deposits in Ontario and Quebec. However, in 2008 Evans stated that reserves at

the Bernic Lake property were only 18,600t Li. The National Research Council reported

total resources to be 155,000t Li in 1976. Table 69 details any resource estimations for

projects being developed in Canada and indicates that total lithium resources are 1.2Mt

Li (6.58Mt LCE), excluding non NI 43-101 estimations, as of 2012.


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Table 69: Canada: Resources estimations for Canadian lithium projects

Company Project Province

Resource

(t Li)

Cont. Resource

(000t LCE)

Past producing, feasibility-level and development projects:

TANCO Bernic Lake Manitoba 18,600 99

International Lithium

Corp.

Moose Northwestern

Territories

3,2001 17

1

Aben Resources Raleigh Lake Ontario … …

Rock Tech Georgia Lake Ontario 45,300 241

Avalon Separation Rapids Quebec 72,200 384

Canada Lithium Val d'Or (Quebec

Lithium)

Quebec 260,900 1,388

Critical Element Corp. Rose Quebec 163,400 869

Glen Eagle Resources Autheir Quebec 11,600 61.7

Nemaska Whabouchi Quebec 210,900 1,122

Sirmac Quebec 3,0001 16

1

Perilya Ltd Moblan Quebec 93,400 497

Other Exploration Projects:

Golden Virtue

Resources Inc.

Valleyview Alberta … …

Ultra Lithium Inc. Berland River Alberta 488,8001 2,600

1

Channel Resources Fox Creek Alberta 361,000 1,920

Amerilithium Corp. Americana Property Alberta 567,4002 3,018

2

Lithium Exploration

Group

Valleyview Alberta … …

Habanero Resources South Leduc Alberta … …

Weststar Resource

Corp.

Silvercreek & Simonette Alberta … …

Berkwood Resources

Ltd

Fox Creek Alberta … …

Force Energy Corp Zoro 1 Project Manitoba 7,6001 40.3

1

Golden Virtue

Resources Inc.

Godslith Manitoba 28,2001 150

1

Rodinia Lithium Strider Lithium Project Manitoba 23,7001 126

1

War Eagle Mining MAC Northwestern

Territories

… …

Green Atlantic

Resources Corp.

Brazil Lake Nova Scoita … …

North Arrow Minerals Torp Lake Nunavut … …

Houston Lake Mining Pakeagama Ontario … …

Mega Graphite Big Mack Ontario … …

Gossan Resources Separation Rapids Ontario … …

Canadian Orebodies 80% in Zig Zag property

(Ultra Lithium Inc.)

Ontario … …

Table continued….


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….Table continues

Company Project Province

Resource

(t Li)

Cont. Resource

(000t LCE)

Ultra Lithium Inc. Zig Zag property Ontario … …

Canadian Copper Core

Inc.

Seymour Lake Ontario … …

Stockport Exploration Seymour Lake Ontario … …

Mantis Mineral Corp. Case Ontario … …

Champion Bear

Resources

Separation Rapids Ontario … …

Inspiration Mining Corp. Desrosiers Ontario … …

Landore Resources Ltd. Root Lake Ontario 14,9001 79.2

1

Jourdan Resources Pivert-Stairs Quebec … …

Dios Exploration Inc. /

Sirios Resources Inc.

Pontax Quebec … …

Mineral Hill Industries Chubb Property Quebec 9,3001 50.0

1

International Property Quebec … …

Athona Property Quebec … …

Canadian & Martin

McNeely Property

Quebec … …

Total listed (Inc. non NI 43-101) 2,383,4001 12,678

1

NI 43-101 compliant only 1,237,300 6,582

Source: Company data Notes: 1-non 43-101 compliant resource estimation

2-estimation for regional area including zones outside of claims

5.8.2 Canadian trade in lithium

Chile is the largest exporter of lithium carbonate to Canada, whilst lithium hydroxide and

lithium oxide are imported mainly from the USA and South Korea/China respectively.

Lithium carbonate imports from Chile peaked in 2008 at 2,100t, falling to 1,050t in 2009

and remaining stable at between 1,000t-1,100t since (Table 70). Canadian imports of

lithium carbonate are estimated to decrease to 900t in 2012, calculated from January-

July 2012 trade data. Imports of hydroxide and oxide, however, are expected to

increase in 2012, probably for use in manufacturing cathode materials by companies

such as Phostech and E-one Moli Energy.

Historically, Canada exported notable amounts of lithium carbonate to Japan and the

USA. Since 2009 however, only minor amounts of lithium carbonate have been

exported. Exports of lithium oxide and hydroxide have increased from 20t in 2009 to

315t in 2012.


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Table 70: Canada: Imports and exports of lithium compounds 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports Carbonate 1,045 1,406 2,258 2,627 1,545 1,459 1,501 1,370

Oxide 96 370 50 56 73 29 214 264

Hydroxide 138 212 259 149 117 213 225 484

Exports Carbonate 610 361 278 509 32 19 39 9

Oxides and Hydroxides 7 92 33 7 20 64 297 315

Net Import/Export Carbonate 435 1,045 1,980 2,118 1,513 1,440 1,462 1,361

Oxides and Hydroxides 227 490 276 198 170 178 142 433 Source: GTIS

5.8.3 Past producers of lithium in Canada

5.8.3.1 Tantalum Mining Corp. of Canada Ltd. (TANCO)

Owned by Cabot Corporation of the USA, TANCO operate a mine and concentration

plant located near Lac du Bonnet (Bernic Lake) in Manitoba, Canada. Until September

2009, when the mine was placed on care and maintenance, the mine was the sole

producer of lithium minerals in Canada. During its operation, the mine and plant

produced a range of spodumene concentrates with between 5.0-7.25% Li2O which were

mainly exported to the USA for use in the ceramics, specialty glass and metallurgical

industries. Extraction and processing of tantalum ores was restarted at the Lac du

Bonnet mine in May 2011, however facilities for the production of a spodumene

concentrates remain on care and maintenance.

TANCO used an underground room and pillar mining method to extract spodumene-

bearing pegmatite ores. The targeted pegmatite was highly fractionated and displayed

distinct zones containing tantalite-columbite, spodumene, pollucite and lepidolite

mineralisation. A resource estimation of 1.5Mt at 1.26% Li (contained LCE 100,600t)

was made in 1993. More recent estimates however report reserves of 99,000t LCE.

Mined spodumene ore was concentrated on site. The plant is positioned on a

peninsular formed by two inlets into Lac du Bonnet because of land constraints. The first

stage of concentration involved crushing and grinding of coarse ores to -12mm.

Spodumene was subsequently concentrated by flotation before magnetic separation

was used to remove unwanted iron minerals. The plant had a capacity of 24,000tpy

spodumene concentrate, which before it’s closure was generally >90% utilised (Table

71). TANCO also produced a montebrastie and amblygonite concentrate containing


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around 7% Li2O, which is removed from the spodumene concentrate to control its

phosphate and fluorine content. The market for montebrastie and amblygonite

concentrate, however, was limited.

Table 71: TANCO: Spodumene concentrate production 2005 to 2011 (t)

2005 2006 2007 2008 2009 2010 2011

Spodumene Conc. 22,500 22,500 23,000 22,000 10,000 - -

Li2O1 1,609 1,609 1,645 1,573 715 - -

LCE 3,978 3,978 4,067 3,890 1,768 - -

Source: 2005 BGS World Mineral Production, 2006-2010 USGS Mineral Commodity Summaries Note: 1-Based on a Li2O content of 7.15% of spodumene concentrate

5.8.4 Potential new producers of lithium in Canada

5.8.4.1 Canada Lithium Corp.

Canada Lithium owns a 100% share of the Quebec Lithium project through its wholly

owned subsidiary Quebec Lithium Inc. The Quebec Lithium project is located on the

north eastern edge of La Corne town, 60km north of the city of Val d’Or, Quebec,

Canada. The project was previously in production between 1955 and 1965, producing

lithium carbonate, hydroxide and spodumene concentrate from lithium bearing pegmatite

dykes. Canada Lithium acquired Quebec Lithium Inc. and the Quebec Lithium project in

March 2008 and has since completed a PFS in March 2010 followed by a feasibility

study in December 2010, which was updated in June 2011.

Canada Lithium released an updated mineral resource estimation in December 2011,

which incorporated data from the 2011 drilling program. The total measured and

indicated resource estimate was 33.23Mt of spodumene ore grading 1.19% Li2O (0.98Mt

contained LCE), using a cut-off grade of 0.8% Li2O (Table 72).

Table 72: Canada Lithium: Resource estimation for the Quebec Lithium project,

December 2011

Tonnes (Mt) Grade (Li2O%) Contained LCE (000t)

Measured 6.91 1.18 201.6

Indicated 26.33 1.19 774.9

Inferred 13.76 1.21 411.7

Total 47 1.19 1,388.2 Source: Canada Lithium & AMC Mining Consultants (Canada) Ltd. technical report, December 2011.

A mineral reserve estimate was released in June 2011 and updated in December 2011,

based on an 80% ore recovery and 20% waste dilution at 0.05% Li2O. The reserve

estimate used three cut-off grades, 0.9% Li2O for years 1 and 2, 0.6% Li2O for years 3 to


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12, and 0.25% Li2O for the remainder of the mine life. Total reserves at the project were

reported as 20.33Mt grading 0.85% Li2O (Table 73), consisting of 17.06Mt of higher

grade 0.94% Li2O ore which will be processed directly and 3.2Mt of low grade 0.38%

Li2O which will be stockpiled and processed towards the end of the life of mine.

Alterations to the ore model made in the December 2011 update also increase the life of

mine strip ratio from 3.6:1 to 5.5:1.

Table 73: Canada Lithium: Reserve estimation for the Quebec Lithium project,

December 2011

Tonnes (Mt) Grade (Li2O%) Contained LCE (000t)

Primary Mined Ore

Proven 6.60 0.92 150.2

Probable 10.45 0.95 245.5

Sub-total 17.06 0.94 396.6

Stockpiled Ore (low grade)

Proven 1.19 0.39 11.5

Probable 2.07 0.38 19.5

Sub-total 3.27 0.38 30.7

Total 20.33 0.85 427.3 Source: Canada Lithium

Canada Lithium began metallurgical test work on material from the Quebec Lithium

project in 2008 soon after acquiring a stake in the property. Sample spodumene bearing

ore material was sent to SGS Lakefield, Canada in November 2008 to undertake bench

scale processing test work to produce a high purity lithium carbonate product. Bench

scale test work achieved production of a 99.6% Li2CO3 product and pilot plant scale test

work was commissioned. In September 2010, the pilot plant was reported to be capable

of producing a >99.9% purity Li2CO3 from Quebec Lithium project spodumene ore.

The metallurgical flow sheet used in the pilot plant test work, reported in the June 2011

feasibility study, follows a two stage method. Spodumene ore is crushed before being

photometrically sorted. The photometric sorting technique was developed in Germany

and makes use of the colour contrast between the gangue granite (dark-black) and the

spodumene bearing pegmatites (pale-white). The crushed and sorted ore is next ground

before being placed into flotation circuits to produce a spodumene concentrate. The

second stage involves roasting in a rotary kiln before sulphidation with sulphuric acid,

water leaching, purification of the pregnant leach solution and ion exchange, before

lithium carbonate is then precipitated from solution.

Capital costs for the Quebec Lithium project were reported in an updated feasibility

study in October 2012 at US$228.5M, of which construction of the processing facility

contributed to over half of total costs (Table 74). The October 2012 update includes

construction costs for battery grade LiOH and Na2SO4 recovery and production circuits

which were not previously included in capital cost estimations.


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Table 74: Canada Lithium: Estimated capital expenditure for Quebec Lithium project

(inc. LiOH and Na2SO4 plant costs), October 2012

(US$M)

Mining Costs

Mining equipment 11.3

Pre strip 2.0

Processing

Crushing/Flotation plant 43.8

Hydrometallurgical plant 88.7

Photometric sorter 5.0

LiOH circuit 6.8

Na2SO4 circuit 8.2

Other

TMF, Infrastructure, Other 16.9

Gas pipeline 5.0

EPCM/Owner cost 27.4

Contingency 13.4

Total 228.5 Source: Canada Lithium

Table 75 :Canada Lithium: Estimated operating expenditure for Quebec Lithium

project, October 2012

US$/t milled ore US$/t Li2CO3

Mining 17.08 1,040e

Size reduction and floation 8.52 521

Hydrometallurgical costs 18.95 1,160

Gas Fuels 5.58 342

G & A 0.62 38

Total 50.75 3,101 Source: Canada Lithium

Canada Lithium raised CAN$30M (US$29.3M) in equity financing toward construction of

facilities in June 2012 and intends to continue raising funds. Operating costs were

estimated at US$3,101/t Li2CO3 (Table 75). In February 2012, Canada Lithium received

a five-year debt financing facility totalling CAN$92M from the Bank of Nova Scotia and

CAT Financial Services. The Bank of Nova Scotia provided CAN$75M of the debt

financing package which will be used to bring the project into production. CAT

Financing Services contributed CAN$17M which will be used to purchase mining

equipment. Canada Litihum raised a further CAN$20.0M through the sale of

approximately 27.4M common shares at CAN$0.73/share to a syndicate of investors led

by Casimir Capital Ltd. The syndicate also has the option to purchase upto a further

4.1M common shares at a price of CAN$0.73/share for 30 days after the initial deal is

closed, which Canada Lithium estimates could raise a further CAN$3M.


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Canada Lithium began construction of a full scale processing plant in August 2011 from

which it intends to produce 20,000tpy LCE for a 14 year life of mine, along with the

potential to produce an additional 2,000tpy battery grade lithium hydroxide and up to

30,000tpy by-product sodium sulphate. Pre-stripping and mining at the Quebec Lithium

project began in late 2012, with a reported 12,000t of ore mined, crushed and stockpiled

in December 2012. Commission of the processing plant began in January 2013, and

first production of lithium carbonate is expected end of April 2013.

In November 2012, Canada Lithium signed a five-year off-take agreement with Chinese

commodity trader Tewoo-ERDC for between 12,000tpy and 14,400tpy battery grade

lithium carbonate. The Tewoo-ERDC deal is schedules to begin in March 2013 when

first production from the Canada Lithium plant is expected. In January 2013, Canada

Lithium also secured a three year distribution agreement with Japanese commodity

trader Marubeni Corp. for an initial 2,000tpy lithium carbonate in 2013, with an option to

increase to 5,000tpy lithium carbonate by 2015. As part of the agreement, Marubeni will

hold the sole distribution rights for battery grade lithium carbonate produced by Canada

Lithium to the Japanese market.

5.8.4.2 Nemaska Lithium

Nemaska Lithium (Nemaska) owns a 100% interest in the Whabouchi deposit and the

Sirmac lithium property located in the James Bay region of Quebec. Nemaska also

holds a 47.2% stake in Monarque Resources, which manages a portfolio of Ni-Cu-PGE

projects in Quebec.

In January 2011, major Chinese lithium processor Sichuan Tianqi Lithium Industries Inc.

(Section 5.10.7.1) purchased a 10% share in Nemaska through an initial private

placement. Sichuan Tianqi increased its shareholding to 19.9% in Q3 of 2011.

Whabouchi Project

The Whabouchi project is located in the James Bay region of Quebec, approximately

300km north east of Chibougamau. Nemaska began exploring and developing

spodumene bearing pegmatites at the Whabouchi project for their lithium potential in

October 2009. The Whabouchi project is comprised of 33 individual exploration claims

which form a 17.61km2 block. The project can be accessed year round by a road which

runs 15km away from the project site and by an airstrip which is situated 18km west of

the project boundary.

The project area is mainly composed of a sequence of basalts and ultramafics known as

the Lac des Montagnes volcano-sedimentary belt. This sequence is intruded by a

number of late stage leucogranites and biotite bearing pegmatites. The spodumene

pegmatite intrusive occurs at the centre of the basic-ultrabasic sequence in a NE-SW

orientation, displaying a strike of 1.3km, width of approximately 130m and known depth

of 300m. Spodumene forms up to 20% of the pegmatite’s rock mass with other lithium

bearing minerals such as petalite forming up to 2%.


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An updated version of the initial May 2010 resource estimation was released in June

2011, which incorporated all available drilling and sampling data. The updated report

estimated a measured and indicated mineral resource of 25.0Mt grading 1.54% Li2O

(0.95Mt contained LCE) and 140ppm beryllium (Table 76), along with a strip ratio for

mining of 2.7:1. The estimate used a cut-off grade of 0.4% Li2O.

Table 76: Nemaska Lithium: Resource estimation for the Whabouchi project, June

2011

Mt Li2O (%) Be (ppm)

Measured 11.29 1.58 147

Indicated 13.78 1.51 134

Inferred 4.40 1.51 136

Total 29.47 1.54 139 Source: Nemaska Lithium Notes: Cut-off grade of 0.4% Li2O was used

In October 2012, Nemaska released an updated PEA including a reserve estimation for

the Whabouchi project. The reserve estimate incorporated a mining dilution of 4.5% and

worked on a cut-off grade of 0.4% Li2O. Total reserves at the project were estimated at

19.6Mt grading 1.49% Li2O (Table 77).

Table 77: Nemaska Lithium: Reserve estimation for the Whabouchi project, October

2012

Mt % Li2O Cont. LCE (t)

Proven 10.20 1.53 156,000

Probable 9.44 1.45 137,000

Total 19.64 1.49 293,000 Source: Nemaska Lithium

Initial metallurgical test work was undertaken on material from the Whabouchi project by

SGS Lakefield in July 2010. Test work intended to produce a >6.0% Li2O spodumene

concentrate from mined spodumene pegmatite as a first step towards producing a

battery-grade lithium carbonate product. Flotation was used to beneficiate crushed

spodumene pegmatite, achieving a >6.0% Li2O spodumene concentrate with a recovery

of 78%. Nemaska produced a battery grade lithium carbonate product (>99.5% Li2CO3)

from Whabouchi spodumene concentrate in November 2010, at SGS Lakefield’s

laboratories.

Nemaska completed its initial PEA on the Whabouchi project in January 2011. The

study assessed an operation with mine production of 2,950tpd ore (1Mtpy), producing

202,000tpy spodumene concentrate for a 15 year life of mine. The January 2011 study

was updated in October 2012, increasing targeted full scale production to 213,000tpy

spodumene concentrate over an 18 year life of mine. Mine production is planned to be

converted into 20,700tpy battery grade lithium hydroxide and 10,000tpy battery grade

lithium carbonate at a facility in Valleyfield, Quebec. The plant is also designed to

increase battery grade lithium hydroxide production to 27,000tpy and decrease battery


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grade lithium carbonate production to 4,000tpy should demand for battery grade lithium

hydroxide outpace that for battery grade lithium carbonate.

Initial capital costs were estimated in the updated October 2012 PEA to be CAN$454M,

including a CAN$50M contingency and CAN$15M working capital. Operating costs for

the producion of both battery grade lithium hydroxide and battery grade lithium

carbonate were reported to be CAN$3,400/t and CAN$3,500/t respectively.

Plans to construct a 500tpy lithium hydroxide and carbonate plant at Salaberry-de-

Valleyfield, Quebec were confirmed by Nemaska in February 2013, with construction

completed by end November 2013 and commissioning undertaken during December

2013. In March 2013, Nemaska announced that the pilot plant would have an average

production capacity of 426tpy lithium hydroxide during the first phase of operation. First

production from the pilot facility is scheduled for January 2014, and lithium chemicals

produced at the plant are to be used to supply Phostech Lithium and provide product

samples for potential customers. Nemaska intend to produce and purchase feedstock in

the form of lithium sulphate and spodumene concentrate, to sustain two years

production at the pilot plant. Raw materials will be purchased from the open market or

produced from the Whabouchi deposit during bulk sampling programs. The pilot plant

has been assigned a budget of CAN$25M including EPCM and contingency, by Met-

Chem Canada Inc. who completed a PEA on the facility in October 2012.

In March 2012, Nemaska reported successful results in producing a battery grade lithium

hydroxide product, before filing for the process to be patented in June 2012. The lithium

hydroxide product can be used to produce battery grade lithium carbonate. The

process, unlike the standard LiOH production method, does not use caustic soda,

instead producing LiOH directly from Li2SO4 by electrolysis. Also in March 2012,

Nemaska reported advancements in producing spodumene concentrate through flotation

and dense media separation. A locked cycle flotation test returned recoveries of 85-

98% when producing a 6.5% Li2O spodumene concentrate. Patent applications for both

battery grade lithium hydroxide and battery grade lithium carbonate production by the

electrolysis method were applied for by Nemaska in June 2012.

Nemaska continue to work towards producing a feasibility study for the Whabouchi

project, expected to be completed in Q2-2013. Engineering and construction of

processing and mine infrastructure is expected to begin soon after and continue

throughout 2013-2014. Comissioning of the Whabouchi mine and concentration

facilities is forecast to begin by in Q2-2015, with first commercial spodumene

concentrate production in Q4-2015.

In October 2012, Nemaska signed an off-take agreement with Phostech Lithium, a

subsidiary of Clariant AG Group producing cathode materials in Canada. The

agreement will see Phostech evaluate and purchase lithium hydroxide produced at the

Nemaska pilot plant, and the two companies will also jointly investigate the feasibility of

tailoring Nemaska’s lithium hydroxide output to Phostech’s demand specifications.

Nemaska has also highlighted the potential of regenerating Phostech’s by-product

production of lithium sulphate into lithium hydroxide via electrolysis, a process which

could be applied to other cathode material plants.


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Sirmac Project

The Sirmac project is located 130km south of Nemaska’s Whabouchi project,

approximately 100km north of the town of Chibougamau. Nemaska acquired the project

from Everton Resources Inc. in November 2010 after commissioning an initial review of

the project in the previous month. The project is comprised of 15 mining claims which

cover 6.45km2 south of Lake Sirmac.

Lithium is hosted within spodumene bearing pegmatites which intrude into mainly

metavolcanic and metasedimentary sequences. Spodumene is the main lithium bearing

mineral in the pegmatites, however tryphylite and beryl also occur in lesser amounts. A

historical (non-NI 43-101 compliant) resource was reported in 1994, which estimated

318,324t grading 2.04% Li2O (approximately 16,000t contained LCE).

Nemaska are in the process of constructing transport routes to the Sirmac site, so that

machinery and equipment can be brought in for sampling and construction of general

infrastructure. Details of recent exploration activities were released in November 2012,

reporting assays of between 1.08% Li2O over 18.5m and 1.87% Li2O over 4.5m, taken

as part of a channel sampling program across the main target dyke (Dyke #5). The

2012 exploration program also identified a new spodumene bearing dyke (Dyke #1)

500m west of Dyke#5, returning grades of 0.51% Li2O over 9m. The channel sampling

program is planned to be followed up by a primary drilling campaign, to determine the

dimensions and grade of the spodumene-pegmatite intrusives and ultimately estimate a

NI 43-101 compliant resource.

5.8.4.3 Avalon Rare Metals Inc.

Avalon Rare Metals fully owns the Separation Rapids project located 70km North of

Kenora, Ontario. The project area consists of ten adjacent mineral claims covering

14.5km2. The project area is centred on the ‘Big Whopper’ pegmatite which is host to

lithium, tantalum and other rare metal mineralisation. Avalon has also secured a lease

for an area adjacent to the Separation Rapids project, covering 4.0km2 for a 21 year

period.

Prior to purchasing the Separation Rapids project in October 1996, Avalon concentrated

on gold exploration in Canada, deciding to switch their focus to rare metal and rare earth

exploration. Avalon completed a PFS for the project in 1999, after undertaking

geological mapping, sampling programs, geophysical surveys and a 10,000m diamond

drilling campaign. The PFS included a NI 43-101 mineral resource estimation of 11.6Mt

grading 1.34% Li2O, 0.007% Ta2O5 and 0.30% Rb2O (Table 78). A NI 43-101 compliant

reserve estimation by Micon International Inc. was also included in the PFS, suggesting

a probable reserve of 7.72Mt grading 1.4% Li2O.


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Table 78: Avalon Rare Metals: Separation Rapids NI 43-101 resource and reserve

estimation, 1999

Tonnes (t) Li2O (%) Cont. LCE (t LCE)

Resource estimation

Indicated 8.9 1.34 294,900

Inferred 2.7 1.34 89,500

Total 11.6 1.34 384,400

Reserve estimation

Probable 5.6 1.41 195,300

Total 5.6 1.41 195,300 Source: Separation Rapids PFS 1999, Avalon Rare Metals

Lithium mineralisation at the Separation Rapids project is hosted within the ‘Big

Whopper’ pegmatite, mainly as petalite with lesser amounts of spodumene

mineralisation. Avalon is also identifying the possibility to extract and concentrate

tantalum and feldspar mineralisation to produce saleable products.

The PFS study realised in 1999 was based around a project producing 200,000tpy ore

increasing to 300,000tpy ore after 6 years, for a 20 year life of mine. The project was

planned to produce a high grade petalite product (97% petalite) for the glass and

ceramics industry along with a lower grade mixed petalite-feldspar product. Avalon

initially estimated production of 21,000tpy high grade petalite concentrate, 25,500tpy

mixed petalite-feldspar and 8,000tpy spodumene concentrate.

Metallurgical test work on ore samples from the Separation Rapids project was

undertaken by Avalon and SGS Lakefield Research during 2007 and 2008, to develop a

flow sheet to produce a petalite concentrate without the use of hydrofluoric acid. Test

work identified multiple alternative reagents capable of producing petalite concentrate

with an acceptable quality in the lab.

After re-starting exploration work at the project in October 2011, Avalon is in the process

of reviewing the local infrastructure requirements at the separation rapids project and

working towards the necessary operating permits.

5.8.4.4 Perilya Limited

Perilya holds a 60% share in the Moblan Lithium Project, located in Quebec, Canada.

Perilya acquired the 60% shareholding during the takeover of GlobeStar Mining in

January 2011, which had explored the Moblan deposit since purchasing the 60% stake

from Société Québécoise d'Exploration (SOQUEM) in November 2008. The remaining

40% of the Moblan project remains owned by the SOQUEM who have assisted with

exploration.

The majority shareholder in Perilya is the Chinese zinc producer Shenzhen Zhongjin

Lingnan Nonfemet Co. Ltd, holding a 53% share in the company. Other major


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shareholders include L1 Capital Pty Ltd. and Acorn Capital Ltd. who own a 10% and a

5% shareholding respectively.

The project is split into two separate areas known as East and West Moblan. To date

the majority of exploration has been undertaken on Moblan West, which is composed of

14 claim areas covering 2.35km2. Unlike the West Moblan area, the East Moblan area is

100% owned by Perilya Ltd., however it covers a smaller area of 1.63km2 composed of

11 claims and is less advanced.

Perilya released an updated mineral resource estimation in May 2011, after results of a

2010 drilling campaign were assessed. The results reported a contained resource of

14.2Mt grading 1.41% Li2O (contained 497,000t LCE) using a cut-off grade of 0.6% Li2O

(Table 79).

Table 79: Perilya Ltd: Mineral resource estimation for Moblan deposit, May 2011

Tonnes (Mt) Grade (% Li2O) Contained LCE (t)

Measured 4.71 1.63 190,000

Indicated 6.75 1.33 222,000

Inferred 2.78 1.22 84,000

Total 14.25 1.41 497,000 Source: Company data

Mineralisation at the Moblan property occurs within a pegmatite body known as the

‘Main Sill’, which intrudes into greenschisst-lower amphibolite facies metamorphic rocks

forming the greenstone belt. Lithium is hosted within sporadic spodumene

mineralisation within the pegmatites, occurring along with tantalum and niobium

mineralisation.

Perilya has completed a scoping study at the Moblan project, focussing on developing

an initial metallurgical flow sheet, environmental impacts and a preliminary mine design.

The scoping study is based on an operation with a mining rate of 135,000tpy for a 10

year life of mine. The scoping study also estimated capital costs at CAN$22M for both

mining and milling equipment and facilities to produce a spodumene concentrate along

with sodium and potassium feldspar by-products.

Perilya plan to undertake an infill drilling program at the Moblan project to expand and

increase confidence in the resource estimation. Metallurgical samples will be taken

during the drilling to undertake further metallurgical test work on spodumene concentrate

production from the deposit. Geological mapping and initial grab sampling is also

planned for the Moblan east area to assess its resource potential.

5.8.4.5 Rock Tech Lithium Inc.

Rock Tech Lithium holds interests in three lithium projects within Quebec and Ontario

provinces of Canada. The Georgia Lake project is the company’s most developed

lithium project, with a NI 43-101 compliant resource estimation, completed metallurgical


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test work and environmental and social programs underway. The Kapiwak project and

the Lacorne Project in Quebec are the company’s other two lithium projects. As of Q3

2012, Rock Tech Lithium had completed only preliminary exploration and fly over

geophysical surveys for the two projects, which are also used to guide future exploration

at the sites.

Georgia Lake Project

Rock Tech Lithium wholly owns the Georgia Lake lithium project, covering over

114km2 of the Thunder Bay Mining Division in Ontario. The project consists of 64

claims, separated into three non-contiguous blocks, known as the northwestern,

northeastern and southern claim blocks. The claim blocks contain multiple target areas

as shown in Table 80. A further 81 dispositions form the remainder of the Georgia Lake

project area, including the stand alone ‘Newkirk-Vegan’ block composed of eight

adjoining dispositions covering 1.2km2.

Table 80: Rock Tech Lithium: Structure of the Georgia Lake project, November 2011

Claim/ Disposition Block Contained properties Area Block composition

Northwestern Nama Creek

Conway

McVittie

38.3km2 21 contiguous claims and 42 contiguous

dispositions

Northeastern Jean Lake

Foster-Lew

27.7km2

17 contiguous claims and 29 contiguous

dispositions

Southern Aumacho

MNW

47.2km2 26 contiguous claims and 2 contiguous

dispositions

Newkirk-Vegan Newkirk

Vegan

1.2km2 8 contiguous dispositions

Source: Independent Technical Report, November 2011

In November 2011, Rock Tech Lithium released a resource estimation for the Nama

Creek and Conway properties undertaken by Caracle Creek International Consulting.

The report estimated the two properties contained an indicated and inferred mineral

resource of 6.69Mt grading 1.10%. The mineral resource estimation was updated in July

2012 to include additional drilling results. The new estimate reported a contained

indicated mineral resource of 0.72Mt grading 1.05% Li2O, and an inferred mineral

resource of 8.8Mt grading 1.03% Li2O (Table 81).


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Table 81: Rock Tech Lithium: Updated mineral resource estimation for Georgia Lake

project, July 2012

Property Zone Tonnes (Mt) Li2O% Cont. LCE (t LCE)

Indicated

Conway - 0.70 1.05 18,177

Inferred

Nama Creek MZN 4.99 1.04 128,339

Nama Creek MZSW 0.97 1.09 26,147

Nama Creek Harricana 0.95 1.03 24,198

Nama Creek Line 60 1.30 0.93 29,899

Conway - 0.59 1.02 14,883

Total 9.5 1.02 241,600 Source: Updated mineral resource estimate Rock Tech Lithium press release July 2012

Spodumene is the principal ore mineral at the Georgia project, occurring within

pegmatite intrusives. The property hosts a number of pegmatite intrusives, however not

all pegmatites exhibit spodumene mineralisation and some have been sericitised

causing a significant loss of the lithium content. The spodumene bearing pegmatites are

lens shaped forming continuous units or splitting into multiple parallel units, reaching up

to 600m in strike length and 18.2m in thickness.

Rock Tech Lithium completed metallurgical test work on samples from the Georgia Lake

project during mid-2011, focussing on the production of a spodumene concentrate and a

lithium carbonate product. Two methods of producing a spodumene concentrate were

tested, one using a heavy liquid separation (HLS) technique and another floatation

method. The HLS method returned a spodumene concentrates with between 6.21%-

6.29% Li2O% with a 60.8%-75.5% lithium recovery. The flotation method returned a

spodumene concentrate grading 6.15% Li2O with a recovery of 81.5 %. Further

hydrometallurgical testing to produce lithium carbonate from spodumene concentrate

was able to achieve a lithium carbonate product with 99.998% Li2CO3 average purity,

exceeding the widely regarded battery grade minimum purity of 99.5% Li2O3.

Exploration drilling is planned to continue at the Nama Creek and Conway properties

and a new drilling campaign at the Newkirk property is schedule to begin in 2012.

Kapiwak Project

The Kapiwak project is located in Quebec, Canada, approximately 380km north of the

town of Matagami. The project covers a 195km2 area bordering the James Bay hard

rock lithium project owned by Galaxy Resources.

Grab samples taken from the Kapiwak project during 2009 returned grades between

0.89% and 2.90% Li2O.


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5.8.4.6 Critical Elements Corporation

Critical Elements Corp. (CEC) manages the Rose Tantalum-Lithium property located in

the James Bay region of Quebec, 300km north of the township of Chibougamau. CEC

acquired a 100% interest in the Rose project in November 2010, after undertaking

drilling in December the previous year. The project covers 333km2, comprised of 636

mining licences in five separate blocks.

Lithium mineralisation is hosted within shallow dipping spodumene pegmatite dykes

outcropping at surface. Spodumene has been observed forming up to 40% of the

pegmatite rock mass, initial grab samples taken by CEC returned values of 0.45% Li2O.

In December 2011, CEC reported an indicated resource estimation for the Rose project

of 26.5Mt grading 0.98% Li2O (contained 642,238t LCE) using a cut-off grade of 0.75%

Li2O. A further inferred resource of 10.7Mt grading 0.86% Li2O (contained 227,565t LCE)

was also included in the resource estimation.

A PEA was completed by CEC for the Rose project in December 2011. The report

assumed a feed rate of 1,500tpd ore to a processing facility, estimating initial capital

costs of CAN$268.6M predominantly composed of costs associated with a processing

plant. Total capital costs for the proposed 17 year life of mine were estimated at

CAN$305.4M including site closure, equipment replacement and general infrastructure

maintenance. Operating costs for spodumene concentrate production were estimated at

CAN$67.83/t. A separate study by SECOR, a Canadian consultancy firm,

recommended that the processing plant be constructed on site at the Rose project rather

than an off-site location.

CEC has successfully completed metallurgical test work on attaining a spodumene

concentrate by flotation of crushed ore. Test work is continuing on producing a battery

grade (>99.5% Li2CO3) lithium carbonate product from spodumene concentrate, which to

date has achieved recoveries of 91% when producing a 99.9% Li2CO3 product.

5.8.4.7 Glen Eagle Resources Inc.

Glen Eagle Resources manage the Autheir lithium property located in the Abitibi-

Témiscaningue region of Québec. Purchased from Globex Mining Enterprises in

October 2010, the property consists of 19 adjoining claim areas covering 6.5km2, of

which all but one are 100% owned by Glen Eagle Resources. The last claim is held by a

JV, 70% owned by Glen Eagle Resources and 30% owned by Royal Nickel Corp.

A historical non NI 43-101 compliant resource estimation was made for the Autheir

property in 1999, reporting a total resource of 2.4Mt grading 1.04% Li2O. The 1999

estimate was revised as part of a PEA study released in Januray 2012, which reported

an updated NI 43-101 compliant mineral resource of 6.2Mt grading 1.0% Li2O (Table

82).


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Table 82: Glen Eagle: Resource estimation for Authier lithium property, January 2012

Mt Li2O% Cont. LCE

Indicated 4.0 1.0 99,000

Inferrred 2.2 1.0 54,000

Total 6.2 1.0 153,000 Source: Glen Eagle Resources PEA study January 2012

Lithium mineralisation occurs within multiple pegmatites related to late stage intrusives,

cross cutting the regional volcano-metamorphic country rock. Spodumene is the main

lithium bearing mineral, associated with mineralisation of beryllium, niobium, tantalum

and molybdenum minerals. Within the Autheir property, the larger spodumene bearing

pegmatites are the focus of exploration.

The January 2013 PEA released by Glen Eagle for the Autheir property reported capital

costs of CAN$42.1M to construct mining and milling facilities with a processing capacity

of 2,000tpd ore gradings roughly 0.98% Li2O. Glen Eagle intends to produce

spodumene, mica and feldspar concentrates for a 10 year life of mine. Operating costs

are estimated in the January 2012 PEA study at CAN$41.0/t of spodumene-mica-

feldspar concentrate or CAN$24.0Mpy.

Glen Eagle and COREM undertook metallurgical test work on a representative bulk

sample during 1999, to determine a flow sheet for spodumene concentrate production.

The preferred flow sheet involved initial crushing of ore followed by a floatation circuit to

remove mica. The mica depleted material is classified in a hydro-cyclone before being

entered into a floatation circuit to extract spodumene. The crude spodumene float

concentrate undergoes three stages of cleaning to produce the final spodumene

concentrate. The process was able to produce a spodumene concentrate with a Li2O

content of 5.7%-5.8% whilst maintaining a recovery of between 67.52% and 70.19%. A

mill recovery of 85% was used in the January 2013 PEA study, suggesting metallurgical

work has optimised the flowsheet designed by Glen Eagle and COREM in 1999.

5.8.4.8 Aben Resources Ltd.

In 2009, Aben Resources acquired two lithium exploration projects in Ontario, Canada.

The more developed of the two projects is Raleigh Lake, located approximately 96km

South East of Dryden, which had been identified in the 1960s to host lithium bearing

pegmatites during geological mapping by the Canadian geological survey. Drilling

undertaken during 1999 and 2000 by Avalon Ventures Ltd. returned results of up to

1.5% Li over 6.9m.

Aben Resources completed a drilling campaign at the Raleigh Lake property in 2010

with samples assayed for lithium, rubidium and tantalum content. Assays returned

grades up to 1.33% Li over 1m and 1.3% Li over 9m.


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The Gama lake property is Aben resources other lithium project located 150km north of

Red Lake. The project sits along a northwest-southeast trend associated with lithium

bearing pegmatites intrusive in the local area.

5.8.4.9 Toxco Inc. Canada

Toxco Inc. (Section 5.39.7) operates a recycling plant at Trail, British Columbia which

recovers lithium carbonate from scrap lithium ion batteries and production scrap from Li-

ion battery manufacturing. The facility is the only recycler of primary and secondary

lithium batteries in North America.

The Trail plant uses a process whereby scrapped lithium batteries are discharged and

cooled to -325oF (-198

oC) to render lithium practically inert. Batteries are then

mechanically shredded before lithium components are separated and converted to

lithium carbonate for resale. Hazardous electrolytes are neutralized to form stable

compounds and plastics from casings and other components are collected for recycling

or scrapping.

5.8.4.10 Other Canadian Lithium Projects

Since the mid-2000s a large number of exploration companies have acquired claims in

Canada, undertaking exploration for lithium and other rare metals. Companies with

projects which are yet to reach a scoping study or PFS stage are detailed in Table 83.

Table 83: Canada: Lithium exploration projects in Canada with uncompleted scoping

studies or PFS in October 2012

Company Project Location Details

Lithium Mineral Projects

Force Energy

Corp

Zoro 1 Project Manitoba,

Canada

The Zoro 1 project is 100% owned by Force Energy

Corp. Previous historic reserve estimate 1.73Mt at

0.945% Li2O. Force Energy plan to continue

exploration at the site throughout 2012.

Jourdan

Resources

Pivert-Stairs James Bay,

Quebec

The Pivert Stairs property consists of 113 claims

covering 60 km2. Jourdan Resources completed

drilling in mid 2011 which returned grades between

trace-0.15% Li2O

Dios Exploration

Inc / Sirios

Resources Inc.

Pontax James Bay,

Quebec

Grab samples taken from the Pontax property in

2009 returned up to 5.46% Li2O. Dios and Sirios

undertook drilling in 2010 which returned grades of

1.69 % Li2O over 9m and 1.43% Li2O over 13m.

Table continued….


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….Table continues


Golden Virtue

Resources Inc.

Godslith Manitoba The Godslith property covers 51km2. A non NI 43-

101 compliant resource estimation of 4.8 Mt grading

1.27% Li2O was made for Godslith. Golden Virtue

released a technical report in August 2009 for the

property. The report did not include resource

estimation.

Valleyview Alberta The Valleyview project covers 364km2, a portion of

which is leased for 3 years from Lithium Exploration

Group.

Houston Lake

Mining

Pakeagama 170km north of

Red Lake,

Ontario

Houston Lake took samples from the Pakeagama

project in 2008, which returned grades of 1.21% Li2O

on average. Samples also returned average grades

of 222ppm tantalum and 107ppm niobium oxide.

Mega Graphite Big Mack Separation

lake, Ontario

The Big Mack property covers 64km2 and was joint

ventured to Mega Graphite in May 2010 by Pacific

Iron Ore Corporation. Only surface samples have

been taken and neither Mega Graphite nor Pacific

Iron Ore Corporation has undertaken significant

drilling on the property.

Gossan

Resources

Separation

Rapids

58 km north of

Kenora,

Ontario

Gossan Resources undertook geological mapping

and surface sampling in 2009. channel samples

returned grades up to 1.42% Li2O although the

majority were <1.0% Li2O

Canadian

Orebodies

80% in Zig Zag

Property (Ultra

Lithium Inc.)

60 km NE of

Armstrong,

Ontario

The Zig Zag property is split into five areas:

Tebishogeshik, Dempster East, Dempster L28,

Ketchican Road Beryl Occurrence, Bird River

Potential No. 1.

Ultra Lithium Zig Zag Property 60 km NE of

Armstrong,

Ontario

Ultra Lithium has an option to purchase 80% of the

Zig Zag property from Canadian Orebodies. Drilling

during early 2011 returned grades of between 0.06-

1.49% Li2O. Drilling samples also returned elevated

tantalum, niobium and rubidium grades.

Berland River Alberta A historic non NI 43-101 compliant resource

estimation by Alberta Research Council in 1995

reported a resource of over 1Mt contained Li2O

(>2.6Mt LCE) at the Berland River project.

Canadian Copper

Core Inc.

Seymour Lake 230km N-NE of

Thunder Bay,

Ontario

Canadian Copper Core holds an option to purchase

70% in the project through a series of cash payments

and minimum exploration expenditure of CAN$3M.

A further 10% would be gained if a BFS is delivered.

Table continued….


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….Table continues


Stockport

Exploration

Seymor Lake 230km N-NE of

Thunder Bay,

Ontario

Stockport exploration undertook drilling in both 2002

and 2009 returning an average grade of 1.467% Li2O

for drill hole composites at the Seymour Lake project.

Rodinia Lithium Strider Lithium

Project

20km E of

Snow Lake,

Manitoba

Rodinia Lithium 100% acquired the Strider Lithium

project from Strider Resources in 2009. A historical

non NI 43-101 compliant resource estimation using

past drilling from the 1950s and 1997, reported

3.97Mt grading 1.29% Li2O.

North Arrow

Minerals

Torp Lake 30 km

southwest of

Tidewater,

Nunavut

North Arrow Minerals 100% own the Torp Lake

property. Spodumene mineralisation was identified

in late 1980s during regional reconnaissance.

Surface channel samples taken by North Arrow

Minerals returned grades of 4.5% Li2O over 6m and

3.3% Li2O over 7m.

War Eagle Mining MAC 40km NW of

Cantung Mine,

Northwest

Territories

War Eagle Mining owns a 96.5% interest in the MAC

project. Surface samples on the exposed lithium-

cesium-tantalum bearing pegmatite have returned

grades of up to 1.53% Li2O. War Eagle Mining’s

main focus of exploration is on Sn-Ta.

Green Atlantic

Resources Corp.

Brazil Lake 30km NE of

Yarmouth,

Nova Scotia

Green Atlantic Resources holds an option to earn up

to a 75% stake in project with Champlain Mineral

Ventures Ltd. Assays for tantalum-rubidium-beryllium

have been released for drilling samples taken during

2010, however lithium assays were not included.

Grab samples from boulders at the project have

returned grade of between 0.34% and 1.24% Li2O.

Mantis Mineral

Corp.

Case 80km E of

Cochrane,

Ontario

Assays from drill hole samples taken by Mantis

Mineral Corp. returned lithium grades of between

0.18% Li2O over 8.75m and 1.98% Li2O over 9.20m.

Landore

Resources

Root Lake Superior

Province,

Ontario

Landore Resources owns 100% of the Root Lake

property covering 51.3km2 of claims. A historic (non

NI 43-101 compliant) resource estimate of 2.3Mt

grading 1.3% Li2O (73,900t LCE) has been reported

for the property.

Inspiration Mining

Corporation

Desrosiers Sudbury,

Ontario

On-going exploration for predominantly Molybdenum

but also lithium, tantalum, bismuth and other metals

Table continued….


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….Table continues


Champion Bear

Resources

Separation

Rapids

Ontario The Separation Rapids project is 100% owned by

Champion Bear who have completed surface

exploration and drilling at the project. Assays from

drill core have returned grade of up to 3.76% Li2O

over 4.0m, and 402ppm Ta2O5 over 4.7m

Mineral Hill

Industries

Chubb Property Lacorne

Township,

Quebec

The Chubb property consists of 20 claims covering

8.12km2. The project contains three identified dykes

known as Dyke A, B and C. Using historical drilling

results a non NI 43-101 compliant estimate of 2Mt

grading 1.0% Li2O has been suggested for Dyke A at

the project alone.

International

Property

Figuery

Township,

Quebec

Covering 5.34km2, the International Property

consists of 15 minral claims. Drilling during the

1950’s returned assays of 1.39% Li2O in one bulk

sample

Athona Property Landrienne

Township,

Quebec

The Athona Property covers an area of 12.86km2.

The property contains pegmatite dykes which have

been historically assayed for molybdenum

Canadian &

Martin McNeely

Property

Landrienne

and La Corne

Townships,

Quebec

The Canadian & Martin McNeely property is centred

on a set of three parallel dykes with associated

spodumene bearing pegmatite intrusives. The

property covers 20.8km2

Monarques

Resources

Lemare Quebec Monarques carried out mapping and sampling of the

Lemare property in 2012, identifying spodumene

bearing pegmatites grading up to 3.1% Li2O.

Tucana

Exploration Corp.

Abigal Quebec The Abigal property is situated in proximity to the

Whabouchi claims held by Nemaska, which contain

lithium bearing pegmatites. Little exploration has

been completed at the Abigal property.

Lithium Brine Projects

Channel

resources

Fox Creek 24km South of

Fox Creek

town, Alberta

Channel Resources released a mineral resource

estimation in 2009 that reported an inferred resource

of 1.92Mt LCE contained within the oilfield brines.

The average concentration of the sampled brines

was 88.3ppm Li, 4,595ppm K and 2,817ppm Mg.

Amerilithium

Corp.

Americana

Property

Alberta The Americana property is situated in a regional

geological formation estimated to contain a resource

of 567,000t Li (non Ni 43-101 complaint). Brines at

the property have returned an average grade of

~100ppm Li

Table continued….


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….Table continues


Lithium

Exploration Group

Valleyview Alberta Lithium Exploration Group holds a 100% share in the

Valleyview project. Previous sampling undertaken

by Lithium exploration Group has reported brine

concentrations of between 70-85ppm.

Habanero

resources

South Leduc Alberta Habanero Resources acquired the South Leduc

property in 2009, covering 1,618km2. Since

acquiring the property, Habanero Resources has not

released any information on exploration updates.

Weststar

Resource Corp.

Silvercreek &

Simonette

30km and

60km West of

Fox Creek

town, Alberta

Weststar purchased the Silvercreek and Simonette

projects in August 2009. Since then it has not

released any information on the progress of the

exploration project

Berkwood

Resources Ltd

Fox Creek 35km west of

Fox Creek

town, Alberta

Berkwood Resources have continued preliminary

exploration at the Fox Creek site throughout 2012.

Source: Company data

5.9 Chile

In 2011, Chile was the second largest producer of lithium after Australia, although it

remains the largest producer of lithium products from brine deposits. Chilean production

began to accelerate after SQM entered production in 1996 at the Salar de Atacama.

Since 1996, the countries lithium carbonate production has grown at a rate of 9.7%py,

from 15,069t LCE in 1996 to 66,200t in 2012. The majority of Chilean lithium production

is exported, with South Korea, Japan and China being the destination for over 60% of

lithium carbonate exports. Domestic production of lithium hydroxide resumed in 2004,

when Sociedad Chilena del Litio (SCL) restarted operations at its production facility

which had been suspended since the late 1990s.

In 2011 there were only two commercial producers of lithium carbonate in Chile, both

extracting brines from the Salar de Atacama which lies between the main Andean range

to the east and Cordillera de Domeyko to the west. Rockwood Lithium (Section 5.39.2)

began production of lithium in 1984 at La Negra, followed by SQM in 1996 in

Antofagasta. SQM’s large production low pricing strategy, as lithium was considered a

by-product to fertilizer production, transformed the lithium industry which had previously

been dependent on production from mineral concentrates. The surge in supply from

Chilean brine deposits and diminished lithium carbonate prices resulted in a number of

mineral-based conversion operation in China, Russia and the USA to cease operation.


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Bids for special operating contracts began on the 12th June through the Chilean Ministry

of Mining. The successful bidder was announced on the 24th September and the

licences became valid soon after.

5.9.1 Chilean lithium reserves

Chile was estimated by the USGS in January 2012 to contain reserves of 7.5Mt Li, the

largest reserves for a single nation in the world and accounting for approximately 57% of

global reserves. The Salar de Atacama is the countries largest single lithium reserve

contained in brines with elevated concentrations of lithium, potassium, boron and

sulphates. Combined resource estiamtions from Rockwood Litihum and SQM at the

Salar de Atacama total approximately 5.9Mt Li (31.4Mt LCE) and a further 400,000t Li is

believed to be contained elsewhere in the salar.

Other salars in Chile such as the Salar de Maricunga, the Salar de Pedernales and the

Salar Piedra Parada have been estimated to contain significant resources of lithium

which may be converted into reserves with further exploration.

5.9.2 Chilean lithium production

In 2009 demand for lithium compounds in the battery, pottery and glass, lubricant and

pharmecuticals industries fell sharply as a result of the global economic downturn.

Recovery since 2009 has been strong, returning lithium carbonate production in 2010 to

marginally above the 2008 total (Table 84).

In 2011, Chilean production of lithium compounds was reported by the Servicio Nacional

de Geología y Minería as 68,403t LCE, an increase of approximately 16,500t LCE from

2010, although this is thought to include some double counting of lithium carbonate and

lithium hydroxide production. Production may have been greater if bad weather had not

affected lithium brine production in the country during early 2011.

Production capacity in Chile totalled 82,000tpy LCE in 2012 and planned expansions by

both Rockwood Lithium and SQM in 2013-2015 are expected to increase production

capacity in the country to 111,000tpy LCE.


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Table 84: Chile: Lithium carbonate, chloride and hydroxide production, 2004 to 2011

(t)

2004 2005 2006 2007 2008 2009 2010 2011

Lithium Carbonate 43,971 43,091 46,241 51,292 48,469 25,154 44,025 59,933

Lithium Chloride 494 681 1,166 4,185 4,362 2,397 3,725 3,864

Lithium Hydroxide - 504 3,794 4,160 4,050 2,987 5,101 5,800

LCE 44,401 44,128 50,595 58,598 55,832 29,870 51,758 68,403

Change from previous

year (%) 7% -1% 15% 16% -5% -47% 73% 32% Source: Anuario de la Mineria de Chile 2011

5.9.3 Special Lithium Operations Contracts (CEOLs)

Since 1979, lithium has been classified as a strategic mineral as a result of its potential

use in the manufacture of nuclear weponary. As a strategic mineral, the Chilean mining

code dictates that all lithium reserves are property of the Chilean State Government and

that exploration or exploitation of lithium may only be undertaken directly by the State of

Chile, or its companies, or by specially licenced concessions and operation contracts.

The last special operating contract was granted by the Chilean government in 1982, and

as of June 2012 four companies hold licences to exploit lithium reserves (SQM,

Rockwod Lithium, CODELCO and Simbalik).

In February 2012, the Chilean government announced that new special operations

licences for lithium exploitation would be auctioned to interested parties. The new

licences are expected to allow for the production of 100,000t lithium metal (530,000t

LCE) over a 20 year period. The decision to grant new licences was made by the

Chilean Ministry of Mining to remove restraints on growth in the Chilean lithium industry.

This is aimed at assisting Chile to remain a dominant producer of lithium products in the

global market, which is under threat from new producers and exploration companies in

Australia, Canada and Argentina. Along with the initial bid for the special operations

licence, sucessful bidders will be required to pay an upfront payment of 2,500M Chilean

Pesos (US$4.94M) along with a seven percent royalty payment on future sales revenue

to the Chilean government.

Bids for special operating contracts were launched on the 12th June 2012 through the

Chilean Ministry of Mining and parties became unable to withdraw offers after the 31st

July. Bidding for the contracts closed on the 12th Septemeber with three parties led by

Chile’s NX UNO de Peine, SQM and a POSCO Consortium placing bids (Table 85).


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Table 85: Chile: Special operating licence bidders for the September 2012 auction

Bidder Involved Parties Value of bid placed

(US$M)

Sociedad Química y

Minera (SQM)

Sociedad Química y Minera 40.6

POSCO Consortium Posco Ltd, Mitsui & Co, Daewoo International Corp,

Li3 Energy

17.3

NX UNO de Peine NX UNO de Peine, Samsung Group 5.77 Source: Company news

SQM was revealed as the successful bidder on the 24th September 2012 after bidding

an offer of US$40.6M for the licence. The POSCO consortium offered US$17.3M, less

than half of SQM’s successful bid, with the other party NX UNO de Peine presenting a

bid of US$5.77M. The auction process was appealed by POSCO Consortium, which

claimed SQM were ineligible to participate in the bidding process as it was involved in a

number of lawsuits with the Chilean government, breaking a precondition required to

place a bid. SQM’s bid was declared invalid on the 2nd

October 2012 and the entire

CEOL bidding process was annulled, resulting in the resignation of Chilean mining

minister Pablo Wagner. The POSCO Consortium formally appealed to the Ministry of

Mining’s Special Tender Committee to reconsider annulling the September 2012 CEOL

bid, awarding the CEOL contract to the POSCO Consortium instead as the highest

‘eligible’ bidder.

The Chilean goverment has stated it will assess the lithium industry in 2013 before

deciding whether to reactive the tender process for CEOLs.

5.9.4 Sociedad Química y Minera

Sociedad Química y Minera (SQM) extracts lithium brines from the Salar de Atacama in

northern Chile. It is the world’s largest producer of lithium carbonate and a major

producer of lithium hydroxide. The company began the production of lithium compounds

in 1966 as a by product of its potassium chloride operations.

SQM operate a lithium carbonate and hydroxide plant at the Salar de Carmen facilities

near Antofagasta. SQM increased the capacity of the Salar de Carmen facility in 2008

to 40,000tpy LCE. A 6,000tpy lithium hydroxide plant was also completed in 2005,

which gave SQM an important share of the lithium hydroxide market.

At the end of 2011, the controlling shareholder group was a coalition between the

Pampa Calichera group and Kowa group, which hold 31.97% and 2.08% of SQM

respectively. The two groups signed a joint agreement in December 2006 to combine

their ownership and block Potash Corporation of Saskatchewan (PCS), who owns 32%

of SQM, acquiring a controlling stake. Other major shareholders are shown in Table 86.


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Table 86: SQM: Majority shareholders of SQM as of December 31st 2011

Name Group A Shares B Shares Total % Ownership

Sociedad de Inversiones Pampa

Calichera S.A.

Pampa

Calichera 44,758,830 12,241,799 57,000,629 21.66%

Inversiones el Boldo LTDA. PCS 44,751,196 17,571,676 62,322,872 23.68%

The Bank of New York Mellon - … 42,036,912 42,036,912 15.97%

Inversiones RAC Chile LTDA. PCS 19,200,242 2,699,773 21,900,015 8.32%

Potasios de Chile S.A. Pampa

Calichera 18,179,147 156,780 18,335,927 6.97%

Inversiones Global Mining

(Chile) LTDA.

Pampa

Calichera 8,798,539 … 8,798,539 3.34%

Banchile Corredores de Bolsa

S.A. - 136,919 4,890,193 5,027,112 1.91%

Corpbanca Corredores de Bolsa

S.A - 11,189 4,264,250 4,275,439 1.62%

Inversiones la Esperanza Chile

LTDA. Kowa 3,693,977 … 3,693,977 1.40%

Others - 3,289,513 36,515,589 39,805,102 15.13%

Total 142,819,552 120,376,972 263,196,524 100.00%

Source: SQM Annual report 2011

5.9.4.1 Reserves and Resources

As of May 2011, SQM hold the exclusive rights to exploit an approximatley 1,470km2

area of the Salar de Atacama in northern Chile. SQM leases the land from the

government controlled Corporacción de Formento de la Producción de Chile (CORFO),

in an agreement which expires in December 2030. As part of the agreement, SQM is

responsible for the maintainance of the exploration rights and annual payments to the

government. CORFO also receive annual royalty payments from SQM which in 2010

totalled US$18.2M. In conjunction with the 1,470km2 leased from CORFO, SQM hold a

further 1,127km2 of exploitation licences and 1,265km

2 of exploration rights at the Salar

de Atacama (as of May 2011). Applications for a further 126km2 of exploration rights

have been submitted to the Chilean Ministerio de Minería.

In addition to the 1,470km2 leased to SQM, CORFO hold an additional 652km

2 of

licences in the Salar de Atacama. As part of the licence agreement signed with SQM

until December 2030, CORFO has agreed not to permit any other companies to explore,

exploit or mine and mineral resource on this land until the agreement has expired.

In December 2010, SQM reported proven and probable reserve estimates of 28.74Mt

LCE (Table 87). The estimate was calculated using economic restrictions, geological

exploration, brine sampling and geostatistical analysis for an 819.2km2 area at depths to

100m and 280m. Lithium recoveries at the Salar de Atacama operation are reported at

28%-40%.


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Table 87: SQM: Reserves within brines at the Salar de Atacama project

Proven (Mt) Probable (Mt)

Potassium (K+) 50.4 17.5

Sulphate (SO42-

) 37.2 2.2

Lithium (Li+) 2.7 2.7

LCE 14.37 14.37

Boron (B-3

) 1.1 0.2 Source: SQM 20-F document December 2010

The brine at the Salar de Atacama typically contains 1,500ppm lithium and is reported to

exceed 2,500ppm, making it the highest grade lithium brine deposit currently in

operation. The low magnesium to lithium ratio in the brine also allows for the production

of purer lithium carbonate after processing, and lower reagent consumption.

5.9.4.2 Production

Brines are pumped from wells which extend between 1.5m-60m below the surface of the

Salar de Atacama. The wells target areas of the salar which display high lithium,

potassium, sulphate and boron concentrations. The extracted brine is pumped into

evaporation ponds to precipitate sodium and potassium chloride which is harvested to

be stored or processed futher. The remaining brines, enriched in lithium, potassium and

borates, are transferred to another series of evaporation ponds which further

concentrates the brines to 6% Li, 1.8% Mg and 0.8% B. The concentrated brine is

collected and transported by truck to the Salar de Carmen, for production of lithium

carbonate and hydroxide. The processing method used by SQM is detailed further in

(Section 3.1).

The Salar de Carmen processing facility has the capacity to produce 43,500tpy of lithium

carbonate, although only 88% of its capacity has been utilised since its expansion in

2009. Production of lithium carbonate increased significantly from 21,300t in 2009 to

32,400t in 2010 and reported revenues from sales of lithium compounds increased 28%

from US$117.8M in 2009 to US$150.8M in 2010 (Table 88). The significant increase in

production and revenue is a result of increased demand from the battery industry and

consumers replenishing stockpiled material after the global economic downturn in late

2008-2009. Production increased further in 2011 to approximately 40,700t lithium

carbonate, creating revenue of US$183.4M. SQM are believed to have a pond capacity

to produce 60,000tpy LCE, however the necessary processing equipment is not yet in

place to operate at this level.

After a rapid 45.3%py increase in the value per tonne of lithium products between 2004

and 2007, the unit value of SQM’s lithium products decreased year-on-year to 2011

before increasing to US$4,860/t in 2012 (Table 88). The decline in the unit value of

SQM’s lithium compounds since 2007 can be attributed to SQM cutting lithium

carbonates prices by 20% in late 2009, which has taken a number of years to be

implemented into new supply contracts. The unit value increased in 2012, after a


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number of major producers announced price increases which came into affect during

2012.

Table 88: SQM: Production, revenue and value per tonne of lithium compounds,

2003 to 2012

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Production (t) 27,300 30,600 27,800 30,400 28,600 27,900 21,300 32,400 40,700 45,700

Revenue

(US$M) 49.7 62.6 81.4 128.9 179.8 172.3 117.8 150.8 183.4 222.2

Unit Value

(US$/t) 1,821 2,046 2,928 4,240 6,287 6,176 5,531 4,654 4,506 4,860

Source: 2002-2012 SQM annual reports

5.9.4.3 Products

SQM produces four lithium carbonate products:

QLithium Carbonate Crystallized – used in the ceramic frits, enamel glazes,

ceramic glass, continuous casting powders industries and in the manufacture

of lithium downstream products.

QLithium Carbonate Granulated – used predominantly in aluminium smelting

QLithium Carbonate Powder – used in applications which require reduced

partical size.

QLithium Carbonate Battery Grade – used in the production of cathode

materials for lithium rechargeable batteries.

The specifications for SQM QLithium Carbonate products are shown in Table 89.


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Table 89: SQM: Specifications for lithium carbonate (wt %)

Lithium Carbonate Technical Grade Lithium Carbonate

Battery Grade Crystallised Granulated Powder

Chemical Constituent

Li2CO3 (min) 99.0 99.0 99.0 99.2

Cl (max) 0.02 0.02 0.02 0.01

SO42-

(max) 0.05 0.1 0.1 0.03

Na (max) 0.1 0.2 0.1 0.06

K (max) 0.05 0.05 0.05 0.005

Ca (max) 0.04 0.07 0.04 0.01

Mg (max) 0.01 0.02 0.01 0.01

B (max) 10ppm 10ppm 10ppm n/a

Fe2O3 (max) 0.003 0.003 0.003 0.001

Moisture (max) 0.2 0.2 0.2

Insolubles

(max) 0.02 0.03 0.02 0.01

LOI (max) 0.7 0.8 0.7 0.5

Partical Size

Tyler sieve +20 = 1.5% max +4 = 0% +20 = 0% D50 = 10μm1

+200 = 70% min +60 = 95% min +60 = 10% max D90 = 20μm1

D100 = 40μm1

Source: SQM Notes: 1-Guaranteed particle size, D50 = median, D90 = size at 90% and D100% = size at 100%

SQM produces four lithium hydroxide products:

QLubelith™ Industrial – used in the production of lubricating greases, dyestuffs,

batteries and other downstream lithium industries

QLubelith™ Industrial Wet Grade – similar composition to above except product

is moisturised to minimise dust emission during handling

QLubelith™ Technical – products shows a higher LiOH content for applications

which require reduced impurities.

QLubelith™ Technical Oil Coated – higher purity lithium hydroxide product with

oil coating to reduce dust emissions.

The specifications for SQM’s lithium hydroxide products are shown in Table 90.


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Table 90: SQM: Specifications for lithium hydroxide (wt %)

Industrial Industrial Wet

Grade

Technical Technical Oil

Coated

Chemical Constituant

LiOH (min) 56.5 55.0 56.5 56.5

Cl (max) 0.005 0.005 0.05 0.005

SO42-

(max) 0.03 0.03 0.03 0.03

CaO (max) 0.03 0.03 0.03 0.03

K (max) 0.01 0.01 0.01 0.01

Na (max) 0.03 0.03

NaOH (max) 0.05 0.05

CO2 (max) 0.35 0.35

Li2CO3 (max) 0.5 0.5

Fe2O3 (max) 0.0015 0.0015 0.0015 0.0015

Insolubles (max) 0.008 0.008 0.008 0.008

Oil Content (max) 1

Physical Properties

Molecular Weight 41.96 41.96 41.96 41.96

Bulk Density

(g/cm3)

0.9 0.9 0.9 0.9

Water Solubility

(g/100g H2O)

@ 10oC 22.3 22.3 22.3 22.3

@ 80oC 26.8 28.8 26.8 26.8

Source: SQM

SQM also has a capability to supply lithium metal at 99.5% purity, typically used in the

pharmaceuticals and chemicals industries.

5.9.4.4 Markets

SQM has an international presence with offices located in Chile, Belgium, USA, Japan

and China. In 2010, SQM sold lithium products to 300 customers located in 50

countries. Over half of all lithium products sold in 2010 was to customers located in Asia

and Oceania (Figure 25). SQM’s sales to Asia and Oceania have increased

substantially since 2006 when the two continents accounted for 37% of total lithium

sales. Rapid growth in the Asian lithium battery industry since the early 2000’s, centred

in Japan, South Korea and China, and the subsequent growth in demand for lithium is

most likely responsible for the increase in SQM’s sales to the region. The percentage of

sales to North America has been in decline since 2005, when they accounted for 25% of

total sales, compaired with only 10% in 2011. No single customer accounted for more

than a 14% share of SQM’s lithium product sales in 2011, with the top ten customers

accountable for no more than 51% of total sales.


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Figure 25: SQM: Lithium sales by destination 2011, 2009, 2007 and 2005 (%)

2011 2009

2007 2005

Source: SQM 20-F documents 2008-2010

5.9.4.5 Exports

In 2011, shipments of lithium carbonate from SQM totalled 29,900t, exported

predominantly to Japan and South Korea which accounted for 24.5% and 24.3% of total

exports respectivley. Other major importers of lithium carbonate from SQM in 2010 were

Belgium (16.8%), China (16.6%) and the USA (7.9%) (Figure 26). Shipments made to

Belgium were onward shipped to other European countries. Exports of lithium

carbonate in 2012 are estimated to increase in line with the recent trend to

approximately 33,000t, mainly to Japan, South Korea and China.

Europe , 28%

North America,

10%

Asia & Oceania,

61%

Others , 1%

Europe , 31%

North America,

14%

Asia & Oceania,

53%

Others , 2%

Europe , 34%

North America,

21%

Asia & Oceania,

38%

Others , 7%

Europe , 33%

North America,

25%

Asia & Oceania,

31%

Others , 11%


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Figure 26: SQM: Destination of lithium carbonate exports, 2006 to 2011 (t)

Source: Banco Central de Chile

5.9.5 Rockwood Litihum (Salar de Atacama and La Negra Plant)

Established in 1980 as Sociedad Chilena Del Litio, Rockwood Litio Ltda. (RWL) is a

subsidiary of Rockwood Holdings (Section 5.39.2). Sociedad Chilena Del Litio itself a

subsidiary of Chemetall GmbH joined Rockwood Holdings in 2004, and was renamed

RWL in April 2012. The company began the production of lithium carbonate in 1984

from brines extracted at the Salar de Atacama in northern Chile. Extracted brines are

processed at the La Negra lithium carbonate and chloride plant near Antofagasta. (SCL)

expanded the La Negra plant in 2005, which increased production capacity to an

estimated 29,000tpy of LCE. In February 2012, Chemetall announced that it would

invest US$140M in the construction of a new 20,000tpy LCE lithium carbonate facility

near to the port of Antofagasta in Chile, aiming to increase production capacity in the

country to 50,000tpy LCE by the end of 2013.

Brines are extracted from Chepica del Salar, an area in the southern Salar de Atacama.

The brine solutions are pumped to surface and into a series of evaporation pools which

cover an area of 1.4km2. Evaporation concentrates the brines from around 0.2% Li

when first extracted to 6%, at which stage brine is removed and transported to the La

Negra plant.

A lithium chloride facility with a 3,600tpy capacity was constructed at the La Negra plant

in 1998, however it was closed in late 1999. Production from the facility restarted in

2005 and exported lithium chloride products mainly to the USA. Exports of lithium

chloride in 2010 were 3,471t and capacity at the facility had been increased to 4,500tpy

lithium chloride (3,919t LCE).

23,765 22,710

16,632

12,226

25,599

29,900

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2006 2007 2008 2009 2010 2011

Japan S. Korea Belgium USA China

Spain Italy Other Total


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Between 2006 and 2011, RWL mainly exported lithium carbonate to Germany, Japan

and the USA. Exports to these three countries in 2011 accounted for 59.4% of SCL’s

total lithium carbonate exports (Table 91). Exports from SCL dropped sharply in 2009 as

a result of reduced demand for lithium caused by the global economic downturn. In

2012, South Korea became the largest importer of lithium carbonate from RWL,

importing 6,630t LCE.

A portion of RWL’s exports of lithium carbonate and chloride to the USA will be used

internally, shown by the lower unit value of exports (Table 91 and Table 92). Lithium

compounds are processed into downstream lithium products at the Rockwood Lithium

Inc. plants in North Carolina and Tennessee.

Table 91: RWL: Gross tonnage, value and unit value of lithium carbonate exports, 2006 to 2012

Germany Japan USA China S. Korea Others

2006

Gross tonnage (t) 4,295 3,324 2,418 2,074 1,532 1,274

Value (FOB US$M) 10.87 11.08 4.29 6.50 5.50 3.64

Unit value (US$/t) 2,532 3,333 1,775 3,132 3,589 3,458

2007

Gross tonnage (t) 5,256 3,652 3,165 1,738 1,796 1,009

Value (FOB US$M) 15.35 19.58 6.32 8.84 8.00 3.99

Unit value (US$/t) 2,920 5,362 1,999 5,087 4,453 6,291

2008

Gross tonnage (t) 5,886 3,736 3,670 1,736 1,988 1,057

Value (FOB US$M) 24.00 22.57 9.93 8.23 9.77 4.79

Unit value (US$/t) 4,077 6,040 2,705 4,743 4,912 5,756

2009

Gross tonnage (t) 2,585 2,306 1,974 985 1,955 412

Value (FOB US$M) 12.05 13.14 6.12 4.96 11.61 1.75

Unit value (US$/t) 4,663 5,698 3,098 5,039 5,937 5,402

2010

Gross tonnage (t) 4,727 3,292 1,773 1,660 3,027 760

Value (FOB US$M) 18.29 14.82 5.54 7.47 14.31 3.27

Unit value (US$/t) 3,862 4,502 3,125 4,503 4,729 4,839

2011

Gross tonnage (t) 4,370 3,490 2,857 2,240 3,993 1,089

Value (FOB US$M) 16.87 15.07 8.85 9.36 17.09 4.05

Unit value (US$/t) 3,862 4,319 3,100 4,180 4,282 4,528

2012

Gross tonnage (t) 3,537 1,831 3,316 3,463 6,630 834

Value (FOB US$M) 13.70 9.13 10.23 17.25 31.84 3.15

Unit value (US$/t) 3,874 4,986 3,086 4,983 4,802 4,903 Source: Banco Central de Chile


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Table 92: RWL: Gross tonnage, value and unit value of lithium chloride exports,

2006 to 2012

USA Canada China UK Others

2006

Gross Tonnage (t) 919 … … … 28

Value (US$M) 2.83 … … … 0.19

Unit Value (US$/t) 3,081 … ... … 6,795

2007

Gross Tonnage (t) 3,980 … … … 300

Value (US$M) 8.79 … … … 1.77

Unit Value (US$/t) 2,207 … ... … 5,907

2008

Gross Tonnage (t) 4,436 … 280 … …

Value (US$M) 9.65 … 1.36 … …

Unit Value (US$/t) 2,337 … 4,849 … …

2009

Gross Tonnage (t) 2,323 … … … …

Value (US$M) 5.09 … … … …

Unit Value (US$/t) 2,191 … ... … …

2010

Gross Tonnage (t) 3,192 114 114 48 3

Value (US$M) 6.84 0.25 0.25 0.20 0.02

Unit Value (US$/t) 2,143 2,205 2,197 4,173 5,518

2011

Gross Tonnage (t) 3,724 0 501 24 30

Value (US$M) 9.27 0 0.92 0.10 0.16

Unit Value (US$/t) 2,490 … 1,831 4,173 5,296

2012

Gross Tonnage (t) 3,078 0 703 0 342

Value (US$M) 10.30 0 2.31 0 1.16

Unit Value (US$/t) 3,347 … 3,293 … 3,414 Source: GTIS

5.9.6 Simbalik Group

Taiwan based Simbalik Group (Simbalik) manages the Maricunga project located 130km

north east of Copiapo through their Chilean subsidiary Simbalik Group Inversiones Ltda.

The Salar de Maricunga is at an elevation of 3,760km covering 145km2 in total, of which

Simbalik own the concessions to 13.5km2. Simbalik shares the Salar de Maricunga with

Li3 Energy (Section 5.9.7), First Potash Corp. (Section 5.9.8), Salares Lithium Inc.


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(Section 5.3.1) and Mammoth Energy Group Inc. (Section 5.9.10), all of whom own

concessions covering the salar. Unlike the other concession holders at the Salar de

Maricunga, Simbalik’s concession has been granted a mining licence in 1932 by

Comisión Chilena de Energίa Nuclear, which Simbalik inherited when they purchased

the concession in July 2011. The mining licence allows Simbalik to extract 50,000t Li for

a period of 15 years.

Based on an estimation of the Salar de Maricunga by CORFO in 1982, Simbalik have

projected a total contained resource at the salar to be 1.79Mt Li and 19.29Mt K. Brines

at the project are reported to reach 1,400ppm Li and 13,120ppm K, however a sample

program by Qinghai Institute Salt Lake in 2010 returned maximum concentrations of

1,486ppm Li, 9,686ppm K and 2,069ppm B.

Simbalik intend to construct a processing facility either on site or in proximity to the

Maricunga project with a capacity to produce 35,000tpy LCE and 80,000tpy potash.

5.9.7 Li3 Energy Inc.

Li3 Energy Inc. (Li3) own a 60% stake in the Maricunga property in northern Chile, along

with 100% stakes in the Loriscota, Suches and Viscachas lithium brine projects in Peru.

The Maricunga property is the most advanced of Li3’s lithium interests. In late January

2012, Li3 declared an interest in purchasing the lithium assets of New World Resources

Corp. (Section 5.6.3), however Li3 pulled out a deal between the two companies in April

2012 over disagreements on transaction terms.

In 2012, Li3 participated in the Special Lithium Operations Contract (CEOL) bidding

process as part of a consortium with POSCO, Daewoo International Corp and Mitsui &

Co. After the Chilean government had declared SQM’s highest bid to be invalid, Li3

appealed to the Ministry of Mining’s Special Tender Committee, asking for the CEOL to

be awarded to the second highest bidder. The appeal however was rejected and the

Chilean government annulled the entire bidding process in October 2012. Li3 continue

to make calls for new CEOL contracts to be awarded, or for a change in the law to allow

Chilean lithium deposits to be exploited.

5.9.7.1 Maricunga Property

In May 2011, Li3 finalised an agreement with Sociedades Legales Mineras Litio 1 a 6 de

la Sierra Hoyada de Maricunga, a group of 6 companies, to acquire a 60% stake in the

Maricunga property. The project is located on the Salar de Maricunga, 130km east of

the city of Copiapó in Region III of Chile. At an elevation of 3,760m, the Salar de

Maricunga covers an area of 145km2 of which Li3’s concessions cover 14.38km

2. The

Salar de Maricunga is also occupied by Simbalik Group Inversiones Ltda (5.9.6), First

Potash Corp. (Section 5.9.8) who acquired concessions in February 2011, Mammoth

Energy Group (Section 5.9.10) who acquired concessions in March 2011 and Salares

Lithium (Section 5.3.1), acquiring concessions after their merger in August 2010.


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Li3’s Maricunga property is composed of 6 mining concessions which give Li3 the right

to mine and produce potash and boron products from the salar. As of February 2013,

Li3 does not hold a licence to produce lithium products from the Salar de Maricunga,

which requires a specific permit from the Chilean government.

In April 2012, Li3 released a NI 43-101 compliant resource estimation for the Maricunga

project (Table 93). The estimate reported a contained mineral resource of 118,440t Li

and 1.62Mt of potash. Lithium content of the brines typically ranges between 700-

900ppm Li. The magnesium-lithium ratio in the April 2012 estimate was measured at

7.1:1, increasing from 6.6:1 measured in 2007 but still considered by Li3 to be low

enough for conventional solar evaporation to be an effective processing method. The

sulphate-lithium ratio of the Maricunga property brines was reported at 0.5:1.

Table 93: Li3 Energy: Resource estimation for the Maricunga property, April 2012

Measured Inferred Total

Lithium metal (000t) 107.8 10.5 118.4

LCE (000t) 603.9 59.3 663.2

Potassium metal (000t) 776.2 76.3 852.5

Potash (000t) 1,482.6 145.7 1,628.4 Source: Li3 Energy

Initial bench scale metallurgical test work was undertaken at the Universidad de

Antofagasta by the Centro de Investigación Cientίfico Tecnológico para la Minerίa

(CICITEM). Bench scale studies tested a solar evaporation method on two sets of brine

samples from the Salar de Maricunga, an untreated brine sample and a brine sample

that had been treated with sodium sulphate (Na2SO4) to remove most of the calcium

from solution. The tests concentrated the untreated brine to 0.925% Li in twelve

evaporation stages and the treated brine to 1.98% Li in nine evaporation stages, but

concluded that more work is necessary to define the most benefical method for

Maricunga brine. Future test work will also assess solvent extraction as a means to

purify brines for lithium extraction.

As of February 2013, Li3 has no estimates of capital or operating cost for the Maricunga

property.

In January 2012, Li3 announced that it would establish a pilot plant facility to test R3

Fusion SPaCeR™ technology patented by USA-based R3 Fusion Inc. The R3 Fusion

SPaCeR™ technology is an accelerated evaporation method which concentrates saline

brine and recovers purified water. The technology has the potential to significantly

reduce the accommodation period of brine in evaporation ponds to achieve sufficient

lithium concentrations, and reduce the amount of fresh water used by the project. The

pilot plant facility is expected to be completed in H2 2012, and operate for at least a 6

month period.

In March 2012, Li3 finalised a MoU with South Korea’s POSCO to jointly develop the

Maricunga property. As part of the MoU agreement, POSCO has invested US$18M in

total, formed of an initial US$8M in September 2011 to fund exploration and acquire a


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9% interest in the company, and a second US$10M investment in August 2012.

POSCO will also design, build, operate and finance a pilot processing facility, either in

Chile or South Korea, to which Li3 will provide technical assistance. Any technology

developed during the pilot plant test work may be used by POSCO on Li3’s other lithium

projects. In the pilot plant test work, POSCO will attempt to incorporate technology

developed in South Korea to extract lithium directly from low concentration brines, which

has previously been successful on treating brine from the Salar de Maricunga.

5.9.7.2 Li3 Energy Peruvian Projects

Li3’s Peruvian projects include Loriscota in Puno department, Suches in Tacna

department and Vizcachas in the Moquegua department. The three projects cover a

combined area of 79km3 and are located at an elevation of >4,000m. The projects were

identified in a 1981 study by the Peruvian Ministry of Energy and Mines (MoEM) to

contain elevated concentrations of lithium and potassium in brines and Li3 has since

confirmed this in an initial sampling program. Unlike the Maricunga project in Chile, the

exploitation of lithium deposits in Peru is not restricted by the government, and the three

projects are situated in areas allocated for mineral exploration and mining.

5.9.8 First Potash Corp.

On 16th November 2012, Pan American Lithium changed its name to First Potash Corp.

(FPC) to reflect the company’s focus on developing potash resources. FPC acquired a

99% stake in South American Lithium Co. S.A. Cerrada (Salico) in December 2009. The

remaining 1% in the company is held by a Chilean nominee. Prior to its purchase by

FPC, Salico controlled licences covering nine salars in Region III of Chile. FPC acquired

licences covering two more salars, the Salar de Maricunga and Salar de Pedernales in

May 2012, after signing an agreement with Sociedad Gareste Ltd. The May 2012,

agreement saw FPC receive 100% control of the Salar de Pedernales and an option to

gain an 80% in the Salar de Maricunga project through a series of development and

financing stages. Salars which are covered by FPCs licences include:

Lagunas Jilgueros 11km2

Laguna Brava 11km2

Salar Igorado 6km2

Salar de Wheelwright 12km2

Laguna Escondida 9km2

Rio de la Sal / Llanta 30km2

Laguna Verde 34km2

La Laguna 4km2

Salar Piedra Parada 36km2

Salar de Maricunga 12km2

Salar de Pedernales 51km2

Total 216km2


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The Laguna Verde licence area is FPCs most advanced project with an inferred

resource estimation supported by technical reports. Laguna Verde is located 190km

from Copiapo at an elevation of 4,320m. The resource estimation using an average

brine concentration of 212.4ppm lithium and 4,881ppm potassium was 519,900t LCE

and a further 4.2Mt KCl. FPC plan to improve the resource estimation at Laguna Verde

to a measured and indicated category during 2012, along with the initiation of a PFS

expected to be completed in 2013. If the PFS returns favourable results, FPC will look

to design and attain necessary permits for a 10,000tpy LCE plant to process surface

brines and extend their exploration to deep brines.

In September 2011, FPC signed an agreement with POSCAN, the Canadian subsidiary

of South Korean steel producer POSCO. In the agreement POSCAN purchased a 10%

share in FPC for CAN$1.43M. POSCAN will also finance and construct a pilot plant or

R&D facility at one of FPCs Chilean salar projects for the production of lithium

carbonate.

5.9.9 CODELCO

State owned Chilean copper miner CODELCO holds lithium claims at the Maricunga and

Pedernales salars in Region III of Chile. The claims were awarded prior to 1979 and can

be exploited with only presidential approval, by-passing the need for a CEOL.

CODELCO have declared an interest in exploiting their lithium assets and are looking to

form a partnership agreement with companies already involved in the lithium industry. In

March 2013, four offers of co-opearation from interested parties had been been put

forward, which CODELCO will assess during Q2 2013. CODELCO has stated that it has

the potential to begin lithium production at one of its lithium assets by end-2016,

although this is remains speculative.

5.9.10 Mammoth Energy Group Inc.

Mammoth Energy Group is an exploration and development company focused on

strategic and energy resources. Since its formation, Mammoth has acquired additional

concession areas through its 100% subsidiary Compania Lithium Investments Limitada

of Chile (CLIL). In 2011, CLIL purchased concessions at four new projects in addition

to the concessions held at the Salar de Marciunga. The company now holds

concessions covering five projects in northern Chile.

Salar District Area (km2) Brine Concentration

Salar de

Maricunga

Copiapó Province,

Region III

35 -

Salar de Luco El Loa Province,

Region II

10 500-750ppm Li

Salar de Pujsa El Loa Province, 19 500-750ppm Li


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Region II 9,000-10,000ppm K

Laguna Paguisa Parinacote Province,

Region I

25 -

Laguna Lagunilla Tamarugal Province,

Region I

10 -

5.9.11 Lomiko Metals Inc.

Lomiko Metals wholly own eight concessions covering the Salar de Aguas Caliente brine

project located in Region III of Chile. In total, nine concession areas span the total

surface area of the Salar de Aguas Caliente. The ninth concession is owned by SQM

(Section 5.9.4) covering 4km2. The Lomiko Metals concessions were purchased in June

2009 and span 19km2 of the salar.

5.9.12 Errázuriz Lithium

Errázuriz Lithium formed part of the NX UNO de Peine group along with Samsung SDI

and Minera Copiapó who participated in the failed CEOL bidding process in September

2012. The company is a private enterprise owned by the Errázuriz family and holds

concessions covering roughly 700km2 of land in Chile.

5.9.13 Exports of litihum from Chile

In 2012, Chile exported just under 56,000t of lithium carbonate with the main

destinations for exports being South Korea, Japan and China. Since 2006, exports of

lithium carbonate to South Korea have increased 36.3%py and China 19.3%py as strong

demand has been driven by growth in these countries lithium ion battery industries

(Table 94). Exports to Japan fell in 2012 most likely a result of of on-going disruption to

battery production along the Fukushima prefecture coast and an unfavourable currency

exchange rate. As Asian imports of lithium carbonate from Chile have increased

dramatically, exports to the USA have been in decline since the mid-2000s, and

recovery after the global economic crisis has been relatively slow.


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Table 94: Chile: Exports of lithium carbonate by destiatnion, 2004 to 2011

2004 2005 2006 2007 2008 2009 2010 2011 2012

U.S.A 12,311 12,073 9,294 8,258 8,941 2,971 2,741 5,209 5,467

Japan 7,965 7,855 9,708 10,917 11,024 5,850 10,939 10,824 9,387

Belgium 7,850 7,233 5,593 5,024 4,883 2,633 5,414 5,029 7,695

China 5,512 3,754 4,176 2,964 2,960 1,393 4,689 7,230 12,053

Germany 2,748 5,007 4,295 5,420 5,886 2,585 4,727 4,370 3,537

S. Korea 962 1,863 2,300 3,609 5,366 4,832 8,797 11,273 14,737

Italy 1,228 1,295 890 2,464 676 760 1,012 1,240 420

Spain 284 440 552 556 828 647 1,134 1,422 922

Others 1,286 2,312 1,875 1,915 2,023 774 1,443 1,652 1680

Total 40,145 41,832 38,682 41,125 42,586 22,443 40,896 48,248 55,898

Source: GTIS

As SQM began production of lithium carbonate in 1996, at the time considered to be an

unimportant by-product of potash production, prices fell sharply from around US$3,000/t

to below US$2,000/t. Sub-US$2,000/t prices were maintained until 2005, when growth in

demand for lithium especially from the lithium battery industry began to accelerate

driving up prices. Although Chilean lithium carbonate prices peaked in 2009, export

volumes from SQM and Rockwood fell by 40% and 25% respectively, as a result of

financial uncertainty caused by the global economic downturn. To assist recovery in

lithium demand in 2010, SQM and Rockwood implemented a 20% price reduction for

lithium carbonate to approximately US$4,200/t (Table 95). Prices however are expected

to return to pre 2009 levels (>US$5,000/t) in 2012, as Rockwood Lithium has announced

a US$1,000 price increase across its entire lithium salt product range.

Table 95: Chile: Litihum carbonate export volume, value and unit price by company,

2005 to 2011

Tonnage (t) Total Value (US$M)

Unit Value (US$/t)

ROCK SQM Total ROCK SQM Total ROCK SQM Total

2005 16,018 25,814 41,831 30.7 56.6 87.3 1,916 2,192 2,086

2006 14,917 23,765 38,682 41.9 79.1 121.0 2,808 3,328 3,128

2007 16,615 22,710 39,325 62.1 120.8 182.9 3,736 5,320 4,651

2008 18,074 16,632 34,706 79.3 96.4 175.7 4,386 5,799 5,063

2009 10,217 12,226 22,443 49.6 65.2 114.8 5,271 5,330 5,115

2010 15,239 25,599 40,838 63.7 110.6 174.3 4,179 4,320 4,267

2011 22,704 29,900 52,604 89.7 131.5 221.2 3,950 4,399 4,205

Source: Banco Central de Chile Notes: ROCK – Rockwood Litihum

Table 96 shows lithium chloride exports from Chile by country, which in 2012 totalled

4,123t. Exports of lithium chloride are predominantly from Rockwood Litihium, although

SQM exported 300t of lithium chloride in 2007. After falling between 2005 and 2007,

lithium chloride prices have remained stable, with a slight price increase observed in

2011 to US$ 2,451/t. Prices increased in 2012 by just under US$1,000/t as Rockwood

Lithium implemented its planned lithium salts price increase.


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Table 96: Chile: Lithium chloride exports by destination, 2004 to 2012

2004 2005 2006 2007 2008 2009 2010 2011 2012

Gross Weight (t)

U.S.A 98 767 919 3,980 4,436 2,323 3,192 3,724 3,078

China - - - - 280 - 114 501 703

Others 1 - 28 300 - - 165 78 342

Total 99 767 947 4,280 4,716 2,323 3,471 4,303 4,123

Value (000 US$)

U.S.A 254.9 2,454.7 2,831.9 8,785.1 9,655.0 5,088.6 6,839.4 9,273.8 10,304

China - - - - 1,357.6 - 250.5 916.7 2,316

Others 2.7 - 190.3 1,772.2 8.4 - 468.2 357.9 1,167

Total 257.7 2,454.7 3,022.1 10,557.3 11,021.0 5,088.6 7,558.1 10,548.3 13,787

Unit Value (US$/t)

U.S.A 2,602 3,198 3,082 2,207 2,177 2,190 2,143 2,490 3,348

China - - - - 4,849 - 2,197 1,831 3,294


Exports of lithium hydroxide totalled 5,303t in 2012, increasing 363t from the previous

year (Table 97). SQM’s Salar de Carmen processing facility is the only producer of

lithium hydroxide in Chile at the, which began production in 2005. The main destinations

for SQM’s exported lithium hydroxide in 2012 were Belgium, the USA and South Korea.

The majority of exports to Belgium are redistributed to other European destination from

SQM’s warehouse in the country. The average selling price of lithium hydroxide after

reaching a peak of US$6,784/t in 2008 decreased to US$4,948/t in 2010 before

increasing back to US$5,368/t in 2012.


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Table 97: Chile: Lithium hydroxide exports by destination, 2004 to 2012

2004 2005 2006 2007 2008 2009 2010 2011 2012

Gross Weight (t)

Belgium - 20 1,767 2,159 2,559 1,765 2,432 2,179 1957

U.S.A - 91 784 773 836 455 944 1,272 1742

India - 20 193 210 276 326 807 473 53

S. Korea - - 40 93 62 111 314 417 651

Others 15 18 719 787 800 556 688 601 901

Total 15 149 3,500 4,021 4,533 3,214 5,184 4,940 5,303

Value (000 US$)

Belgium - 94 8,749 13,664 17,408 10,733 12,049 11,267 10,180

U.S.A - 391 3,721 4,989 5,525 2,471 4,570 7,036 9,685

India - 94 917 1,288 1,854 1,856 3,970 2,423 271

S. Korea - - 191 582 419 648 1,555 2,168 3,389

Others 52 80 3,673 5,833 5,544 3,379 3,504 3,184 4,944

Total 52 658 17,251 26,355 30,751 19,087 25,647 26,079 28,469

Unit value (US$/t)

Belgium - 4,695 4,952 6,329 6,803 6,080 4,954 5,172 5,201

U.S.A - 4,308 4,747 6,457 6,608 5,431 4,841 5,530 5,558

India - 4,692 4,761 6,135 6,713 5,686 4,920 5,121 5,152

S. Korea - - 4,825 6,246 6,743 5,828 4,959 5,201 5,207


5.10 China

China has grown to become one of the largest markets for lithium compounds and

mineral concentrates, contributing around a third to global lithium demand in 2012.

Existing spodumene mines in Sichuan, Jiangxi and Xinjiang provinces have been a long-

term domestic source of lithium mineral concentrates, and new deposits are being

developed in Hunan and Henan provinces. Lithium brine operations are typically located

in western and south-western China, within Qinghai and Tibet provinces.

The rapid ascendency of the Chinese mineral conversion industry, processing domestic

and imported supplies of spodumene concentrates, has significantly altered the global

lithium supply chain, especially for spodumene concentrates, lithium carbonate and

lithium hydroxide.


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5.10.1 Chinese reserves of lithium

There are conflicting views on China’s contained lithium reserves. Roskill estimates

Chinese reserves and resources to be 27.14Mt LCE, with 21.29Mt LCE contained within

lithium brine deposits and the remaining 5.85Mt LCE contained within hard-rock lithium

deposits.

Chinese lithium reserves are estimated by the USGS to be 18.63Mt LCE, the second

largest national reserve behind Chile. An estimation of lithium resources, also

undertaken by the USGS in 2012, reported 28.7Mt LCE.

Between 2008 and 2010, a number of reserve estimations were produced by SinoLatin

Capital, ResearchInChina and Mr. R. Keith Evans, which reported reserves of between

14.3Mt-17.8Mt LCE.

5.10.1.1 Lithium Mineral Reserves

Chinese deposits of lithium minerals are almost exclusively located within four provinces,

Sichuan, Jiangxi, Hunan and Xinjiang. The majority of lithium mineral operations are

located in the Aba and Jinchuan prefectures of Sichuan province, representing 43% of

the total mineral reserves being mined in 2012. Spodumene-bearing pegmatites in the

province are generally associated with two large granitic intrusives located at Kangding

and Jinchuan in the western Sichuan Plateau.

In 2012, those Chinese lithium hard rock projects in operation are estimated to contain

reserves of 4.2Mt LCE (Table 98). A further 1.7Mt LCE are estimated to be contained

within deposits being explored and developed.

Xiajika is widely considered one of largest spodumene deposits in the world with

estimated mineral reserves of 2.9Mt LCE. In 2012, GanZi Rongda (Section 5.10.5.3)

which owns the Xiajika property held concessions covering only a small area of the

spodumene-pegmatite deposit. GanZi Rogda’s concessions are estimated to contain

reserves of 73,700t Li, although the company has a first refusal for mining rights in

surrounding claims.


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Table 98: China : Estimated resources and reserves of both lithium mineral and brine

operations and projects

Company Mine/Project Mine/

Deposit Type

Province Resources & Reserves

(t Li) (t LCE)

In Operation

Hunan Pingjiang Tianfeng Pingjiang Nonmetal

Mine

Min. Hunan 42,000 223,600

Yichun Huili Yichun Huili Mine Min. Jiangxi 325,0001 1,730,000

1

Jiangxi Western Heyuan deposit Min. Jiangxi 29,500 157,000

CITIC Guoan West Tajiner Bri. Qinghai 495,500 2,637,500

Qinghai Salt Lake East Tajiner Bri. Qinghai 1,300,000 6,919,900

Qinghai Lanke Chaerhan/Germu Bri. Qinghai 500,000 2,661,500

Fujian Huamin Taiyanhe Village Mine Min. Sichuan …

Minfeng Lithium Dilaqui, Gaoerda &

Lamasery

Min. Sichuan 10,200 54,300

GanZi Rongda Xiajika Mine Min. Sichuan 73,700 392,300

Sichuan Ni & Co Maerkang Mine Min. Sichuan 225,000 1,197,700

Sichuan Aba Guanyinqiao Min. Sichuan …

Sichuan Hidili Lijiagou Mine Min. Sichuan 65,600 349,200

Tibet Mineral Zabuye Bri. Tibet 1,560,000 8,303,900

Xinjiang Non-Ferrous Kokotay mine Min. Xinjiang 32,000 170,300

Sub total 4,658,500 24,797,200

In Development

Lushi Guanpo Lushi Min. Henan 93,000 495,000

Daoxian County Daoxian Min. Hunan 125,000 665,400

Tianqi Lithium Cuola Min. Sichuan 110,000 585,500

Tibet Sunrise Dangxiongcuo Bri. Tibet 167,000 888,900

Sub total 495,000 2,634,900

Total 5,153,500 27,432,100 Source: Company data and provincial government data Notes: 1-Total reserve for Jiangxi province according to Sterling Group Ventures, 2004 Notes: Min. = Mineral

Bri.I = IBrine

5.10.1.2 Lithium Brine Reserves

In comparison to lithium mineral deposits, lithium brine deposits in China are typically

much larger. Qinghai and Tibet provinces are the main centres for lithium brine

extraction in China, with several companies already in operation or developing projects

(Table 98).

The Qaidam basin in Qinghai province contains the most abundant resources of lithium

in China. Saline lakes in this region are generally characterised by their high

magnesium to lithium ratios which, until new technology was developed to process them,

inhibited their development. East Taijiner and West Taijiner are the two largest


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operations within the basin, containing combined resources and reserves of 2.86Mt Li

(15.22Mt LCE).

Tibet is the only other province to contain a producing lithium brine plant in China

located at the Zabuye Salt Lake and operated by Tibet Lithium (Section 5.10.4.1). Tibet

Sunrise is developing a lithium brine project at the Dangxiongcuo salt lake which is

estimated to contain over 1.0Mt Li (5.32Mt LCE). Overall, lithium brine projects currently

in operation in China have a combined resource and reserve estimation of over 3.8Mt Li

(contained 20.2Mt LCE).

5.10.2 Production of lithium

Chinese production of lithium minerals in 2010 was estimated to be 81,000t, an increase

from the previous year after a number of producers increased output and new producers

entered production. In 2012, production of lithium minerals was estimated to have

increased to 100,000t gross weight as projects which entered production in the previous

two years began ramping up production.

Until 2004, Chinese lithium production from brines was negligible. In 2004, production

from the Zabuye and West Taijiner saline lakes began, although production was not

increased to significant levels until 2008. Lithium brine production peaked in 2009 at

7,000t LCE, as one major producer in the Qaidam basin area increased production to

4,000t LCE. Since 2009, lithium production from brines has fallen back to around 3,000t

LCE, as complications with brine chemistry and inclement weather conditions have

affected production.

Total lithium production has continued to increase at a rate of 16%py between 2003 and

2012, from 4,328t LCE to more than 16,300t LCE (Table 99).

Table 99: China: Production of lithium, 2003 to 2012

Brines (t Li2CO3) Mineral (t gross weight) Total Prod. (t LCE)

1

2003 … 35,000 4,328

2004 100 36,000 4,551

2005 200 37,000 4,775

2006 300 37,000 4,875

2007 500 38,000 5,199

2008 2,500 40,000 7,446

2009 7,000 62,000 14,666

2010 5,500 81,000 15,516

2011 5,000 91,000 16,252

2012 4,000 100,000 16,365 Source: Lithium minerals – BGS (2003-2008), Roskill estimates (2009-2012) Brine – Roskill estimates Notes: 1-Based on an average Li2O content of 5.0% in lithium minerals produced


Roskill


5.10.2.1 Mineral Production

The mining of lithium minerals in China began as early as the mid-1950s with the first

deposit to be exploited being the Li-Be-Nb-Ta pegmatite deposit at Koktokay in Xinjiang.

Lithium concentrates mined at Kokotay during this early period were mainly supplied to

the former Soviet Union. Since then, several other lithium mines have been opened,

and dressing, smelting and processing plants built, mainly in Sichuan, Jiangxi and

Hunan.

Sichuan became the second largest producer of lithium minerals during the late 1980s,

as Sichuan Ni&Co Guorun (Section 5.10.6.4) and Sichuan Aba Guangsheng (Section

5.10.6.2) brought both the Maerkang and Guanyinqiao spodumene mines into

production. Sichuan has since become the largest spodumene producing province in

China after the mineral potential of the Aba and Jinchuan prefectures was further

explored and developed by other mining companies such as Minfeng Lithium (Section

5.10.6.3) and GanZi Rongda (Section 5.10.5.3). As a domestic supply of lithium mineral

concentrates became more available, a number of lithium processing plants became

established in Sichuan, producing lithium compounds initially from both local, and later

imported from sources of spodumene.

Growth in demand for lepidolite concentrates by the glass and ceramic industries in

China resulted in the Yichun Ta-Nb-Li mine in Jiangxi, a lepidolite deposit, upgrading its

flotation plant twice between 1987 and 1989. Jiangxi is currently the largest producer of

lepidolite concentrates in China. The Yichun deposit is currently worked by Yichun Huili

Industrial (Section 5.10.5.2).

In 2011, Capacity for the production of lithium minerals in China was estimated at over

30,500t LCE, equivalent to approximately 205,000t 6% Li2O spodumene concentrate.

Actual production in 2011 however was much less, estimated at just over 8,000t LCE

(Table 100).


Roskill


Table 100: China: Producers of lithium minerals, 2011 to 2012

Company Location Product 2011

production

2012

production

2012

capacity

(t LCE) (t LCE) (t LCE)

In Operation

Fujian Huamin Taiyanhe Village Mine,

Sichuan

Spodumene 600 1,500 4,000

Minfeng Lithium Dilaqiu, Gao’erda &

Lamasery, Sichuan

Spodumene 100 400 3,000

GanZi Rongda Xiajika Mine, Sichuan Spodumene 2,000 3,000 20,000

Sichuan Ni & Co Maerkang Mine,

Sichuan

Spodumene 1,000 1,600 3,600

Xinjiang Non-

Ferrous

Kokotay mine, Xinjiang Spodumene 500 500 2,200

Jiangxi Western Heyuan deposit Spodumene 3,000 5,000 8,000

Sichuan Aba Guanyinqiao Spodumene 1,000 1,000 1,500

Yichun Huili Yichun, Jiangxi Lepidolite 100 100 1,225

Hunan Pingjiang

Tianfeng

Pingjiang, Jiangxi Lepidolite 200 200 2,000

Sichuan Hidili Lijiagou Mine, Sichuan Spodumene … 1,500 3,600

Total 8,500 14,800 49,125

In Development

Tianqi Lithium Cuola Mine, Sichuan Spodumene … … 15,0001

Lushi Guanpo Lushi, Henan Lepidolite … … …

Daoxian County Daoxian, Hunan Spodumene … … …

Total … … 15,0001

Source: Company data, Roskill estimates Notes: 1-Planned capacity upon production start-up

5.10.2.2 Brine Production

Development of Chinese lithium brine projects only began in the late 1990s with the

production of minor amounts of lithium chloride at Qinghai Salt Lake’s potash plant.

Research and exploration into lithium extraction from saline lakes in Tibet and Qinghai

provinces however began much earlier in the 1980s, although difficulties with the altitude

and high magnesium content of the brines meant new processing techniques needed to

be developed before brines could be processed commercially.

Between 2004 and 2007, lithium production from brine deposits was negligible. A ramp

up in production by CITIC Guoan at the West Taijiner salt lake (Section 5.10.4.2) in 2008

saw lithium brine production exceed 1,000t LCE for the first time. Lithium carbonate is

currently produced at three sites in Qinghai province and the Zabuye salt lake in Tibet

province. In 2012, capacity for lithium production from brines in China is 43,750t LCE,

but actual production is estimated to be approximately 3,000t (Table 101). Expansions


Roskill


to existing capacity and the development of the Dangxiongcuo salt lake in Tibet Province

are expected to increase capacity to more than 70,000tpy LCE, however the timescale

for these expansions to be completed is unclear.

The location of brine deposits in China is problematic from both the transportation and

processing perspectives. The high altitude of the Tibet plateau limits production during

cold periods and the distance from the brine deposits in the west of China to processors

and customers in the east of China negatively impacts on product costs. In addition,

lithium carbonate produced from brines in Qinghai is not thought to be sufficient enough

in quality for battery purposes because of high chlorine and sodium content.

Table 101: China: Production and capacity of Chinese lithium brine operations, 2011

Company Location 2012 production

(t LCE)

2012 capacity

(tpy LCE)

Planned capacity

expansion (tpy

LCE)

In Operation

CITIC Guoan West Taijiner 1,300 5,000 20,000

Tibet Zabuye Zabuye 2,300 3,750 18,000

Qinghai Salt Lake East Taijiner - 200 10,000

Qinghai Lanke Chaerhan/Germu 500 10,000 17,000

In Development

Tibet Sunrise Dangxiongcuo … … 5,000

Total 4,100 18,950 70,000 Source: Company data, section 5.10.4

5.10.2.3 Lithium Chemicals and Metal Production

Prior to the 1970s, China produced lithium chemicals mainly for military uses at 20

plants, 18 of which processed lithium chemicals from a spodumene concentrate with the

remaining two plants using a lepidolite concentrate. The emergence of low cost lithium

brine operations in South America, and a resultant fall in prices impacted heavily on

production of lithium chemicals in China, resulted in a number of plants closing down or

reducing their output. By 2003, only two plants, the Xinjiang Lithium Salt Plant owned by

Xianjiang Non-ferrous (Section 0), and Sichuan Tianqi Lithium Industry (Section

5.10.7.1), remained in operation with a combined capacity to produce 10,000tpy LCE.

The main centre for lithium mineral conversion in China is Sichuan province, because of

the availability of domestic lithium raw materials and local expertise. Other lithium

conversion plants are located in Jiangxi and Xinjiang, again for the same reasons, and in

Jiangsu and Fujian provinces because of their proximity to port facilities and bulk-

transport links (Figure 27).


Roskill


Figure 27: China: Location of mineral conversion and lithium chemical/metal plants in

China, 2012

Source: Company Data, Section 5.10.4 to 5.10.6.1 Notes: Red markers = location of lithum conversion plants Orange markers = location of lithium chemical plants

Although China still produces lithium mineral concentrates from domestic sources,

imports of spodumene concentrate from Talison Lithium (Section 5.3.1) in Australia are

the main source of lithium raw materials for mineral conversion plants. Spodumene

produced by Talison Lithium is thought to be of better quality and is used for production

of battery grade lithium carbonate and hydroxide especially. In 2012, Chinese mineral

conversion plants held a combined capacity to produce over 83,000t LCE, although only

about half of this production capacity was realised (Table 102).


Roskill


Table 102: China: Mineral conversion plant production and production capacity, 2012

Company Location

Production

2011

(t LCE)

Production

2012

(t LCE)

Production

Capacity

(t LCE)1

Tianqi Lithium Shehong and Ya’an,

Sichuan

11,000 14,000 17,000

Galaxy Resources Zhagjiagang, Jiangsu … 1,454 17,000

Jiangxi JiangLi (Sichuan Ni & Co) Fenyi County, Jiangxi … … 7,500

Sichuan Ni&Co Chengdu, Sichuan 4,000 5,000 7,000

Ganfeng Lithium Xinyu, Jiangxi 5,000 5,000 6,500

China Non-Ferrous Metal Ürümqi, Xinjiang Uyghur 4,000 4,000 6,000

Sichuan Aba Wenchuan, Sichuan 3,000 3,000 5,000

Sichuan Changhehua Dujiangyan city, Sichuan 3,000 3,000 5,000

General Lithium Haimen, Jiangsu 4,000 4,000 5,000

Minfeng Lithium Wechuan, Sichuan 1,500 2,000 3,000

Sichuan State Lithium Wenchuan, Sichuan … … 2,500

Jiangxi Western Hongjin Industrial Park,

Ganxian

500 1,000 2,000

Total 36,000 42,454 83,500

Source: Section 5.10.6.1 & 5.10.7 Notes: 1-Includes production of other lithium compounds such as lithium hydroxide and chloride measured in terms of

lithium carbonate equivalent

The overall capacity to produce lithium metal in China is estimated to be approximately

1,400t in 2012, mainly due to the introduction of lithium metal production at some larger

lithium compound manufacturers (Table 103).

Table 103: China: Producers of battery grade lithium metal, 2012

Company Location Total

capacity (tpy Li)

BG capacity (tpy Li)

Specification

Ganfeng Lithium Xinyu, Jiangxi, China

650 100e

>99.9% Li, <200ppm Na, <50ppm K, <200ppm N, <200ppm Ca, <50ppm Cl

Jianzhong Lithium1

Yibin, Sichuan, China

300 100 …

Xinjiang Haoxing Urumqi, Xinjiang, China

150 501 >99.9% Li, <200ppm Na,

<200ppm Ca

Jiangsu Hongwei Taizhou, Jiangsu, China

200 100e >99.9% Li, <200ppm Na,

<200ppm Ca

Kunming Yongnian Lithium

2

Kunming, Yunnan, China

50e 18 …

Baijerui Advanced Materials

Wuhan, Hubei, China

50e 25 >99.9% Li, <200ppm Na, <50ppm K, <300ppm N,

<200ppm Ca, <60ppm Cl

Total 1,400 844

Source: Company data, Roskill estimates (e), Materials Handbook Notes: 1-Subsiduary of Jianzhong Nuclear Fuel 2-Subsiduary of CHINALCO


Roskill


Lithium metal is mainly produced as part of a range of lithium products by lithium

compound manufacturers such as Ganfeng Lithium with a production capcity of 650t Li

metal and Jiangzhong Lithium with a capacity to produce 300t Li metal in 2012. Other

companies with capacity to produce lithium metal include Xinjiang Haoxing, Jiangsu

Hongwei and Kunming Yongnian Lithium. As lithium metal production methods have

been refined by the more advanced chemical companies, a greater portion of high purity

>99% Li metal has been produced, used in pharmaceutical and certain chemical end

uses.

5.10.3 Chinese trade in lithium

China is a net importer of lithium products, with South America being the main source of

lithium compounds and Australia the main source of lithium mineral concentrates.

Although China is a major producer of lithium compounds from mineral concentrates, it

remains reliant of imports of lithium carbonate. Between 2005 and 2009, imports of

lithium carbonate were declining at around 23%py as production from lithium brine

producers and mineral converters was able to increasingly satisfy domestic demand.

Strong growth in Chinese demand for lithium compounds since 2009 has caused

imports to rebound, increasing 85%py between 2009 and 2011. In 2012, Chinese

imports of lithium carbonate exceeded 13,000t lithium carbonate, more than double the

tonnage imported by China in 2006 (Table 104). Exports of lithium carbonate in 2011

were primarily to the USA (40%), Japan (19%), Singapore (9%) and South Korea (7%).

Chinese exports to Singapore in 2011 are believed to be anomalous, with 500t shipped

back to China in 2012.

Table 104: China: Imports and exports of lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Import

Chile 4,833 4,487 3,266 3,363 1,670 4,991 7,701 13,156

Argentina 2,444 1,239 371 858 674 1,354 536 396

Japan 252 31 110 1 7 25 2 12

USA 838 428 3 2 2 3 1 21

Other 206 180 81 82 36 25 9 37

Total 8,572 6,365 3,832 4,306 2,389 6,398 8,250 13,622

Export

USA 1 2 8 18 60 9 2,129 972

Japan 52 1,647 725 629 678 1,248 1,030 729

Singapore - - 3 1 68 4 501 1

S. Korea 214 147 191 143 137 229 380 282

India 138 319 313 99 107 178 249 46

Netherlands 204 136 549 246 149 205 233 149

Other 755 927 1,316 1,356 798 783 841 794



Roskill


The Chinese mineral conversion industry is heavily reliant on imports of lithium mineral

concentrates, which composed approximately three quarters of the total volume of raw

materials used by mineral converters in 2012.

Lithium chloride is primarily imported by Chinese companies and converted into lithium

metal or other lithium compounds. After increasing between 2005 and 2009, reaching a

peak of 7,639t in 2009, imports of lithium chloride fell sharply to around 2,000t in 2010

as one consumer switched to lithium chloride brine feedstocks, and imports have

remained below 2009 levels since (Table 105). After a drop in exports during 2008,

exports of lithium chloride have since shown an overall increase of 22.5%py, with the

main markets for Chinese lithium chloride being the USA, the Netherlands and Israel in

2012.

Table 105: China: Imports and exports of lithium chloride, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Import

Argentina 1,664 1,762 2,720 4,196 1,820 3,753 1,520 1,536

Chile 158 113 2,513 3,261 - 256 742 1,132

India 0 41 49 136 194 200 280 9672

Other 6 234 48 46 14 32 19 1512

Total 1,827 2,149 5,330 7,639 2,028 4,241 2,561 2,753

Export

USA 66 100 35 22 23 22 25 96

Netherlands 86 87 67 23 25 36 49 57

France - - - - 9 27 35 27

S. Korea 6 22 20 16 16 13 30 44

Israel - - 5 20 17 30 22 47

Other 99 103 125 76 98 117 98 83

Total 258 314 251 157 189 245 260 353 Source: GTIS

Unlike the other commonly traded lithium compounds, China is a net exporter of lithium

hydroxide, importing only 19t in 2011. This is likely caused by the availability of

domestic lithium hydroxide produced by a number of mineral conversion plants

predominantly in Sichuan, Jiangxi and Jiangsu provinces. Exports of lithium hydroxide

have fluctuated significantly between 2005 and 2011 falling as low as 1,300t in 2006 and

peaking at 4,400t in 2011. The main markets for Chinese lithium hydroxide are India,

The Netherlands, South Korea and Japan, which were the destination for approximately

52% of total exports in 2011. Lithium oxide is also exported and imported by China in

minor amounts, typically for use in chemical applications.


Roskill


Table 106: China: Imports and exports of lithium hydroxide, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports Chile - 3 62 10 1 2 1 151

Russia - - - - - - - 120

USA 162 30 115 46 6 21 11 10

Other 18 16 17 23 15 14 7 13

Total 180 50 194 78 22 37 19 293

Exports India 372 227 1,062 984 331 340 1,289 682

Netherlands 120 192 454 512 171 177 439 392

S. Korea 39 49 127 86 153 194 319 460

Japan 98 217 268 117 120 311 250 339

Other 943 694 2,072 1,177 1,172 1,434 2,080 1,569


Table 107: China: Imports and exports of lithium oxide, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports Taiwan - - 11 25 - 9 39

1 229

1

S. Korea - 40 - - - - 17 -

USA - - - - - 2 - 2

Other 2 - - 15 30 - - -

Total 2 41 11 41 31 12 57 231

Exports S. Korea 1 2 8 1 1 - 8 15

Indonesia - - - - - - 2 4

India - - 5 1 1 - - 4

Other 1 - - - - - - -

Total 2 2 13 2 2 - 10 23 Source: GTIS Note: 1-believed to include incorrectly labelled imports of lithium battery cathode materials

5.10.4 Chinese lithium brine producers

5.10.4.1 Tibet Lithium New Technology Development Co. Ltd.

Tibet Lithium New Technology Development (Tibet Lithium) was formed in 1999 as a

joint venture between Geo Science Research Institute of China and the Tibet Mineral


Roskill


Development Co. Ltd. Tibet Minerals own a 50.72% share of the joint venture with other

major shareholders including BYD Co. Ltd. who control an 18% share in the company.

The company exploits the Zabuye Salt Lake located in the north of Zhongba County in

Tibet province, China. The company also undertakes the production and refining of

lithium compounds via a number of subsidiaries.

The Zabuye salt lake sits at an altitude of 4,421m and covers an area of 247km2 which is

split into the northern area (98km2) composed of a surface brine lake and a southern

area (149km2) composed of a semi-dry salar. The saline lake has an estimated

resource of more than 8.3Mt LCE. Brine at the lake shows a lithium concentration of up

to 1,525ppm Li, with a low magnesium to lithium ratio of <0.1:1. High concentrations of

boron and potassium in the brines however have affected the processing of the brine.

The Zabuye salt lake is classed as a carbonate-type brine as opposed to the sulphate-

type brines found in other Chinese salars in the Qaidam basin.

Tibet Lithium began lithium carbonate production at the Zabuye plant in 2004 after a

total investment of RMB2Bn (US$300M) in the project. The plant has a reported

capacity to produce 5,000tpy of crude lithium carbonate (75% purity). Poor

infrastructure and supply of utilities at the Zabuye plant limit lithium carbonate production

and significant investment would be needed to allow for increased production and

ultimately increased capacity. The crude lithium carbonate produced at Zabuye is

transported 3,300km via Qinghai province to a separation plant in Baiyin, Gansu

Province. Fuzhou Zabuye Lithium Industry located in Fujian province and Baiyin

Zabuye Lithium Industry located in the north of the Gansu Province, are both

subsidiaries of Tibet Lithium New Technology Development. Baiyin Zabuye processes

crude lithium carbonate concentrates from Tibet Lithium into finished products including

lithium carbonate and hydroxide. The Baiyin Zabuye plant has a capacity to process

7,500tpy industrial grade (>75% Li2CO3) lithium carbonate.

In 2010, Tibet Minerals announced production of 2,249t of lithium carbonate and 717t of

lithium hydroxide. A fall in the company’s 2010 gross profit margin from the previous

year was put down to production of lower grade lithium concentrate, lower plant

throughput and increased processing costs. Production is estimated to decrease by

approximately 10% in 2012 based on production figures in the first half of 2012 (Table

108).

Table 108: Tibet Lithium New Technology Development: Lithium production,

2010 to 2012e

Production 2010 2011 2012e

Lithium Carbonate (t) 1,479 2,063 2,400

1

Lithium Hydroxide (t) 452 648 Source: Tibet Minerals Annual Reports Notes: e-estimated from January to June 2012 data

1-Hydroxide and carbonate production not differentiated

In April 2011, Tibet Minerals raised RMB1.21Bn (US$187M) through a non-public

offering to eight investors. Tibet Lithium was assigned US$15.5M of the raised capital to

increase production capacity at the Zabuye operation to 18,000tpy LCE and improve


Roskill


infrastructure at the operation. The remainder of the raised capital will be used by Tibet

Mineral’s other subsidiaries including the separation plant at Bayin which intends to

increase its capacity to 10,000tpy of lithium products, including 5,000tpy battery grade

lithium carbonate, 2,000tpy technical grade lithium carbonate and 3,000tpy lithium

hydroxide.

5.10.4.2 Qinghai CITIC Guoan Technology Development Co. Ltd.

Qinghai CITIC Guoan Technology Development (Qinghai CITIC) is a wholly owned

subsidiary of the CITIC Group and operates at the West Taijinar (Xitai) saline lake in the

Qaidam Basin, China. In 2003, Qinghai CITIC signed an agreement with the Qinghai

provincial government to develop salt lake resources in the Qaidam Basin and invested

RMB2.3Bn (US$335M) in establishing production facilities.

The Xitai salt lake, which covers an area of 82.4km2, is estimated to contain reserves of

3.04Mt of lithium chloride (2.68Mt LCE), along with 26.56Mt of potassium chloride,

1.63Mt of boron trioxide and significant amounts of magnesium and sodium chloride.

Brines in the Qaidam basin contain approximately 310ppm Li and a lithium to

magnesium ratio of 1: 65, which initially hindered the extraction and processing of lithium

compounds. In 2004, the Bluestar Changsha Design & Research Institution developed

a technique to pre-treat brine from the Qaidam basin to remove magnesium and enable

the production of high purity lithium carbonate products.

Qinghai CITIC owns a processing plant at the Xitai property which produces lithium

carbonate along with specialist magnesium-potassium fertiliser and potassium chloride

products. The original pilot plant was constructed at the Dongtai saline lake,

approximately 30km east of Xitai. The plant was gradually relocated to the Xitai saline

lake between 2007 and 2010, as Qinghai Salt Lake Industry (Section 5.10.4.3) hold the

mining rights to the Dongtai saline lake. Upgrading of the 500tpy lithium carbonate pilot

plant was completed in August 2006; however production at the plant did not begin until

January 2007. Upon completion, the plant had a reported capacity of 5,000tpy lithium

carbonate which Qinghai CITIC had intended to increase to 20,000tpy lithium carbonate

by 2011, budgeting RMB2.2Bn (US$297.5M) for the necessary development in the

fourth quarter of 2007.

In September 2009, Qinghai CITIC signed an agreement with Chengdu CHEMPHYS

Chemical Co. Ltd to assist in the financing, production and marketing of battery grade

lithium carbonate and construct a new production facility at the Xitai property. The new

plant aimed to produce a minimum of 500tpy of battery grade lithium carbonate in 2010;

however there have been no further developments reported since the initial report in

2009.

As of December 2011, the Xitai plant has a reported capacity of 5,000tpy lithium

carbonate, which Qinghai CITIC plan to increase to 30,000tpy by 2014. Since 2008

however, actual production has not exceeded 4,000t LCE (Table 109). In 2010,

production of lithium carbonate was 3,000t, a substantial drop from the previous year.

Production in 2011 is estimated to have fallen by a third to approximately 2,000t LCE


Roskill


because of flooding in the Qaidam Basin during early 2011 which greatly affected

operations at Xitai. Qinghai CITIC has subsequently invested heavily in flood defence

equipment to prevent future disruptions to lithium carbonate production at the site, but

oputput fell again in 2012 to an estimated 1,300t LCE.

Table 109: Qinghai CITIC: Lithium carbonate production, 2008 to 2012 (tLCE)

2008 2009 2010 2011 2012

Production 600 4,000 3,000 2,000 1,300

Reported Capacity 5,000 5,000 5,000 5,000 5,000 Source: Roskill data

In August 2011, Qinghai CITIC signed an agreement with the Bolivian government to

explore the 2,218km2 Coipasa salt flats located roughly 300km south of La Paz. As part

of the agreement, Qinghai CITIC is to quantify the lithium and potassium reserves

present. If an initial assessment of the salt flats meets expectations, Qinghai CITIC will

work in conjunction with a state owned Bolivian company specifically formed to develop

the countries mineral resources.

5.10.4.3 Qinghai Salt Lake Industry Co. Ltd.

In March 2011, Qinghai Salt Lake Industry Group Co. Ltd. merged with Qinghai Salt

Lake Potash Co. Ltd. in order to prevent the company being disintegrated. The name of

the newly formed company was changed to Qinghai Salt Lake Industry Co. Ltd. in May

2011. Qinghai Salt Lake Industry (QSLI), 74% owned by Western Mining Group,

operates at the East Taijinaier (Dongtai) saline lake in the Qaidam Basin, China. The

company produces industrial and edible salt products from a production facility at the

Dongtai property.

The Dongtai saline lake covers an area of 116km2 and sits at an elevation of 2681m.

The typical water depth of the lake is between 0.60m and 1.0m however a substantial

portion of the brine is held within an aquifer below the surface lake. Lithium content of

the surface brines is typically around 120ppm Li, increasing to 638ppm Li in inter-

crystalline brines in the aquifer. As is characteristic of saline brines in the Qaidam basin,

the magnesium to lithium ratio is relatively high (40:1 to 60:1) when compared to brine

operations in Chile, Argentina and the USA. The Dongtai saline lake property is

operated by QSLI’s subsidiary Qinghai Lanke Lithium Industry (Section 5.10.4.4)

estimated to contain reserves of 1.3Mt Li (7.0Mt LCE).

Production dropped as a result of heavy rainfall and flooding across Qinghai province in

early 2011, which badly affected lithium brine operations in the area. Production in 2012

was <100t as difficulties with brine evaporation and processing continued.

In May 2009, QSLI signed an agreement with Pulead Technology Industry to develop a

10,000tpy lithium battery functional material plant. It also plans to invest RMB5.5Bn

(US$800M) in developing lithium battery materials and Li-ion battery production lines.


Roskill


5.10.4.4 Qinghai Lanke Lithium Industry Co. Ltd.

Qinghai Lanke Lithium (Lanke) is owned by Qinghai Salt Lake Industry (Section

5.10.4.3) and the Beijing Research Institute of Chemical Engineering and Metallurgy.

The company was established in 2007 to extract and process lithium brines from the

Chaerhan saline lake in the Qaidam Basin, China.

The Chaerhan saline lake covers an area of 5,856km2 and sits at an elevation of

2,670m. The area contains 9 surface brine lakes.

Dabu Xunhu

Nanhuo Luxunhu

Beihuo Luxunhu

Senie Hu

Dabiele

Xiaobiele

Xiadabuxum

Tuanjie

Xiezuo

Dabu Xunhu is the largest of the nine lakes with a surface area of 184km2 and depth of

0.6m-1.0m. It sits at the lowest point in the Chaerhan saline lake zone along with

Nanhuo Luxunhu, Beihuo Luxunhu and Senie Hu, into which the other five lakes

eventually inflow. Overall the saline lake zone is fed by six permanent streams and

seven intermittent streams.

Shortly after its formation, Lanke began construction of a 10,000tpy lithium carbonate

plant at Germu. The plant was completed in 2009 producing 400t of lithium carbonate in

that year. The plant uses resin absorption technology to extract lithium and potassium

chloride from the brines. The processing method includes resin absorption, elution,

concentration, membrane separation and carbonation. The production costs of the

lithium carbonate production however are relatively high, estimated at RMB15,000/t

(US$2,250/t in 2010), when compared to other Chinese lithium carbonate producers.

This is because the process has a high consumption of resin, water and power in

separating lithium from brine.

In 2010, the plant produced 1,000t of lithium carbonate. The output of the plant fell in

2011 as a result of heavy rain and flooding which adversely affected lithium brine

evaporation and processing in the Qaidam Basin in early 2011 and throughout the year.

In 2012, production recovered back to levels observed in 2010 at approximately 1,000t

LCE.

Through its parent company Qinghai Salt Lake Industry, Lanke operate the Dongtai

property which began production of lithium carbonate at a pilot plant in October 2007.

The pilot plant passed its Verification and Acceptance tests by the Chinese Academy of

Sciences (CAS) in October 2009, which allows the plant to increase its capacity to

3,000tpy lithium carbonate, 2,500tpy boric acid and 25,000tpy potassium sulphate.

QSLI planned to invest RMB1.67Bn (US$250M) in a new facility which would increase

QSLI’s lithium carbonate production capacity to 17,000tpy in the coming years.


Roskill


In 2009, Lanke signed an agreement with Qinghai Fozhao Lithium Energy Development

Co. Ltd. (Fozhao) to construct a 10,000tpy battery grade lithium carbonate plant. Fozhao

and Lanke merged in July 2010 and continue to work on and develop the planned

battery grade lithium carbonate plant. Fozhao are believed to possess some of the most

advanced technology for the extraction of lithium from brines, called Adsorption Brine

Lithium Extraction (ABLE).

5.10.4.5 Tibet Sunrise Mining Development Ltd.

In October 2011, Tibet Sunrise Mining Development Ltd. (Sunrise) and Beijing Mianping

Salt Lake Research Institute (BMRI) signed an agreement with Micro Express Holdings

Inc. (MEH), a subsidiary of the Sterling Group Ventures Inc. The agreement regarded

the termination of a previous contract between MEH and BMRI signed in September

2005, to co-operatively develop the Dangxiongcuo (DXC) Salt Lake Project in Nima

County, Tibet. Once this agreement has been fulfilled and Sunrise has increased its

registered capital to RMB100M (US$15.7M), Sunrise has confirmed it will pay a single

fee of RMB10M (US$1.57M) to MEH to take control of the DXC deposit and for MEH to

relinquish any claim to interest in the deposit. The RMB10M payment will cover the

RMB6.22M (US$0.98M) costs incurred by MEH during its development of the DXC

project.

Sterling Group Ventures had originally acquired an interest in the DXC deposit during

2005 in an agreement between their subsidiary MEH and BMRI. The agreement

detailed the formation of a JV owned 65% by MEH and 35% by BMRI named Tibet

Saline Lake Mining High-Science & Technology (TSLM), which would continue the

development of the DXC saline lake. Construction costs of US$30M were estimated in

2005 to develop the deposit which at the time aimed to produce 5,000tpy LCE in its first

year of operation.

In July 2007, BMRI attempted to terminate the deal made in 2005 because of a lack of

progress in the approval of TSLM. In July the following year Sterling Group Ventures

signed an agreement with Zhong Chuan International Mining Holding Co. Ltd. of China

to hasten development of the DXC project. In this agreement Zhong Chuan

International Mining Holding would inherit the rights and obligations taken on by MEH in

the 2005 agreement with BMRI.

The DXC brine lake is a carbonate type saline lake covering 55.53km2 with an average

depth of 7.5m. In the 1980s, regional geological exploration undertaken by the Tibet

Regional Geology Brigade identified the saline lake which was followed up by

preliminary exploration in the late 1990s and early 2000s by independent Chinese

geologists and the Mianping Salt Lake Research Institute. A 20,000m2 evaporation

pond was constructed at the site in 2003 of which half was revamped in the following

year due to issues with permeability.

In December 2005, Sterling Group Ventures and MEH commissioned the Tibet

Geothermal Brigade to conduct measurements and in March 2006, Sterling and BMRI

commissioned Zhengzhou Comprehensive Utilisation Institute of China Academy of


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Geology to conduct purification tests for the DXC salt lake rough concentrate. A

qualifying report was completed by BMRI in May 2006, including a mineral reserve

estimation of 1.03Mt of LiCl (Table 110). The estimation was calculated according to the

requirements of the Geological Mineral Industrial Standards of the PRC, Geological

exploration regulations for salt lake and salt mineral resources, using data from a

2000m by 2000m grid taken in three separate sampling programs at varying times of the

season cycle.

Table 110: Dangxiongcuo reserve estimation from 2006 qualifying report

Concentration (ppm) Reserve (t)

LiCl 400 1,036,100

LCE (Li2CO3) N/A 902,443

B2O3 3,050 1,281,800

KCl 20,010 52,045,100

Na2CO3 24,510 10,307,600

Rb+

21 8,900

Br -

11,350 113,500 Source: Sterling Group Ventures

5.10.4.6 China MinMetals Non-Ferrous Metals Co. Ltd

In November 2012, China MinMetals Non-ferrous announced the construction of a

lithium-potassium-boron recovery facility at the Yi Liping salt lake in Qinghai Province,

northwest of CITIC Guorun’s Xitiai saline lake project. The Yi Liping salt lake is

estimated to contain resources of 1.78Mt Li (9.4Mt LCE) and 16.4Mt potassium (31.1Mt

KCl).

The plant is expected to have an initial capacity to produce 10,000tpy Li2CO3 and

300,000tpy KCl, which China MinMetals Non-ferrous intends to later increase to 30,000-

50,000tpy Li2CO3, 500,000tpy KCl and 1Mtpy magnesium building materials. Financing

construction of the initial facility is estimated to cost a total of RMB3.38Bn (US$539M),

increasing to RMB4.6Bn (US$733.5M) with the planned expansions. At this stage,

China MinMetal Non-ferrous anticipates the plant to be commissioned by the end of

2015, with first commercial production soon after.

5.10.5 Chinese lithium mineral producers

5.10.5.1 Fujian Huamin Import & Export Co. Ltd.

Fujian Huamin is a major Chinese importer and exporter of multiple commodities and

products. The company has invested in mineral prospecting, mining and processing

projects, including a spodumene deposit in the Taiyanghe village, Jinchuan, Aba


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prefecture Sichuan province. An investment of RMB30M (US$4.8M) was made to

develop and construct mining and milling infrastructure at the spodumene deposit, which

has a mining capacity of 150,000-200,000tpy of spodumene ores (5,500-7,500tpy LCE

assuming a 1.5% Li2O content). Fujian Huamin plans to invest RMB50M (US$8M) to

develop processing, production and marketing techniques for lithium carbonate, lithium

hydroxide, lithium alloys and lithium metal.

5.10.5.2 Yichun Huili Industrial Co. Ltd.

Yichun Huili Industrial Co. Ltd. is a subsidiary of Jiangxi Tungsten, which itself is a

subsidiary of China MinMetals. The company operates the Yichun Huili mine in Jiangxi

Province which produces lepidolite concentrate. The company also produces other

industrial mineral products from plants in Jiangxi and Guangzhou provinces.

In the late 1990’s, the Yichun Huili mine had the capacity to produce 45,000tpy lepidolite

concentrate which contained 0.8%-1.4% Li2O (1,225tpy LCE). Production is now

estimated at approximately 2,000tpy lepidolite concentrate (54.5tpy LCE).

5.10.5.3 GanZi Rongda Lithium Co., Ltd.

GanZi Rongda Lithium Co. Ltd. (Rongda Lithium) was formed in July 2005, after Youngy

Group Co. Ltd. (70%) and Sichuan Provincial Mineral Industry (30%) purchased the

Ganzi Xiajika spodumene mine project located in Xiajika Village, Kangding County,

Sichuan Province. In August 2009, Luxiang Co., Ltd. acquired a controlling 51% stake in

the company with Youngy Group’s holding falling to 43% and a private investor holding

the remaining 6% ownership. Luxiang increased its shareholding to 100% in July 2012

after purchasing both Youngy Group’s and the private investor’s shares.

Rondga Lithium has been granted mining rights for a 0.88km2 area of the Xiajika deposit

for a 30 year period (from 2004). The Xiajika deposit in total is believed to contain 32Mt

of spodumene (82Mt grading 1.44% Li2O), making it one of the largest spodumene

deposits in the world. The area which Rongda Lithium holds the mining rights to is

estimated to contain 5.1Mt spodumene reserves, equivalent to approximately 392,000t

LCE. First refusal has also been given to Rongda Lithium to acquire mining rights to the

remaining 29.7Mt of spodumene reserves surrounding the original claim.

Youngy Group Co. Ltd are the second largest shareholder in Rongda Lithium holding a

49% shareholding in the company. The company is also a major shareholder in BYD (a

leading battery producer and developer of electric vehicles) and its CEO, Li Xiangyang,

is the cousin of Wang Chuanfu, the owner of BYD. In September 2009, Luxiang Co. Ltd.

a manufacturer of asphalt in Guangzhou province, became the majority shareholder of

Rongda Lithium after purchasing a 51% stake in the company for RMB73.10M

(US$10.69M). The 51% purchase was comprised of a 21% stake from Youngy Group

Co. Ltd. (RMB23.10M (US$3.37M)) and a 30% stake from Sichuan Provincial Mineral

Industry (RMB50M (US$7.32M)).


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As of December 2011, the mining and milling capacity of spodumene ore at the Xiajika

deposit is more than 3,000tpd (145,000tpy). A feasibility study regarding a potential

expansion to 3,500tpd has been completed by the Ganzi Tibetan Autonomous

Prefecture of Industry and Information Committee which displayed a positive outcome.

Rongda Lithium has invested RMB650M (US$98M) in developing the Xiajika mine to this

stage.

Rongda Lithium constructed a hydrometallurgical plant throughout 2012 for the

production of lithium salts such as lithium carbonate and lithium hydroxide from

spodumene concentrate. A total of RMB10M was intially invested in the project which

included the formation of ‘Ganzi Tibetan Autonomous Prefecture Sip Kika Co. Ltd.’ which

will operate the planned facility, commissioning by the Sichuan Province Engineering

Consulting Institute of Luding County, and site surveys which have identified a

recommended location for the plant in Kanroji dam, Luding county. Geological hazard,

environmental, safety and hydrological surveys have all been commissioned for the

Kanroji dam site. The planned facility will have a capacity to produce 1,500tpy battery

grade lithium carbonate.

5.10.5.4 Sichuan Hidili Dexin Mineral Industry

The Lijiagou spodumene deposit in Jimu village, Jinchuan, Aba prefecture has been

prospected since 2006, and is currently operated by Sichuan Hidili. Reserves at the

Lijiagou spodumene deposit have been estimated by Sichuan Hidili to be 10.1Mt of

spodumene ore grading 1.4% Li2O; however, estimates from other parties for the deposit

place its reserves at nearly 30Mt spodumene ore. Since its purchase of the deposit in

2006, Sichuan Hidili has invested over RMB100M (US$15.8M) in the project.

After completing an assessment study of the Lijiagou deposit in 2009, Hidili Industry

International Development (HIID) placed a down payment of RMB79M (US$12.5M) in

early 2010 with the intention to acquire an 80% stake in the property. HIID acquired a

100% stake in Sichuan Dexin taking ownership of the Lijiagou deposit in late 2010 for

RMB140.3M (US$21.0M).

Sichuan Dexin had worked closely with Sichuan Hengding Industrial since 2009 on

developing the Lijiagou lithium deposit further. The two companies aimed to construct a

mine and plant with an initial design capacity of 500tpd mined ore, increasing to

3,000tpd mined ore in the following years. Designed production capacity of spodumene

concentrate from the processing plant was estimated at 24,000tpy grading 5.6%-7%

Li2O. Sichuan Hengding had intended to invest RMB500M (US$75M) in developing the

project into a mine and becoming a majority shareholder in Sichuan Dexin, however the

purchase of Sichuan Dexin by HIID in 2010 is likely to have made Sichuan Hengding

reconsider any investment.


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5.10.5.5 Xinjiang Non-Ferrous Metals (Group) Ltd.

Xinjiang Non-Ferrous produces spodumene concentrate from the Kokotay (Keketouhai)

mine located near to the Mongolian border, Xinjiang Uyghur Autonomous Region.

Production from the mine is estimated at between 5,000-7,000tpy spodumene

concentrate, although the mine is predicted to have a capacity of 15,000tpy.

Spodumene concentrate produced at the Kokotay mine is either sold on the Chinese

market or sent to be processed into downstream lithium products at the China Non-

Ferrous Metal Import & Exports (Section 5.10.7.4) plant in Ürümqi also in Xinjiang

Uyghur Autonomous Region.

Mining at Kokotay focuses on the No. 3 pegmatite which was previously mined between

the mid-1950s and 1999. The mine was closed and flooded in 1999 as reserves at the

deposit were believed to have been exhausted or become uneconomical. In August

2006, Xianjiang Non-Ferrous began to reopen and drain the Kokotay mine, because of

rising lithium prices making mining of spodumene ores at the site economic once more.

Xinjiang are also believed to have identified reserves of beryllium, tantalum, niobium and

mica at Kokotay which may be extracted and concentrated as by-products.

5.10.6 Chinese lithium mineral producers with mineral conversion capacity

5.10.6.1 Jiangxi Western Resources Lithium Industry

In July 2010, Sichuan Western Resources acquired Jiangxi Ningdu Lithium Industry Co.

Ltd. (Ningdu Taiyu) and Ganzhou Jintai Lithium Industry (Ganzhou Jintai), merging them

to form a 100% owned subsidiary, Jiangxi Western Resources Lithium Industry Co. Ltd.

(Jiangxi Western). Jiangxi Western has also been exploring a deeper ore body to

extend mine life, and has increased ore reserves to 5.8Mt.

Ningdu Taiyu held the mining rights to the Heyuan spodumene deposit located in

Ningdu, Ganzhou city, which Jiangxi Western now operates. Spodumene ore is

extracted by an open pit operation which has a design capacity of 90,000tpy of ore.

Extracted ore is concentrated on site to produce a spodumene concentrate containing

approximately 5% Li2O.

Ganzhou Jintai, established in September 2007, operated a lithium carbonate plant in

Hongjin Industrial Park, Ganxian. The plant remains in operation under Jiangxi

Western’s control, sourcing lithium raw materials from Ningdu. The plant has a capacity

to produce 5,000tpy lithium carbonate.

In 2010, Jiangxi Western produced 1,489t lithium powder from the Heyuan operation

and 35.8t lithium carbonate from Ganxian pilot plant (Table 111). Production of lithium

carbonate from the Ganxian plant increased to 49.68t Li2CO3 in 2012, however no data

for the volume of sales or production from the Heyuan mine is not available. Sales in

2011 increased to 49.8t lithium carbonate, with a revenue of US$257,744.


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Table 111: Jiangxi Western Resources: Lithium Production, 2010

Production (t) Sales (t) Sales (US$)

Heyuan Mine 1,489 Lithium powder 928.1t Lithium powder 208,610

Ganxian Plant 35.775 Li2CO3 33.35 Li2CO3 146,379 Source: Company annual report RMB 1: US$0.1475

Jiangxi Western intends to increase production capacity at its lithium operations and

plants in anticipation increasing demand for lithium products. A 5,000tpy battery grade

lithium carbonate plant is also planned at the plant in Ganxian in the near future.

5.10.6.2 Sichuan Aba Guangsheng Lithium Co. Ltd.

Sichuan Aba Guangsheng Lithium was established in August 2004, with the

amalgamation of the Aba Chemical Plant and Aba Salt Plant. Capacity of the

company’s production facilities is reported as being 5,000tpy, producing mainly technical

grade lithium carbonate, and lithium hydroxide and sodium sulphate as a by-product.

Lithium hydroxide monohydrate products are sold under the ‘Snow Mountain’ trade mark

both in the domestic and international markets.

Sichuan Aba Guangsheng also operates the Guanyinqiao spodumene mine in Jinchuan,

Sichuan, however output from the mine is too small to satisfy raw material consumption

at the company’s mineral conversion facility in Xuankou town, Wenchuan, Sichuan.

Approximately 70% of spodumene concentrate is estimated to be sourced from Talison

Lithium, Australia.

5.10.6.3 Minfeng Lithium Co. Ltd.

Founded in May 2007, Minfeng Lithium is based in Aba prefecture, Sichuan Province.

The company produces spodumene concentrate from the Dilaqiu, Gao’erda and

Lamasery mines which are processed into downstream lithium products at a facility in

Baihua Industry area, Wechuan, Sichuan.

The Dilaqiu, Gao’erda and Lamasery mines all work a large spodumene pegmatite

intrusive which is claimed by Minfeng Lithium to contain >2.0Mt grading 1.1% Li2O

(54,400t LCE). The Dilaqiu mine began production in April 2008, producing spodumene

concentrate from an on-site ore dressing facility. The Gao’erda and Lamasery mines

were commissioned after the Dilaqiu mine had begun production, along with adjoined

mineral concentration facilities.

Lithium carbonate and hydroxide are produced from Minfeng's lithium salt facility in the

Baihua industrial area. Construction of the 3,000tpy LCE capacity facility began in

October 2007 and was completed in May 2008. Soon after completion, the facility was

structurally damaged by an earthquake which required until August 2008 to rectify and


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restart production. Minfeng intend to increase production capacity at the facility to

6,500tpy LCE including 3,000tpy lithium carbonate and 4,000tpy lithium hydroxide.

5.10.6.4 Sichuan Ni&Co Guorun New Materials Co. Ltd.

Sichuan Ni&Co Guorun New Materials Co. Ltd. (SGNM) are an integrated lithium

producer operating out of Sichuan province, China. SGNM extracts lithium minerals

from the Maerkang spodumene mine. The Maerkang mine is estimated to contain

reserves of 225,000t Li (1.19Mt LCE) with a production capacity of 24,000tpy

spodumene concentrate.

The spodumene mineral concentrate is processed into lithium carbonate and lithium

hydroxide products at SGNM’s plant in Chengdu, Sichuan province which holds a

capacity to produce approximately 7,000tpy LCE. SGNM has recently upgraded the

Chengdu plant improving recoveries, end product grade and increasing lithium

hydroxide production capacity to 3,600tpy.

SGNM markets four lithium carbonate and four lithium hydroxide monohydrate products

ranging from an industrial grade product to a high purity product:

LiOH Li2CO3 Fe Ca Na K

min% min% max% max% max% max%

Lithium Hydroxide Monohydrate

Industrial Grade 56.5 n/a 0.1 0.1 0.002 0.035

Battery Grade 56.5 n/a 0.005 0.005 0.0008 0.005

Non-Dust (with 1% oil) 56.5 n/a 0.1 0.1 0.002 0.035

High Purity 56.5 n/a 0.0005 0.0005 0.0008 0.002

Lithium Carbonate

Battery Grade 1 n/a 99.5 0.025 0.001 0.002 0.005

Battery Grade 2 n/a 99.9 0.002 0.001 0.001 0.002

High Purity n/a 99.99 0.0002 0.0002 0.0002 0.0005

Industrial Grade n/a 99 0.14 n/a n/a 0.008

Jiangxi JiangLi New Material Sci-Tech was established by Sichuan Ni&Co Guorun

New Materials in December 2005. The new facility was based on the original Jiangxi

Lithium factory managed by Jiangxi Metallurgy Group, which produced lithium products

at the site between 1966 and 2001. At the new plant, Jiangxi JiangLi produces lithium

compounds, sulphuric acid, electrolytic zinc and electrolytic nickel. The company also

undertakes research into non-ferrous metals including lithium, nickel and cobalt.

After a RMB78M upgrade program of plant equipment in 2007, production capacity at

the plant is now reported at 3,000tpy technical grade lithium carbonate, 2,000tpy lithium

hydroxide and 3,000tpy battery grade lithium carbonate.


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5.10.7 Chinese mineral conversion plants

5.10.7.1 Sichuan Tianqi Lithium Shareholding Co. Ltd.

Sichuan Shehong Lithium Industry (Shehong Lithium) was established in October 1995

as a state owned company. The Tianqi group acquired Shehong Lithium in 2004 before

renaming the company Sichuan Tianqi Lithium Industry Shareholding Co. Ltd. (Sichuan

Tianqi) in December 2007, during a reorganisation of the group. Sichuan Tianqi was

listed on the Shenzhen Stock Exchange in August 2010. In 2011, Sichuan Tianqi

reported revenues of RMB403M (US$64M), a 37% increase from the previous year.

Sichuan Tianqi operates three wholly owned subsidiaries which focus on different

aspects of the lithium industry. Ya’an Huahui Lithium Technology Materials Industry Inc.

specialises in the production of lithium hydroxide and other lithium products. Chengdu

Tianqi Shenghe Investment Co. Ltd. manages the investment services of Sichuan

Tianqi, and Sichuan Tianqi Shenghe Lithium Industries Co. Ltd. focuses on Sichuan

Tianqi’s lithium exploration projects in China.

Sichuan Tianqi operates two production facilities at Shehong and Ya’an in Sichuan

province and is the largest producer of lithium compounds from lithium mineral

concentrates in China. The company has a capacity to produce 7,500tpy battery grade

lithium carbonate, 3,000tpy industrial grade lithium carbonate, 1,500tpy industrial grade

lithium hydroxide and 100tpy lithium metal. In 2011, Sichuan Tianqi produced 11,063t of

lithium products, an increase of 1,931t from the previous year (Table 112). Reported

sales of lithium compounds in 2011 reached 12,313t.

Table 112: Sichuan Tianqi: Production and sales of lithium products, 2010 to 2011 (t)

Production (t)

Sales (t)

2010 2011 2010 2011

Lithium carbonate 5,739 7,957 5,522 8,731

Other lithium products 3,393 3,105 3,266 3,581

Total 9,132 11,063 8,788 12,313 Source: Tianqi Lithium Annual Report, 2011 (Chinese version)

Sichuan Tianqi plans to increase the production capacity at its facilities to 40,000tpy

LCE within the next 5 years. Sichuan Tianqi’s product portfolio includes lithium

carbonate, battery grade and technical grade lithium hydroxide monohydrate, lithium

chloride anhydrous, lithium metal and lithium di-hydrogen phosphate. A dust-free grade

lithium hydroxide product is also produced, which uses lithium sulphate liquid and

sodium hydroxide as raw materials instead of converting lithium carbonate using calcium

hydroxide.

In July 2012, Sichuan Tianqi announced an expansion of its RMB51.8M (US$8.2M)

project to increase lithium hydroxide monohydrate production at its Sichuan facilities.

The original planned expansion to 4,000tpy lithium hydroxide monohydrate was

considered not adequate to meet Sichuan Tianqi’s forecast market demand, and an


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expansion to 5,000tpy (including 3,000tpy battery grade lithium hydroxide monohydrate

and 2,000tpy technical grade lithium hydroxide monohydrate) was proposed instead.

The new 5,000tpy lithium hydroxide capacity plant will be based at the Ya’an plant,

giving both facilities the capability to produce battery grade lithium hydroxide

monohydrate. Estimated capital costs have increased to RMB53.9M (US$8.5M),

however the added capacity is expected to reduce the overall production costs for

lithium hydroxide.

The company imports 100% of its spodumene concentrate raw materials from Talison

Lithium in Australia (Section 5.3.1). In 2009, Talison Lithium and Sichuan Tianqi signed

a three year agreement for the supply of spodumene concentrates. Sichuan Tianqi also

assists Talison Lithium with the distribution of spodumene concentrate to other mineral

conversion plants in China. Imported spodumene accounts for 55% of Sichuan Tianqi’s

production cost which for lithium carbonate is estimated at between (US$4,000-4,250/t).

In October 2008, Sichuan Tianqi acquired an exploration licence for the Cuola

spodumene deposit located in Yanjiang County, Sichuan. The deposit is located close

to the Xiajika spodumene mine in Ganzi, owned by GanZi Rongda Lithium Co. Ltd.

(Section 5.10.5.3). The Cuola deposit was assessed in 2009 by the Sichuan Provincial

Geological Team and was reported to hold reserves of 19.05Mt grading 1.24% Li2O

(583,400t LCE). Sichuan Tianqi are planning to invest RMB1.5Bn (US$225M) in the

Cuola deposit through its subsidiary Sichuan Tianqi Shenghe Lithium Industries Co. Ltd.,

to construct mining facilities and a processing facility to produce 100,000tpy spodumene

concentrate at 5.5-6.2% Li2O. Production from the Cuola deposit was projected to begin

in 2012, with mining and processing costs estimated at RMB1,200/t (US$180/t);

significantly cheaper than importing spodumene concentrate from Talison Lithium. A

mining licence was granted to Sichuan Tianqi in April 2012 by the Department of Land

and Resources of Sichuan Province, giving Sichuan Tianqi permission to mine the

project for lithium until 2032.

In February 2012, Sichuan Tianqi signed a partnership agreement with Targray

Technology International (Targray), a supplier of materials to battery manufactures in the

USA, Europe and Asia. The agreement dictates that Targray will distribute lithium

carbonate and lithium hydroxide monohydrate products produced by Sichuan Tianqi in

North America and parts of Europe. Targray will mainly distribute lithium products to

manufacturers of cathode and cathode pre-cursor materials.

Talison Lithium acquisition

On 12th November 2012, Sichuan Tianqi purchased a 14.99% share holding

(17,143,422 common shares at CAN$6.50/share) in Talison Lithium through their

Australian subsidiary Windfield Holdings Pty. Ltd (Windfield). A condition of the share

purchase agreement also stated that Windfield, or a related party, announced their

intention to purchase further shares Talison Lithium at >CAN$6.50/share. On 19th

November 2012, Sichuan Tianqi announced its intention to purchase all remaining

shares in Talison Lithium for CAN$7.15/share totalling approximately CAN$806M,

exceeding Rockwood Litihum’s (Section 5.39.2) previous offer of CAN$6.50/share

(valuing Talison Lithium at CAN$724M) made in August 2012. Talison Lithium assessed


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Sichuan Tianqi’s 19th November offer of CAN$7.15/share during late Novemeber 2012

and met with Windfiled (Sichuan Tianqi) to determine whether their bid was superior. On

6th December, Windfield announced it was to increase its bid to CAN$7.50/share valuing

the Talison Lithium takeover deal at CAN$848M (US$855.4M). Rockwood lithium was

given five business days to submit an offer equal to Windfield’s, although Rockwood

stated it would not proceed into a bidding war and the Windfield bid was accepted.

Talison Lithium and Windfield entered into a Scheme Implementation Agreement (SIA),

which includes a CAN$25M reserve break fee which would be paid to Talison Lithium if

Windfield were unable to raise sufficient finance or fails payment to security holders.

Talison Lithium held a scheme meeting for share and option holders on 27th February

2013, in which 99.98% of shareholders voted in favour of the Windfield bid. Talison

Lithium and Windfield now await approval of the scheme by the Federal Court of

Australia on the 12th March 2013. If the scheme is approved Talison Lithium would

cease trading on the TSX market on March 13th 2013. Payment to entiled shareholders

is scheduled to take place on the 26th March 2013.

On 24

th December, Sichuan Tianqi announced plans to issue approximately 170M

shares at RMB24.60/share (US$3.89/share) to raise RMB3.8Bn (US$602.0M). Finances will be used to purchase shares in Talison Lithium acquisition and in other on-going acquisitions. In February 2013, Sichuan Tianqi provided documentation to show it had access to the necessary funds to complete the Talison Lithium transaction. Sichuan Tianqi has entered into an agreement for China Investment Corp. to purchase a 35% stake holding in Windfield for a fee of US$292M, along with completing loan agreements for a total of US$200M from Credit Suisse AG, US$120M from Industrial and Commercial Bank of China Ltd and US$50M from Twenty Two Dragons Ltd.

5.10.7.2 Galaxy Resources (Jiangsu Lithium Carbonate Plant)

The Jiangsu Lithium Carbonate Plant (JLCP) is located at the Yangtze River

International Chemical Industrial Park in Zhagjiagang, China. In October 2009, Galaxy

completed a definitive feasibility study for the construction of a battery grade lithium

carbonate plant in Zhangjiagang. The capital cost was estimated at AUS$55M and site

preparation began in November 2009. In the following month Galaxy signed an

Engineering, Procurement, and Construction Management contract with Hatch

Consulting Shanghai although a construction permit was only attained in June 2010.

Construction of the plant began shortly after the permit was granted.

The production process at the plant requires spodumene concentrate to be roasted and

leached with sulphuric acid. Subsequent precipitation of magnesium, calcium and other

impurities results in a lithium sulphate enriched solution from which lithium carbonate

can be crystallised. Galaxy has also begun a feasibility study to assess a possible

expansion of the JLCP onto adjacent land which would include a 5,000tpy battery grade

lithium hydroxide production circuit. The study was conducted by Hatch Engineering

and Galaxy, although results have not yet been reported.


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The JLCP is designed to have a production capacity of 17,000tpy battery grade lithium

carbonate with a Li2CO3 content of >99.5%. Other product specifications for battery

grade lithium carbonate are listed in Table 113. The plant will produce four grades of

lithium carbonate in total; technical grade (99% Li2CO3), battery grade (99.5% Li2CO3),

EV grade (99.9% Li2CO3) and EV Plus Grade (99.99% Li2CO3). Spodumene raw

materials will be sourced from Galaxy’s Mt. Cattlin plant in Australia.

Table 113: Galaxy Resources: Battery grade lithium carbonate chemical specifications

Chemical Properties Maximum Content (unless stated)

Li2CO3 >99.5%

Na+

0.005%

Fe2+/3+

0.025%

Cu2+

0.001%

Mg2+

0.001%

Al3+

0.010%

Pb2+/4+

0.005%

Ca2+

0.001%

K+ 0.001%

Mn2+

0.001%

Si4+

0.005%

Cl- 0.003%

SO42-

0.080%

Moisture (H2O) 0.400% Source: Galaxy Resources

Construction at the JLCP was completed in December 2011 and Galaxy undertook cold

and hot commissioning checks in early 2012. The plant was officially opened on the 7th

March 2012, and first production of lithium carbonate was achieved on the 10th April

2012. Production ramp up to full capacity of 17,000tpy LCE is expected to take place

over a 12 month period. Capital costs for the plant construction increased from

AUS$55M when construction began to AUS$99.8M in July 2011. Galaxy have

highlighted the possibility of a second similar facility being constructed at the Yangtze

River International Chemical Industrial Park which would process spodumene

concentrate from the James Bay project, if it were to be brought into production.

In November 2012, a fatal incident at the JLCP caused the plant to be shut down whilst

repair work and an inspection by the Zhangjiagang Safety Bureau was completed.

Galaxy also brought in Risk Management Solutions Inc. to complete a Hazard and

Operability (HAZOP) review of the entire JLCP. The Zhangjiagang Safety Bureau

approved production to recommence at the JLCP in February 2013, after assessing

repairs to the affected area of the plant.

5.10.7.3 General Lithium (Haimen) Corp.

General Lithium is located in the Qinglong Chemical Industry area of Haimen, Jiangsu

province. Since its establishment in 1998, the company has become one of China’s


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largest lithium processors with a production capacity of 5,000tpy battery grade lithium

carbonate and 1,000tpy technical grade lithium carbonate. The company imports

spodumene concentrate from Talison Lithium in Australia as it controls no domestic

sources of raw material. General Lithium intends to expand lithium carbonate production

capacity at its plant by end-2013.

5.10.7.4 China Non-Ferrous Metal Import & Export Xinjiang Corp.

State owned China Non-Ferrous Metal Import & Export Xinjiang Corp. (CNIEC) operates

the Xinjiang Lithium Salt Plant, located in northern Ürümqi, Xinjiang Uyghur Autonomous

Region. The original Xinjiang plant founded in 1958 was located in southern Ürümqi,

however a new facility at the present site was constructed in 2006 and commissioned in

2007.

The company is considered to be one of China’s largest producers of lithium products,

marketing its products under the ‘Bo Feng’ trademark. The product range available from

CNIEC includes:

Li2CO3 Technical Grade >99% Li2CO3, >98.5% Li2CO3

Li2CO3 Pharmaceutical Grade >98.5% Li2CO3

Li2CO3 High Purity >99.999% Li2CO3, >99.995% Li2CO3, >99.99%

Li2CO3

Li Hypochloride >71% LiClO

Li Fluoride >98.5% LiF, >98% LiF

Lithium Metal >99% Li, >99.8% Li, >99.98% Li

Li-Al Alloy 27% Li – 73% Al

Li Phosphate >95% Li3PO4, >98% Li3PO4

Li Sulphate >99% Li2SO4, >98% Li2SO4

Li Chloride (Anhydrous) >99.3% LiCl, >99% LiCl, >98% LiCl

Li Molydbate >99% Li2MoO4

Li Hydrite >97% LiH

Li Hydroxide Monohydrate >56.6% LiOH, >56.5% LiOH, >55% LiOH

Li-Al Tetra Chloride >98% purity

Li Perchlorate Anhydrous >99% purity

The new plant commissioned in 2007 has a capacity to produce 6,000tpy lithium

compounds and 200tpy lithium metal. CNIEC imports 100% of its spodumene

concentrate raw materials from Talison Lithium in Australia. Historically CNIEC sourced

spodumene concentrate raw materials locally, however mining of spodumene in the

surrounding area has been suspended because of high mining costs and resource

depletion.


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5.10.7.5 Sichuan State Lithium Materials Co. Ltd.

Sichuan State Lithium Materials is based in Xuankou town, Wenchuan, Sichuan

Province, undertaking research and development, manufacturing and marketing of

lithium products. The majority of the company’s lithium raw materials are sourced from

Aba Guangsheng Lithium Industry Co. Ltd. (Section 5.10.6.2) in the form of spodumene

concentrate. Sichuan State Lithium Materials was founded in 2007, producing a

portfolio of downstream caesium, rubidium and lithium products. Since 2007 the

company has increased its capacity from 1,500tpy lithium products to 2,500tpy, as a

result of upgrading the battery grade lithium carbonate production line.

The range of lithium products produced by Sichuan State Lithium Materials is marketed

both for the domestic market and for export and includes:

Li Carbonate (Technical, Battery, High Purity and Fluorescent grade)

Li Hydroxide Monohydrate

Li Perchlorate Anhydrous

Li Acetate Dihydrate

Li Phosphate (Fluorescent grade)

Li Nitrate

Li Iodide

Li Fluoride

Li Sulphate

Sichuan State Lithium Materials works closely with Sichuan University and the University

of Science and Technology of China to develop new lithium products and plans to

construct a new R&D facility by 2015. The proposed facility will focus its research on

development of lithium iron phosphate technologies and work towards industrial

production of new lithium products.

5.10.7.6 Jiangxi Ganfeng Lithium Co. Ltd.

Jiangxi Ganfeng Lithium was established in 2000 in Xinyu town, Jiangxi province. In

August 2010, the company was listed on the Shenzhen stock exchange, the first solely

lithium producing company to do so in China. Ganfeng Lithium produces a range of

lithium inorganic and organic compounds, along with lithium metal and alloys from four

subsidiaries:

Name Location Activities

Xinyu Ganfeng Organic

Lithium Co. Ltd.

Hexia Town Fairy

Lake, Xinyu, Jiangxi

Production of butyllithium and

butylchloride

Fengxin Ganfeng Lithium

Co. Ltd.

Fentian Development

Zone, Fengxin County

Jiangxi

Production of lithium metal,

lithium-magnesium alloy and

lithium carbonate.

Xinyu Ganfeng Lithium

Sales Co. Ltd.

Xinyu Economic

Development Zone,

Lithium product sales


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Jiangxi

Xinyu Ganfeng

Transportation Co. Ltd.

Hexia Town Fairy

Lake, Xinyu, Jiangxi

Transportation

The company imports lithium raw materials from a number of sources in the domestic

and international markets. SQM, FMC, TOXCO and Qinghai CITIC Guoan have all

supplied raw materials to Jiangxi Ganfeng in the past, in the form of lithium brines and

lithium chloride, along with Talison Lithium in the form of spodumene concentrate.

The production capacity of the four subsidiaries is 650tpy lithium metal, 1,500tpy lithium

chloride, 300tpy lithium fluoride and 3,000tpy lithium carbonate. In 2011, Jiangxi

Ganfeng Lithium reported sales of lithium products totalling US$75M, an increase of

34% from the previous year.

In 2011, Jiangxi Ganfeng announced plans to construct a new lithium compound

production facility in Xinyu, Jiangxi province, in close proximity to the existing lithium

plant. The plant will process imported spodumene concentrates, producing lithium

compounds including lithium chloride, battery grade lithium hydroxide, battery grade

lithium carbonate and other lithium compounds for Jiangxi Ganfeng’s internal use. The

planned capacity of the new plant is 23,000tpy LCE, including 6,000tpy battery grade

lithium hydroxide, 9,000tpy battery grade litihum carbonate and 10,000tpy lithium

chloride, organic compounds and metal. Construction of the facility is expected to take

place in two phases, with construction beginning on the first phase in October 2011.

Capital costs for the plant were revised upwards in H1 2012 from RMB120M

(US$18.9M) to RMB163.3M (US$25.8M). Commissioning of the phase one plant was

scheduled for October 2012, although this has been delayed to mid-2013.

In 2012, Jiangxi Ganfeng assessed the feasibility of constructing a lithium-iron-

phosphate production facility, as a step towards producing Li ion batteries. In January

2013, Jiangxi Ganfeng announced it was to invest RMB294M (US$46.7M) in a project to

increase production capacity of lithium salts and extend downstream its production of

lithium products, producting ultra-thin lithium metal strips, plates, foil, grain, alloys and

precursor materials. The RMB294M (US$46.7M) will be raised in a combination of

privae placements and revenue raised from an IPO. The expansion project will increase

production capacity of lithium metal foil by 500tpy, production of lithium salts by

10,000tpy and production of ternary precursor materials (with a focus on lithium-iron-

phosphate precursor materials) by 4,500tpy.

Jiangxi Ganfeng initially purchased a 9.99% stake in Canadian lithium explorer

International Lithium Corporation in July 2011, who is exploring lithium projects in

Argentina and Canada. Jiangxi Ganfeng increased its stake in the company to 14.7% in

March 2012 through a private placement.


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5.10.7.7 Sichuan Chenghehua Lithium Technology Co. Ltd.

Sichuan Chenghehua operates a lithium processing facility at the Chuan Su-Tech

Industrial Zone in Dujiangyan city, Sichuan province. The facility produces industrial,

battery (99.9% Li2CO3) and high purity (99.99% Li2CO3) grade lithium carbonate products

along with industrial and battery grade lithium hydroxide monohydrate. The Chuan Su-

tech Industrial Zone facility is reported to have a 3,000tpy lithium carbonate and

hydroxide production capacity, and a processing circuit to produce 300tpy lithium iron

phosphate is under construction.

5.10.8 Chinese lithium chemical producers

China Lithium Product Technology Co. Ltd. is located in Xiamen, Fujian province,

manufacturing lithium compounds mainly for the grease and lubricant industry. The

Xiamen production facility has a capacity to produce 2,800tpy lithium hydroxide (57%

LiOH purity), 1,500tpy battery grade lithium carbonate and 5,000tpy 12-hydroxy stearic

acid flakes. China Lithium Product produces a range of lithium hydroxide and carbonate

products which include:

Lithium hydroxide monohydrate (fines grade)

Lithium hydroxide monohydrate (reduced dusting grade)

Lithium hydroxide monohydrate purified (greases and lubricants grade)

Lithium hydroxide monohydrate (technical grade)

Lithium hydroxide (electrochemical grade)

Lithium carbonate (industry and electrochemical grade)

Chengdu Chemphys Chemical, established in 1998, is a producer of high purity lithium

carbonate and lithium hydroxide used in the production of pharmaceutical, battery and

fusion flux products. Lithium carbonate produced at the Chengdu Chemphys facility

located in Wenjiang, near Chengdu, Sichuan province has purities between 99% and

99.99% Li2CO3. The Wenjiang plant is reported to have a capacity to produce 1,500tpy

high purity lithium carbonate. Other lithium compounds including lithium phosphates,

borates and di-hydrogen phosphates are also produced by Chengdu Chemphys.

FMC (Zhangjiagang) Specialty Chemicals, a subsidiary of FMC Corporation (Section

5.39.3), began production of butyllithium products at the Yangzijiang International

Chemical industry park in 2008. The butyllithium products manufactured at the

Yangzijiang plant are mainly used in the polymers industry.

Jiangxi Dongpeng New Materials Co. Ltd. produces lithium, caesium and rubidium

series chemicals at Xin Yu High & New Technology Development Zone, Jiangxi

Province. The range of lithium products produced includes lithium carbonate, hydroxide

monohydrate, fluoride, sulphate, nitrate, phosphate, chloride and perchlorate tri-hydride.

Kinmet Lithium Chemicals produces a range of lithium products including lithium

carbonate, hydroxide, fluoride, bromide, chloride, chromate and metal from a plant in

Liuzhou city, Guangxi province.


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Shanghai China-Lithium Industrial was established in the Shanghai Chemical

Industrial Zone, Shanghai province during October 2002. The company has a capacity

to produce a range of both inorganic and organic lithium products, which include:

Lithium carbonate 1,000tpy

Lithium di-hydrogen phosphate 1,000tpy

Lithium fluoride 500tpy

Lithium acetate 500tpy

Lithium iodide 200tpy

Lithium chloride 300tpy

Lithium nitrate anhydrous 50tpy

Lithium perchlorate anhydrous 50tpy

Products are marketed under the China-Lithium™ trade name both domestically and

internationally. Shanghai China-Lithium Industrial are also investing in research and

development facilities and increasing production capacity at the Shanghai province

plant.

Wuhan Baijierui Advanced Materials Co. Ltd. located in Wuhan Economy and

Technology Exploitation District, Hubei Province is a division of Eastern Lithium

Enterprises, producing and marketing lithium, caesium and rubidium products for

applications in the lithium ion battery, pharmaceuticals and catalysts industries.

Production capacity at the Wuhan Baijierui Advanced Materials plant is reported as

1,200tpy lithium hydroxide, 900tpy lithium chloride, 120tpy lithium metal and 500tpy

lithium celite.

Ruiyuan Group Ltd. is a broad range chemical producer based in Pudong district,

Shanghai, providing products for the pharmaceutical, catalyst and metallurgical

industries. The company manufactures a range of lithium compounds including

carbonates, hydroxides and chlorides along with lithium metal.

5.10.9 Specialist lithium bromide producers

Dalian Honjo Chemical is a joint venture between Honjo Chemical Co., Ltd. of Japan,

Dalian Bingshan Group, Sanyo Electric Co., Ltd. of Japan, Honjo Chemical Corporation

of Japan and Dalian Sanyo Refrigeration Co., Ltd. Production of lithium bromide began

in October 1993, soon after the company’s formation, mainly for use in manufacturing air

conditioning units in Dalian, China. The company has a capacity to produce 6,000tpy

lithium bromide, 40% of which is reserved for Dalian Sanyo Refrigeration Co. Ltd., 30%

exported to Japan and the remaining 30% used to supply domestic demand.

Jinan Sigma Chemical Co. Ltd. produces lithium bromide in Jinan city, Shandong

Province under the brand name ‘Sigma’. The company also lists lithium molybdenate

and lithium chromate in its product list.


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Dongying Pacific Ocean Chemical Engineering Co. Ltd. produces lithium bromide

and other bromine compounds at a facility in Dongguan, Shandong Province. The

company exports bromine compounds including lithium bromide to South East Asia,

Europe, the USA and South Africa.

Shandong Tianyi Chemicals is a subsidiary of Shandong Ocean Chemical Industry

Institute of Science and Technology, producing lithium bromide at the Weifang Binhai

Economic Development Zone, Shandong Province. The company has a reported

capacity to produce 2,000tpy lithium bromide.

Sanxing Chemical Industry Corporation is a producer of 50-55% lithium bromine

solution along with various other bromine compounds in Dangjia town, Shandong

Province.

Weifang Qiangyuan Chemical Industry Co. Ltd. located in the Weifang Binhai

Economic Development Zone, Shandong Province, produces a range of bromide

solutions including lithium bromide.

In addition, producers of air conditioning units and absorption chillers in China, Broad

Air Conditioning, Yantai Ebara Air Conditioning Equipment Co., Ltd. and Jiangsu

Shuang Liang Group are believed to possess an in-house capability to produce lithium

bromide.

5.10.10 Specialist lithium metal producers

Located in Yibin City, Sichuan Province, China Jianzhong Nuclear Fuel Co. Ltd. is a

subsidiary of the China National Nuclear Corporation (CNNC). The company has a

production capacity of 300tpy lithium metal which is marketed as either a 99.9% or

99.95% Li purity product. China Jianzhong also produces lithium-calcium and lithium

batteries which are supplied to both the domestic and export markets.

China Jianzhong has a capability to produce lithium rods, wires and granules, together

with lithium compounds such as lithium hydroxide monohydrate, lithium anhydrous

chloride, lithium carbonate, lithium bromide and lithium hydride.

Kunming Yongnian Liye Co. Ltd. is a producer of lithium metal ingots in South West

Yunnan Province, with a production capacity of 50tpy lithium metal. The company was

formed as a subsidiary of Kunming University of Science and Technology (34%) and

Yunnan Copper (Chinalco Yunnan Copper Resources Ltd.), which developed and

patented a vacuum smelting process to produce lithium metal.

Jiangsu Hongwei Lithium Industry Co. Ltd. produces four lithium metal products at a

plant located in Taizhou, Jiangsu province. The company began production in 1996

under the name Xinghua Hongda Electroheat Chemical Co., Ltd and has a capacity to

produce 180tpy industrial grade lithium and sodium metal and 20tpy lithium metal


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sheeting. The four lithium metal products produced by Jangsu Honglida are detailed

below:

Li

(min %)

Na

(max %)

Ca

(max %)

Fe

(max %)

Si

(max %)

Al

(max %)

Ni

(max %)

Industrial grade

Li-1 99 0.2 0.04 0.04 0.01 0.02 0.005

Li-2 98.5 0.6 0.10 0.05 0.03 0.04 0.01

High purtiy

Li-3 99.9 0.02 0.02 0.002 0.004 0.005 0.003

Li-4 99.9 0.001 0.005 0.0005 0.0005 0.0005 0.0005

5.11 Czech Republic

The Czech Republic is believed to contain a natural resource of 112,775t of lithium

(600.301t LCE), contained mainly within the Cίnovec-jih tin-tungsten pegmatite deposit

located in Ústί nad Labem region near the boarder with Germany. Other lithium

mineralisation occurances have been identified in the Krušné hory mountains. The

Cίnovec-jih deposit is also estimated to contain 56,000t of rubidium and 1,800t of

cesium.

Brines containing anomalus concnetrations have also been identified in the Czech

Republic near the town of Slaný in the Central Bohemian Region. The brines are hosted

within bituminous coal beds and are thought to contain 123,000t Br, 15,000t Li (79,800t

LCE) and 18Mt NaCl.

5.12 Democratic Republic of Congo (DRC)

Two of the largest identified spodumene bearing pegmatites in the world are located at

Manono and Kittolo in the Democratic Republic of Congo (DRC). A mineral resource

estimation for the two spodumene-pegmatite deposits was released in a 1976 National

Research Council report, estimating a contained resource of 2.3Mt Li (12.2Mt LCE).

Since its discovery in 1912, the Manono deposit has had periods of mining for tin-

tantalum, with first production in 1919, but has never been mined for lithium. The

Manono deposit has most recently been operated by private Canadian company

Shamika Resources; although it is unclear whether Shamika still holds the mining blocks

covering the deposit. Exploration and assessment of the property by Shamika stated

that lithium mineralisation occurs within the pegmatite intrusive as vein-hosted

spodumene, amenable to extraction by opencast mining techniques. Congo-Étain, a

DRC government tin mining company, operated the Manono mine until 1995, and

estimated the deposit to contain 30Mt spodumene grading 6% Li2O (4.45Mt LCE),

although the natural ore grade was not reported.


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In July 2012, Alphamin Resources Corp. announced it had purchased permits for two

the areas surrounding the Manono deposit for a fee of US$2M and 6.1M common

shares. The Manono deposit was identified in the press release as the largest

pegmatite hosted deposit of cassiterite, columbo-tantalite and lithium mined to date.

Alphamin also reported that some samples of material from the deposit exceeded

grades of 2% Li2O.

The Kittolo deposit, unlike Manono, has not been explored and developed to the

production stage. The deposit is located 2.4km southwest of Manono and has been

explored by various companies in the past, with a reserve estimation of at least 310,000t

Li (1.65Mt LCE), in addition to tin, tantalum and niobium mineralisation.

5.13 Finland

Lithium mineralisation is hosted within two main deposit types within Finland, firstly in

albite-spodumene type pegmatites, typically located in the Emmes Li-area of Central

Ostrobothnia region, Western Finland, and secondly in more complex polymetallic-rare

element type pegmatites, identified in the Somero Li-area, south-western Finland.

Exploration and identification of lithium resources in Finland first started in the 1950s,

with assessment of lithium mineralisation in spodumene-bearing pegmatites of the

Ostrobothnia region. In the 1960s, Suomen Mineraali continued lithium exploration in

the Ostrobothnia region, identifying 11 pegmatites containing lithium bearing minerals.

The most prospective of these deposits were located at Emmes, Jänislampi and Länttä.

5.13.1 Keliber Oy

Keliber has held the Länttä spodumene-pegmatite deposit located in Ullava district,

60km southeast of Kokkola city, since 1999. Nordic Mining hold a 68% share in Keliber

with the remaining 32% share in the company held by private Finnish investors. The

company was founded in 2001, after the ‘Keliber Project Working Group’ released a

positive assessment of the Länttä deposit, with assistance from the Geological Survey of

Finland (GTK). The Keliber Project Working Group subsequently started a mining

research and development company Keliber Resources Ltd. Oy., purchasing the permits

for the Länttä property. The company became a mining company in 2006 and was

renamed Keliber.

The Länttä pegmatite intrudes into meta-siltstone and schist country rock dipping steeply

toward the south-east. The pegmatite mineralogy is predominantly a quartz-albite-

spodumene mineral assemblage, with less common potassium feldspar and accessory

minerals. A mineral resource estimate for the Länttä deposit was released in 2001 by

GTK to a depth of 200m, which reported 2.95Mt grading 0.92% Li2O (contained 67,000t

LCE), with tantalum, quartz-feldspar and analcime by products.

In addition to the Länttä deposit, Keliber holds claims, reservations and mining

concessions covering six other lithium deposits in Finland (Table 114). The most


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advanced of these are the Emmes and Jänislampi deposits both located in the Central

Ostrobothnia region. The Emmes deposit is centred on a steeply dipping spodumene-

pegmatite vein with a strike of around 350m estimated to contain a mineral resource of

1.1Mt grading 1.3% Li2O down to a depth of 155m. Identified in drilling between 1960-

1982 by Partek Oy and Suomen Mineraali Oy, the Jänislampi spodumene-pegmatite

vein has a thickness of between 3-12m over a strike length of 200m. Samples taken

from the Jänislampi deposit returned grade of up to 1.5-1.7% Li2O and a mineral

resource estimation of at least 60,000t grading 0.5% Li2O (7,400t LCE contained) to a

depth of 15m was reported.

Table 114: Keliber Oy: Claims, reservation and mining concessions for lithium

projects held by Keliber in Finland, 2012

Deposit Location Licence Type

Länttä Ullava district, Central Ostrobothnia Mining Concession

Emmes Kronoby Municipality, Central Ostrobothnia Claim

Jänislampi Kronoby-Kaustinen Municipality, Central Ostrobothnia Claim

Matoneva - Reservation

Peuraneva - Reservation

Nikula Central Ostrobothnia Reservation

Känsälä near Vaasa, Central Ostrobothnia Reservation Source: Keliber Oy

Nordic Mining in co-operation with mineral processing specialists OutoTec Oy, have

developed an eco-friendly method of producing Li2CO3 from spodumene concentrate

using self-generated biogas. Biogas is used both for creating energy and as a raw

material in a continuous processing method. Spodumene concentrate is reduced in size

and run through a magnetic separator to remove gangue minerals. Flotation is used to

produce a spodumene concentrate and converted to beta-spodumene. Energy for the

flotation and conversion stage will be generated using combustion of biogas. The

produced beta-spodumene concentrate is leached before being re-crystallised, filtered

washed, dried and packed. Carbon dioxide from biogas can also be used to purify the

final lithium carbonate product.

5.13.2 Nortec Minerals Corp.

Nortec Minerals is a Canadian based multi-commodity exploration company with

projects located in Canada, Finland and Ecuador. The company was founded in 1999,

as Nortec Ventures Corp. listing on the Toronto stock exchange in 2004. In January

2010, the company changed its name to Nortec Minerals Corp. Nortec holds claim

reservations for two properties with identified lithium mineralisation at Tammela and

Kaatiala. The Kaatiala property is classed as a rare earth element pegmatite deposit,

although studies have reported notable columbite, cassiterite and lepidolite

mineralisation.

The Tammela property is 100% owned by Nortec and covers an area of 23km2. Located

in southern Finland, approximately 60km south west of Hämeenlinna, Nortec are

http://en.wikipedia.org/wiki/Central_Ostrobothnia






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exploring the property for lithium-tin-tantalum-gold mineralisation. Lithium is contained

within spodumene mineralisation at the deposit, which is hosted with the Kietyönmäki

Main Dyke. The Kietyönmäki Main Dyke extends over a strike length of 400m with an

average width of 12m.

Samples of drill core taken by Nortec and the Geological Survey of Finland (GTK) have

returned grades of up to 1.67% over 3.0m and 0.51% Li2O over 3m. A non NI 43-103

compliant resource estimation of the deposit was also made by the GTK, estimating a

resource of 400,000t grading 1.0% Li2O (9,900t LCE contained).

5.13.3 Leviäkangas Deposit

The GTK completed a mineral deposit report on the Leviäkangas deposit in 2010, as a

follow up to exploration conducted on the site by Suomen Mineraali Oy during the

1960s. The report concluded that the Leviäkangas deposit, located in Kaustinen

municipality of Central Ostrobothnia region, hosts lithium mineralisation within

spodumene-pegmatite veins intruding into the schist and meta-sandstone country rock.

GTK collected and analysed a number of samples from the deposit as part of the mineral

deposit report. Samples returned grades of up to 0.74% Li2O, representing an average

spodumene concentration of 21% in the pegmatite vein material. GTK were able to trace

the pegmatite vein along 500m of strike with a range in thickness between 1-20m. A

mineral resource for the deposit was reported as 2.1Mt grading 0.6% Li2O (31,000t LCE

contained).

5.13.4 Syväjärvi Deposit

Located in Kaustinen municipality of Central Ostrobothnia region, The Syväjärvi deposit

was also assessed by GTK between 2006 and 2010. Around 20 samples were taken

from the property by GTK which were assessed using ICP-MS methods. The samples

of pegmatite material contained an average of 13% spodumene, and returned grades of

approximately 1.0% Li2O. A mineral resource estimation of 2.6Mt grading 0.98%

(62,900t LCE contained) was made for the Syväjärvi lithium deposit which remains open

to the north, south and at depth.

5.14 France

France is reported to have no domestic production of lithium, although some mineral

concentrates produced from pegmatites near Clermont-Ferrand contain notable amounts

of lithium.

Kaolins de Beauvoir, a subsidiary of International industrial minerals producer IMERYS,

operate the Echassiéres site, located near Clermont-Ferrand. The site produces kaolin

and other mineral concentrates including a lepidolite rich sand marketed as ‘Felithe’.


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IMERYS is believed to produce approximately 15,000tpy of felithe, containing 1.8% Li2O,

4.4% K2O, 19.4% Al2O3 and 0.46% Fe2O3, used mainly as a flux material in the glass

industry.

Other French enterprises which have become involved in the lithium industry include

Bolloré Group, who made an offer to explore and develop the Salar de Uyuni deposit in

Bolivia in 2009. The Bolivian government subsequently rejected Bolloré’s offer in favour

of a Korean Consortium. In February 2010, Bolloré and Eramet signed an exploration

contract with Argentinean holdings group Minera Santa Rita. The contract gives Bolloré

and Eramet access to explore a number of saline lake projects in the north of Argentina

for lithium and other soluble components.

France is a net importer of lithium carbonate, sourcing the majority of material in 2012

from Belgium (25%), China (25%), and Chile (22%). Lithium carbonate imported from

Belgium in 2011 is believed to represent stockpiled material sourced from SQM’s

operations in Chile (Table 115).

Table 115: France: Imports and exports of lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

Chile 356 216 308 279 85 298 1,855 395

China 1 15 92 42 10 35 32 432

Belgium 381 489 514 358 670 381 476 446

Germany 478 222 233 460 315 315 242 163

Other 224 284 143 111 93 107 187 318

Total 1,439 1,227 1,290 1,251 1,172 1,137 2,792 1,646

Exports

Belgium 196 - - - - - - -

Germany 170 1 - 1 - 1 1 2

Other 89 10 1 2 - 16 1 -


Imports of lithium hydroxide and oxide have ranged between 250t and 570t since 2005,

with China and Germany being the major source countries in recent years. Exports of

lithium hydroxide and oxides are far less than imported tonnages, with the main markets

being Germany and Italy in 2012 (Table 116).


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Table 116: France: Imports and exports of lithium hydroxide and oxide, 2005 to 2012

(t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

China 11 15 69 70 122 315 235 210

Germany 95 108 107 88 75 75 105 144

Other 374 246 138 97 163 180 141 193

Total 480 370 314 256 362 570 479 547

Exports

Germany - - 4 2 40 4 55 35

Italy - - - - 14 15 29 27

Others 3 48 22 3 36 25 24 21


Belgian chemicals company Solvay produce lithium salt electrolytes at a facility in

Salindres, Laguedoc-Rousillion region. Solvay supplies lithium salt electrolytes to

Bolloré’s associates in Canada, to produce lithium metal polymer batteries.

5.15 Germany

Germany is not a domestic producer of natural lithium concentrates or compounds,

importing its demand for lithium raw materials predominantly from Chile and the USA.

Belgium also exports a significant tonnage of lithium carbonate to Germany, although

this material is believed to represent warehoused material from SQM’s operations in

Chile (Table 117).

Table 117: Germany: Imports and exports of lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

Chile 7,029 6,680 6,969 6,145 3,682 5,693 4,707 5,045

USA 788 897 598 730 584 764 788 842

Belgium 122 131 82 140 118 194 168 121

China 33 71 355 59 64 40 68 23

Other 126 130 127 69 45 104 8 27

Total 8,097 7,908 8,131 7,142 4,493 6,795 5,738 6,058

Exports

Turkey 261 303 265 405 426 609 803 952

France 761 589 669 622 365 513 606 298

Austria 123 122 176 196 272 360 292 111

Italy 223 276 169 7 2 16 277 142

UK 270 222 198 157 131 148 244 223

Other 1,353 1,395 1,230 907 688 908 699 530



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5.15.1 Rockwood Lithium (Langelsheim Plant)

Rockwood Lithium has operated in Germany since 1923, producing lithium metal,

chloride, hydride and bromide. The product range produced by Rockwood Lithium has

increased to over 80 different lithium products, mainly organic based compounds used in

chemical and pharmaceutical industries.

Lithium products are produced at the Langelsheim plant located in Goslar district. In

2000, the plant capacity was increased by 50% with the commissioning of a new lithium

aluminium hydride unit. The plant capacity was increased again in 2008 with the

construction of a new production facility, manufacturing mainly organo-lithium

compounds used in agricultural and pharmaceutical applications.

Rockwood Lithium is a member of LithoRec, a research and development group which

focuses on energy efficient and environmentally friendly technologies. In 2009,

Rockwood Lithium was granted €5.7M by the German Federal Ministry for the

Environment, Nature Conservation and Nuclear Safety, for construction of a pilot plant to

undertake research into recycling large lithium-ion batteries used in electric vehicles.

The funded project concluded in September 2011; however Rockwood Lithium

continues to address the possibility of recycling auto-batteries to produce high grade

lithium carbonate.

5.15.2 Helm AG

Based in Hamburg, Helm AG produces a largest range of chemicals for the

pharmaceutical, fertilizer, nutrition and specialty chemicals industries. Helm operates

several production facilities, three in Germany located in Hanover, Hamburg and

Bovenau, along with other facilities situated in Oman, Argentina, Saudi Arabia and

Trinidad and Tobago.

As part of their Chemical Solids business unit product list, Helm produces lithium

hydroxide (>55% LiOH purity) and lithium polysilicate. Lithium chemicals are believed to

be produced at Helms facilities in either Germany or Argentina, because of the

availability of raw materials. Helm has an international network of distribution centres,

although the majority of its sales are to European countries, with North and Central

America being their second largest market.

5.15.3 Lithium exploration in Germany

SolarWorld, a photovoltaic manufacturer headquartered in Bonn, Germany, is exploring

a previously mined deposit in Saxon-Zinnwald, Germany for lithium mineralisation.

Previous exploration of the site was undertaken as early as 1930, as lithium became

more widely used in lubricants. SolarWorld has undertaken drilling at the project during

2011-2012 and expected to produce a resource estimation for the project by the end of

2012. At this stage, first production is forecast by SolarWorld in Q1 2016 although


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feasibility studies, relevant licencing and mine/plant designs are yet to be attained or

completed.

5.16 Greece

In Greece, some of the bauxite mined is thought to contain lithium which is transferred to

the Alumina when processed. The lithium content of the alumina is utilised by smelters,

most likely in the major destinations for Greek alumina (Europe, Russia, and the USA)

which more commonly add lithium carbonate to reduce energy consumption in the

smelting pot. No information regarding how lithium is processed during alumina

production has been found and the producer of lithium coated bauxite has not been

identified. The major producers of alumina in Greece are Aluminium de Gréce, S&B

Indusrial Minerals, and Elmin.

5.17 India

Lithium mineralisation in India occurs within pegmatite intrusives located in the states of

Andhra Pradesh and Karnataka in the south, Jharkhand and Bihar in the east and

Rajasthan in the west. Pegmatites located in Bihar state and near Nellore in Andhra

Pradesh state are some of the largest deposits of mica in the world, including significant

volumes of the less common lithium-bearing mica mineral lepidolite. In 2005-2006 a

programme by the Entrepreneurship Development Institute of Ahmedabad, Gujarat was

looking to develop carbonate production from Indian lepidolite-bearing pegmatites;

however no further details have emerged since then.

In India, products or devices containing enriched lithium such as elemental lithium,

alloys, compounds and mixtures containing lithium, are classified as strategic minerals

under the Atomic Energy Act of 1962. The development of lithium deposits or

production of lithium products is overseen by the Atomic Minerals Division (AMD), part of

the Department of Atomic Energy, and information regarding individual producers of

lithium is not released. However, the AMD has reported recovery and production of

approximately 3-5tpy columbite-tantalite concentrate along with by-product spodumene

at Marlagalla, Mundur and Arehalli in Karnatka. AMD has also in the past formed

stockpiles of lepiodlite mineral concentrate containing up to 2.9% Li2O in Chattabar in

Giya district of Bihar.

Indian imports of lithium hydroxide and oxide have remained relatively steady since

2005, with only two notable dips in imports during 2006 and 2009 (Table 118). Prior to

2006, the USA was the major supplier of lithium hydroxides and oxides; however imports

from the USA fell to only 10t in 2007. In recent years, China and Chile have been the

largest suppliers of lithium hydroxides and oxides to India contributing 74% of total

imports in 2011. In 2012, imports from Russia increase significantly to 749t, whilst

imports from Chile, China and the USA are all declined further. Indian exports of lithium

hydroxide and oxide are minor in comparison to its imports.


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Table 118: India: Trade in lithium hydroxide and oxides, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

China 396 426 1,097 893 374 308 1,003 634

Chile 15 396 626 596 915 1,263 455 94

USA 553 125 10 216 116 275 102 24

Russia 493 261 40 - - - 90 749

Belgium 140 104 - 55 69 15 85 36

Other 82 - 22 26 28 6 231 104

Total 1,679 1,312 1,796 1,787 1,503 1,868 1,966 1,640

Exports

United States - 14 - - - 10 - 21

Saudi Arabia - - - 18 3 - 25 18

United Arab Emirates 93 117 143 153 91 19 15 18

Hong Kong - - - - 7 39 16 -

Other 57 70 49 60 77 59 64 26


Annual trade in lithium carbonate is relatively minor, with imports ranging between 300-

501t since 2005, predominantly from China and Chile (Table 119). Exports of lithium

carbonate from India are almost negligible, excluding a shipment of over 200t to the

USA in 2010.

Table 119: India: Trade in lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

Chile 365 401 97 157 107 242 246 237

China 74 51 196 108 124 198 215 29

USA 7 26 8 26 24 53 33 64

Other 72 40 50 125 48 7 53 48

Total 518 518 352 416 303 501 547 409

Exports

USA - - - - - 276 19 19

China - 132 - 85 - - - -

Germany 53 - - - - - 1 -

Other 25 8 8 14 5 9 1 10


Producers of lithium compounds in India are shown in Table 120.


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Table 120: India: Producers of lithium chemicals

Producer Product

Adarsh Fluorine, Mumbai, Maharashtra Lithium fluoride

Akshay Group Lithium carbonate & nitrate

Baj Chemical Corp., Mumbai, Maharashtra Lithium salts

Rockwood Lithium, Dahej SEZ, Gujarat Supplier of lithium chemicals from Rockwood Lith.

Deep Pharm-Chem, Ankleshwar, Gujarat Lithium bromide

GRR Fine Chem, Ahmedabad, Gujarat Lithium bromide, chloride, carbonate & fluoride

Heniks Inc., Mumbai, Maharashtra Lithium bromide, chloride, carbonate & hydroxide

Jubilant Organosys Butyllithium

Leesha Enterprises, Bangalore, Karnataka Lithium salts

Mahidhara Chemicals, Secunderabad, Andhra Pradesh n-butyllithium & organic lithium compounds

Mody Chemical Industry, Mumbai, Maharashtra Lithium bromide & chloride

Neogen Chemicals, Mumbai, Maharashtra Lithium bromide, chloride & other lithium inorganics

Nicholas Piramal India, Mumbai, Maharashtra Butyllithium & lithium aluminium hydride

Parad Chemical Corp., Vadodara, Gujurat Organic & inorganic lithium compounds

Prabhat Chemiorganic, Mumbai, Maharashtra Lithium bromide

Sainor Laboratories, Hyderabad, Andhra Pradesh n-butyllithium & other organo-lithium compounds

Satyam Chemicals, Mumbai, Maharashtra Lithium acetate, chloride and salts

Shreenivas Chemical Industries, Mumbai, Maharashtra Lithium chemicals

Sontara Organic Industries, Thane, Maharashtra Lithium bromide

Sudershan Laboratories, Jeedimetla, Andhra Pradesh Lithium carbonate, alkyl-lithium compounds, aryl-

lithium reagents & lithium amides

Triveni Chemicals, Vapi, Gujurat n-butyllithium

Vishal Pharmakem, Mumbai, Maharashtra n-butyllithium & lithium carbonate

Westman Chemicals, Mumbai, Maharashtra Lithium bromide & nitrate Source: Chemical press, Chemical register; Indian Chemical portal, company websites

5.17.1 FMC India Private Ltd.

In March 2007, FMC Lithium commissioned the Patancheru plant, its first Indian organo-

lithium compound factory near Hyderabad in Andhra Pradesh state. Organo-lithium

products produced at the Patancheru plant are predominantly used to supply the major

Indian pharmaceutical companies.

5.17.2 Rockwood Lithium

In November 2011, Rockwood Lithium began production at its plant located in the Dahej

Special Economic Zone, Gujarat. The production facility sources lithium raw materials

from Rockwood Lithium Inc.’s production facilities in USA. The plant produces

butyllithium used in the chemicals and pharmaceutical industries. The site will also store

other specialty chemical products for distribution in India and South Asia.


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5.18 Ireland

Ireland has to date not been a producer of lithium products. Spodumene bearing

pegmatite intrusives were identified and drilled in Ireland between 1970 and 1980, which

reported a resource of 2Mt grading 0.63% Li2O (contained 31,000t LCE). Occurrences

are localised to southern Leinster province, in the Carlow and Wexford counties.

International Lithium Corporation (ILC), a multinational mineral exploration company

owned 25.5% by TNR Gold Corporation and 14.7% by Jiangxi Ganfeng Lithium Co. Ltd.

(Section 5.10.7.6), is exploring for lithium in the Leinster province of Ireland at the

Blackfriars project. The Blackfriars licence area covers 292km2 which contains 19

occurrences of lithium-bearing pegmatites. A non NI 43-101 compliant resource

estimation for the Blackfriars project suggests a resource of 570,000t grading 1.5% Li2O

(contained 21,000t LCE), which ILC intend to increase both in size and confidence with

further exploration.

Grab sampling of pegmatite boulders has returned grades exceeding 4.0% Li2O, with a

maximum grade of 4.74% Li2O from the Moylisha area of the property. Drilling at four of

the 19 pegmatite occurrences has returned lithium oxide grades of up to 1.85% Li2O.

5.19 Israel

The Dead Sea in Israel is one of the world’s largest and lowest inland lakes, containing

brines with typical concentrations of between 10-20ppm Li. The Dead Sea in both Israel

and Jordan is estimated to contain reserves of 2.0Mt Li, although no commercial of

lithium has taken place at the inland lake. The Mg: Li is also highly unfavourable for

traditional lithium brine extraction method, frequently exceeding 2,000: 1 compared to

1.5:1 at the Salar del Hombre Muerto in Argentina and 7.1:1 at the Salar de Maricunga

in Chile.

Dead Sea brines are extracted and evaporated in solar ponds to produce potash and

investigations on raffinates from this process to extract lithium have so far proved

unsuccessful.

The Dead Sea Bromine Group, a division of Israel Chemical produces lithium bromide

from a facility located in Ramat Hovav. The facility was constructed as a joint venture

with SQM of Chile, who presumably supplies lithium raw materials to the plant.

Established in 1989, METAL–TECH is the exclusive recycler of lithium batteries for the

Israeli government at a facility in Ramat Hovav near Beersheba.


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5.20 Japan

In 2012, Japan had no domestic economic lithium deposits in operation and was solely

reliant on imports of lithium to satisfy its national demand. As a major producer of both

primary and secondary lithium batteries, Japan is a major importer of lithium compounds

and lithium metal, including over 15,000t lithium carbonate in 2011 (Table 121). Chile

has consistently been the largest source of Japan’s lithium carbonate imports,

contributing >70% of imported material since 2005. Imports of lithium carbonate fell in

2009, as a result of the global economic downturn and subsequent drop-off in demand

from lithium–ion battery cathode producers. Post global economic downturn recovery

was strong with imports in 2010 exceeding volumes reported in 2008; however imports

have since decreased as more battery cathode manufactures move production to China

or switch to a sol-gel production method which requires lithium hydroxide feed stock.

Table 121: Japan: Trade in lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

Chile 7,361 10,359 10,725 10,920 6,930 11,005 10,990 9,604

Argentina 779 914 894 212 285 1,468 2,916 2,375

China 52 1,558 743 637 688 1,216 1,021 720

USA 1,538 1,415 875 1,253 64 297 60 19

Others 270 275 316 172 56 42 103 37

Total 10,001 14,521 13,553 13,194 8,023 14,029 15,089 12,753

Exports

Taiwan 1 - 2 - - 1 2 -

China 151 106 121 1 7 0 2 12

Other 2 1 5 11 39 3 1 31


Since 2009, Japanese imports of lithium hydroxide and oxide have increased by 26%py,

exceeding 4,300t in 2012. This is largely a result of battery cathode manufacturers

importing lithium hydroxide instead of lithium carbonate shown in Figure 28.


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Figure 28: Japan: Imports of lithium carbonate, hydroxide & oxide and combined LCE,

2005 to 2012 (t)

Source: GTIS, Roskill estimates

The USA is the largest exporter of lithium hydroxide and oxide to Japan, accounting for

over 90% of total imports in 2011 (Table 122). The unit value of lithium hydroxide

sourced from the USA indicates imports are battery grade products, and average over

US$7,800/t, whilst imports from Chile and China display a much lower average price.

Table 122: Japan: Trade in lithium hydroxide and oxide, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

USA 1,318 1,829 2,455 2,204 2,029 2,522 3,193 3,940

China 133 294 268 117 120 276 267 384

Chile - - 23 87 20 2 29 40

Others 53 15 - - - 20 - -

Total 1,503 2,138 2,747 2,408 2,170 2,820 3,488 4,364

Exports

China 18 114 93 158 124 20 45 10

USA - - - 1 - - 10 -

S. Korea 8 4 18 54 121 320 2 -

Others 3 17 48 5 1 - 1 1


Since the mid 2000s, a number of Japanese companies have become involved with

potential producers of lithium in North and South America. In July 2010, Itochu Corp.

purchased a 20% share in Simbol Materials (Section 0), a potential future producer of

lithium from geothermal brine deposits in California, USA. Itochu Corp. also secured

exclusive rights to market Simbol’s products to the Asian market. Other large

multinational corporation have also become involved with the lithium extractive industry,

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2005 2006 2007 2008 2009 2010 2011 2012e

Total (LCE) Lithium carboante Lithium oxide and hydroxide


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with Toyota Tsusho investing US$150M in Orocobre’s Salar de Olaroz property in

Argentina, and Mitsubishi Corp. investing in Lithium Americas’ Salar de Caurachi

property, also located in Argentina.

Marubeni Corp. holds a 30% voting right in Pacific Lithium, a producer of high purity

lithium carbonate at its facility in Osaka prefecture. Marubeni also agreed in November

2010 to set up a Centre of Lithium Innovation in Chile with support from SQM,

Rockwood Lithium and Universidad de Chile. The Innovation centre will focus on

developing lithium-ion battery technologies and raw materials for future demand.

Honjo Chemical Corp. began the production of lithium metal and compounds in 1955

and has grown to become the largest producer of lithium chemicals and compounds in

Japan. Honjo has formed a number of joint ventures to produce specialty lithium

compounds. A joint venture between Honjo and Lithium Corp. of America (FMC Lithium)

began producing butyl lithium in 1986 and lithium metal in 1989. In 1993, Honjo formed

another joint venture ‘Dalian Honjo Chemicals’ with Dalian Chemicals, producing and

marketing lithium bromide. Honjo Energy Systems, a subsidiary of Honjo Chemicals

formed during restructuring of the company in 2002, produces cathode materials for

secondary lithium-ion batteries.

Honjo Chemicals operates two plants, on Naoshima Island in Kanagawa prefecture and

Neyagawa in Osaka prefecture. The product range includes:

Neyagawa Naoshima

Lithium cobalate Lithium bromide

Lithium manganate Lithium hydroxide

Lithium nickelate High-purity lithium carbonate

Lithium foil Lithium chloride

Lithium alloy Lithium carbonate micro powder

5.21 Kazakhstan

Until 1995, the Belogorsky combine exploited the Belogorsky, Yubileiny and Bakenny

deposits, which form part of the Ak Kezen pegmatite complex. Historically, Belogorsky

produced a tantalum concentrate grading around 28% Ta2O5, however, after 1995

production of tantalum concentrate ceased and a feldspar concentrate was produced up

until 1998. In late 1999, the Belogorsky combine was declared bankrupt and was sold to

Zolotoi Drakon of Kazakhstan.

In the mid 2000s, Belogorsky undertook pilot plant technological test work on samples of

spodumene concentrate to identify a method for lithium extraction. Ores were leached

with sulphuric acid at 1,105oC for 30 minutes to extract lithium from the spodumene.

The Belogorsky pilot plant is not believed to be in production and no further test work

into lithium extraction has been undertaken at the plant.

In October 2009, Galaxy Resources signed a Strategic Lithium Alliance Agreement with

General Mining Corp. Ltd. to explore multiple locations in Mongolia and Kazakhstan for


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lithium. The Uvs Basin project was the main focus for exploration, where previous

exploration by General Mining Corp. had identified deposits of solid potash and saline

brines. As part of the agreement, Galaxy Resources and General Mining Corp. plan to

co-operate on the identification, exploration, acquisition and development of both the

evaporite and brines deposits for their lithium and potassium potential.

Nova Mining Corporation has also shown interest in acquiring a mineral exploration

licences for multiple projects in Kazakhstan, although negotiations for the licences are

on-going.

5.22 Mali

Lithium deposits from spodumene-bearing pegmatites occur in the southwest of the

country within the Southern Mining district. The most notable lithium occurrence is the

Bougouni Lithium deposit, which produced a small amount of lithium products between

1956 and 1970.

In 1974, a deposit of 300,000t of spodumene with associated quartz, microcline, albite

and muscovite was discovered in the Sikasso-Bougouni area of Mali. The deposit was

later identified by Protec of Canada as economically exploitable, although no further

development plans have been announced.

5.23 Mexico

Although not a historic producer of lithium products, Mexico hosts a number of known

hectorite and geothermal brine deposits being investigated for their lithium potential. In

2011, Mexico was only a minor importer of lithium compounds, importing approximately

175t lithium oxides and hydroxides, and a further 220t lithium carbonate.

5.23.1 Litio Mex S.A. de C.V. (Piero Sutti S.A. de C.V.)

In 2009, Piero Sutti S.A.de C.V. (Piero Sutti) announced the discovery of lithium deposits

at a number of concessions in Zacatecas and San Luis Potosi states, Mexico. In total

Piero Sutti controlled six separate concessions overlying multiple lagoons, covering

468.35km2 (Table 123).


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Table 123: Mexico: Litio Mex S.A. concessions and resource estimations1

Concession # Area (km2) Li2CO3 (Mt) KCl (Mt) Contained Lagoons

Concession 1 223 2.32 140.58 Lagoon Caliguey

Saldivar Lagoon

La Colorada Lagoon

La Doncella Lagoon

Santa Clara Lagoon

Concession 2 137 0.07 3.00 El Agrito Lagoon

El Barril Lagoon

Hernandez Lagoon

Concession 3 5.6 0.03 1.20 El Salitral Lagoon

Concession 4 49.75 0.15 7.20 Chapala Lagoon

Salinas Lagoon

Concession 5 50 0.04 1.80 Villa Hidalgo Lagoon

Concession 6 3 0.54 7.76 La Salada Lagoon

Total 468.35 3.15 161.54

Source: Company website Note: 1-Resource estimations not believed to be NI43-101 or JORC compliant

The concessions held by Piero Sutti hosted lithium within the mineral hectorite, which

occurs in clays formed by hydrothermal argillic alteration of volcanic rocks. Piero Sutti

collected a number of assays during a 100mx100m systematic sampling program across

the Caliguey Lagoon in concession 1 and La Salada Lagoon in concession 6. Assays

from Caliguey were reported to average 311ppm Li and 3.25% K, and from the Salada

lagoon 870ppm Li and 3.25%, however the variation in sample grades is not reported.

After identifying elevated lithium values in clay samples from the various concessions in

2010, Piero Sutti formed Litio Mex S.A. de C.V. (Litio Mex) with a group of Spanish

investors. Litio Mex’s formation was principally to manage the sale of any lithium

products from the operation if production start-up is reached. The Spanish group were

reported to have invested €2M (US$2.48M) upon the formation of Litio Mex, with a

further €3M (US$3.73M) invested between 2010 and 2012. As of June 2012, there are

no facilities in the vicinity of the concession areas which are capable of recovering

lithium, boron or potassium salts. The total €5M (US$6.2M) investment may be used to

finance construction of a 1,000tpy capacity lithium carbonate pilot plant in Mexico.

Reports from local media in San Luis Potosi state estimate that construction of a full

scale production facility at one of Litio Mex’s projects would require US$200M financing

and could begin as soon as late 2012. The company intends to mainly source financing

from companies in China, South Korea, Australia and the USA, with CITIC Guoan

(Section 5.10.4.2) and LG Electronics both associated with constructing a lithium

carbonate or lithium battery facility in Mexico. Other companies highlighted as being

interested in financing Litio Mex are Jien Nickel Inc. and the Horoc Group, along with

Santa Fe Metals. The company itself however has not released any information

regarding plant construction.


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5.23.2 First Potash Corp. (Mexico)

In December 2009, First Potash Corp. (FPC) (Section 5.9.8) acquired an option to

purchase a 76% stake in the Cerro Prieto geothermal brine deposit located in Baja

California State, 30km south of Mexicali. Cerro Prieto is operated by a JV between

Escondida Internacional S.A. de C.V. (76%) and CPI Internacional S.A. de C.V. (24%).

FPC agreed the option to acquire Cerro Prieto with Escondida Internacional, for an initial

fee of US$125,000, 5M common shares and 5M warrants (US$0.50/share for two years)

upon signing. Furthermore, FPC have agreed to pay US$200,000 on signing the

agreement along with US$8,000 per month and US$50,000 upon closure of the

agreement to Escondida Internacional, to repay outstanding debts and cover costs for

due diligence, legal fees and G&A fees. An agreement between the two parties, has not

yet been signed and confirmed.

If the Cerro Prieto project reaches commercial production of lithium products, FPC are

also obliged to pay US$1.75M to shareholders in three phases over an 18 month period

from first production.

The Cerro Prieto project draws geothermal brine from 170 geothermal wells, pumping to

surface 5.7M gallons of hot brine per day. Approximately 60% of brine is pumped into

evaporation ponds and the other 40% used to produce steam for power generation.

Potential lithium carbonate production from the project is projected at 10,000t LCE.

5.23.3 Bacanora Minerals Ltd.

Bacanora Minerals is focused on the development of borate and lithium projects in

Sonora State, Mexico. The company holds two projects in Sorona State, the Magdalena

Borate project 17km east of Magdalena de Kino, and the Sonora Lithium project 180km

north east of Hermosillo. At the Sonora Lithium project, Lithium is hosted within the

minerals hectorite and polylithionite occurring in clay outcrops in volcano-sedimentary

sequences.

Surface sampling of the hectorite-polylithionite clays has returned grades of between

1,700ppm Li and 5,500ppm Li. Primary phase drilling completed in January 2011 at the

La Ventana target returned 955-5,080ppm Li along with anomalous caesium, boron,

potassium and magnesium concentrations. This was backed up by a second phase of

drilling on the target in December 2011, which returned similar grades.

Bacanora Minerals released a PEA for the La Ventana target at the Sonora project in

Januray 2013. The study assumed the production of 35,000tpy LCE over a 20 year

LOM, with average operating costs of US$1,958/t lithium carbonate and an initial capital

cost of US$114M. An additional inferred resource estimation of 16.83Mt grading 1.3%

Li2CO3 was reported by Bacanora, bringing the total inferred resource at the Sonara

property to 60Mt grading 1.6% LCE (contained 960,000t LCE).


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In February 2013, Bacanora signed a farm-in-agreement (binding MoU) with Rare Earth

Minerals (REM) to co-operate in exploration of the newly identified El Sauz and Fleur

concessions adjacent to and along strike from Bacanora's La Ventana deposit. In the

agreement, REM will purchase a 10% shareholding in Bacanora Minerals for an initial

fee of US$250,000 and a further US$500,000 in exploration expenditure over a six

month period. After the initial six month period, REM has an option to increase its

shareholding to 30% for a fee of US$500,000 and a further US$1M in exploration

expenditure over a six month period. REM will also have first refusal to increase its

interest up to 49.9%.

5.24 Mongolia

Although Mongolia is not a producer of lithium at present, the country is known to

contain deposits of evaporate minerals and saline brines are being explored for their

lithium and potash potential. In 2010, JOGMEC and the National Institute of Advanced

Industry, Science and Technology of Japan signed an agreement with the Mongolian

government to develop lithium resources in the country. Exploration is likely to focus on

areas in the north west of the country near the border with Russia which contains known

occurrences of potash minerals and saline brines.

Golden Cross LLC, a wholly owned subsidiary of General Mining Corporation, holds

over 2,000km2 of exploration licences named the Uvs Basin project in Uvs Aimag

province, North West Mongolia. The exploration licences target mainly coal and solid

potash deposits although the area is thought to be prospective for lithium brines and

soda ash.

In October 2009, Galaxy Resources (Section 5.3.2) signed an agreement with Golden

Cross LLC through their parent company General Mining Corporation for a right to

finance any lithium project in Kazakhstan and Mongolia through to BFS stage. In return

Galaxy would take ownership of 80% of the funded project with General Mining

Corporation having the option to retain a 20% stake.

Nova Mining Corporation acquired the right to purchase production from three lithium

projects in Mongolia. The letter of intent signed in June 2012 with Mongolian National

Mining Consultants Limited (MNMC) exclusively allows Nova Mining to purchase at a

discounted rate production from three lithium mining licences located in Bayankhongor,

Dornogobi and Dundgobi. Nova is to undertake a due diligence studies before signing a

Definitive Mineral Production Agreement.

5.25 Mozambique

The Alto Ligonha Pegmatite Field is located close to the town of Alto Ligonha, eastern

Nampula area, and is host to the greatest concentration of lithium depostis in the

country. The pegmatites of the Alto Ligonha field display a range of mineral

assemblages and chemistries, although lithium predominatnely occurs as spodumene


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and lepidolite mineralisation. Pegmatites also contain rare metal minerals (columbite

and tantalite), rare earth and radioactive minerals, gemstones (aquamarine, morganite,

rubelite, verdelite, emerald), along with various industrial minerals and raw materials

The first reports of pegmatite mining in the Alto Ligonha area date back to 1926 and

mining continued for several decades. In the 1960s Mozambique was a major producer

of beryl, and also contributed significantly to lithium, niobium and tantalum production.

Empresa Mineria do Alto Ligonha Ltda has produced small quantities of lepidolite from

time to time, producing on average 300tpy between 1965 and 1971. The last reported

production was 725t of lepidolite and 25t of spodumene in 1976.

In March 2012, Australian exploration company Kimberly Rare Earths began exploration

at the Malilonge Strategic Metal (MSM) site. Kimberly Rare Earths has an option to earn

up to 90% of mineral rights in the MSM site excluding gemstones. Geochemical

surveying undertaken in mid-21012 identified three targets with anomalus lithium-tin-

tantalum concentrations in soil samples, named Chiagio, Malala and Tombalala North.

Peak lithium cocnentrations in soil sampels reached 450ppm Li at the Chiagio target,

289ppm Li at Malala and 151ppm Li at Tombalala North.

5.26 Namibia

Until 1998, Namibia produced lithium products (petalite, amblygonite and lepidolite

concentrates) from the Rubicon mine, located 30km south east of Karibib. At its peak in

the 1970s, the Rubicon mine opeated by NamLitihum had an output of between 5,000-

10,000tpy lithium mineral concentrates; however this fell to 1,000-2,500tpy between

1985 and its eventual closure in 1998. It is thought that higher grade ore material at the

Rubicon mine was extracted prior to the mine being closed.

Table 124: Namibia: Production of lithium minerals, 1990 to 1998 (t)

Year Amblygonite Lepidolite Petalite Total

1990 53 81 1,134 1,268

1991 20 33 1,139 1,192

1992 5 93 1,054 1,152

1993 5 88 649 742

1994 … … … 1,362

1995 … … … 2,611

1996 … … … 2,081

1997 … … … 1,019

1998 … … … 500 Source: British Geological Survey Namibia Ministry of Mines and Energy

Namibian pegmatite deposits are located mainly in the Karibib-Walvis Bay- Omaruru

area of central and western Namibia, although other rare metal and lithium beraing

pegmatites have been identified in southern districts.


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Black Fire Minerals (BFM) acquired 100% ownership of the Karibib deposit in

Novemeber 2009, from Sunrise Minerals’ Namibian subsidiary ‘Starting Right

Investments Ninety Four Ltd.’. The Karibib project is located approximately 25km east of

Karibib, Erongo region, and formed of two adjoining ‘exclusive prospecting licences’

spanning 765km2.

The two licence areas are known as Rubicon and Helikon, both of which contain

identified pegmatite intrusives. Mapping and subsequent drilling has revealed the

pegmatites have strike lengths of up to 1.6km, and widths of 5-40m. Lithium minerals

identified in the mineralised pegmatites include spodumene, petalilte, lepidolite,

amblygonite, along with secondary hectorite mineralisation.

In Feb 2010, BFM reported more than 80 rock chip sample assays grading 1.88% Li2O

on average with a peak lithium content of 7.18% Li2O. Tantalum was also assayed for

with an average grade of 415ppm. A drilling program in March 2010 returned grade

varying from 1.43% Li2O over a 0.69m interval to 0.62% Li2O over 3.50m in a separate

drill hole.

5.27 Netherlands

There is no domestic lithium production in the Netherlands and the national supply of

lithium products is imported primarily from China, the UK, Belgium and Germany.

Imports of lithium carbonate since 2009 have ranged between 300-500t, far below the

volume observed prior to 2007 (Table 125).

Table 125: Netherlands: Trade in lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

China - - 321 262 148 195 236 148

United Kingdom 137 165 161 115 70 124 90 108

Belgium 846 979 902 255 64 71 64 69

Germany 58 60 71 111 16 40 39 51

Other 131 410 178 213 19 2 4 -

Total 1,173 1,613 1,634 956 317 433 432 377

Exports

Germany 26 4,175 174 253 86 40 78 320

France 84 83 51 79 57 53 69 84

Belgium 30 53 27 38 13 16 19 24

Others 182 65 115 150 279 52 77 71

Total 323 4,375 367 519 435 163 241 499 Source: GTIS

Imports of lithium hydroxide and oxide peaked in 2008 reaching just short of 1,300t; with

the majority of material sourced from the USA (Table 126). The onset of the global

economic downturn and reduced lithium demand caused imports to fall by 74% in 2009


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as imports from the USA were cutback. In 2011, exports of lithium hydroxide and oxide

totalled 259t, with Germany and France being the major destinations for Dutch exports.

Table 126: Netherlands: Trade in lithium hydroxide and oxide, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

China 62 149 271 390 146 105 238 -

UK 58 78 97 53 85 157 82 -

Belgium 52 83 58 74 0 5 79 112

USA - 179 463 757 90 16 28 -

Others 16 58 23 10 8 7 10 29

Total 188 547 913 1,284 329 290 437 140

Exports

Germany 40 104 253 599 129 24 94 80

France 52 16 14 115 31 13 64 34

Poland 0 15 11 9 52 13 32 1

Belgium 173 131 111 122 43 3 6 31

Others 85 19 179 360 132 64 64 84

Total 349 286 568 1,206 386 116 259 229 Source: GTIS

5.28 Portugal

Lithium is mined domestically in Portugal from lepidolite-bearing pegmatites. The sole

producer of lithium in the country is Sociedad Mineira de Pegmatites, extracting lithium

ores from two mines.

Portugal is estimated by the USGS to contain lithium reserves of 10,000t Li (53,230t

LCE). Lithium-bearing pegmatites occur mainly within the Barroso-Alvao pegmatite field

and Fregeneda-Almendra pegmatite field of north-western Portugal. Both pegmatite

fields are hosted in low-medium grade metamorphic rock and are associated with local

granitoid intrusive bodies. Spodumene, petalite, lepidolite and amblygonite

mineralisation have been identified in samples of the pegmatites from the Barroso-Alvao

and Fregeneda-Almendra fields, although mineralisation of spodumene and lepidolite is

most common.

Other lithium bearing pegmatite intrusives identified in the country are shown below:

Deposit Location Comments

Guarda

Pegmatite Field

Beira Interior

Norte, Centro

region

Comprised of three main occurrences at

Massueme, Gouveia and Goncalco

Small amounts of lithium bearing

pegmatite are extracted from the


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Goncalco deposit and use in the

domestic ceramics industry.

Lithium mineralisation predominantly as

lepidolite

Serra de Arga Minho-Lima,

Norte region

Pegmatites reported to have grades of

between 0.45-1.2% Li2O

Lithium mineralisation occurs as petalite,

spodumene, lepidolite and amblygonite

Mangualde Dão-Lafões,

Centro region

Lithium contained within lithiophilite

bearing pegmatite intrusives

Segura Beira Interior

Sul, Centro

region

Identified pegmatites dykes with

amblygonite and montebrasite

mineralisation

5.28.1 Sociedad Mineira de Pegmatites

Sociedad Mineira de Pegmatites (SMP) is the sole producer of lithium mineral

concentrates in Portugal. The company operates two mines at Mesquitela and Guarda,

which extract the lithium-bearing mineral lepidolite. In 2009, a resource of 10,000t Li

(53,230t LCE) was estimated for the two deposits.

Output from the two mines has increased from 24,600t in 2003 to 41,000t in 2012 (Table

127). Lepidolite concentrate produced by SMP is typically used in the local ceramics

and glass industries. Concentrate is not exported due to high freight cost and lack of

suitability in major lithium mineral applications.

Table 127: Sociedad Mineira de Pegmatites: Production of Lithium, 2004 to 2012 (t)

2004 2005 2006 2007 2008 2009 2010 2011 2012

Lepidolite 28,696 26,185 28,497 34,755 34,888 37,359 40,109 37534 41,000

LCE1 1,774 1,619 1,762 2,149 2,157 2,310 2,479 2,320 2,500

Source: 2003-2005 Roskill estimates, 2006-2011 BGS, 2012 USGS Note: 1-assuming 2.5% Li2O content

5.29 Russia

Since 2008, lithium resources in Russia have been considered as strategic deposits.

Although Russia is believed to contain significant lithium reserves, domestic production

ceased in 1999 and lithium raw materials have since been imported, predominantly from

Chile and China.


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5.29.1 Russian Lithium Reserves and Resources

Although exact Russian lithium reserves are unknown they are considered to be

substantial, with estimations ranging between 130,000t Li to an upper limit of 5Mt Li.

Lithium deposits in Russia are hard rock deposits, occurring almost exclusively as mixed

rare metal pegmatites. Lithium hosted in mica-fluorite metasomatic deposits has also

been identified, although these deposits are comparatively uncommon. A small number

of brines have been assessed for lithium content within Russia, however to date all have

returned low lithium concentrations.

Geographically, Russian lithium deposits are located mainly in Eastern Siberia, and the

Northern Region. The Far East region of Russia is also host to a small number of lithium

deposits. The largest lithium deposit identified in Russia is the Kolmozerskoe deposit in

Murmansk Oblast, estimated to contain 74Mt of ore grading 1.14% Li2O by the

Geological Survey of Finland in 2011. Attempts to exploit the Kolmozerskoe deposit

have been deterred as it is located in a remote and undeveloped area of Russia. Table

128 lists the other lithium deposits identified in Russia.

Table 128: Russia: Deposits of lithium

Deposit Type of ore Other

metals

Reserves Li2O

Content

(%)

Status

Murmansk oblast

Voronietundrovskoe

(Vasin Mylk section)

Rare metal

pegmatite

Ta, Be, Cs Small 0.9 No plans for development

Polmostundrovskoe Rare metal

pegmatite

Ta, Nb Large 1.25 Reserves outlined

Kolmozerskoe Rare metal

pegmatite

Ta, Nb Very large 1.35 Reserves outlined

Tuva republic

Ulug-Tanzek Rare metal garnet Ta, Nb, Zr,

rare earths

Large 0.08 Reserves outlined

Tastygskoe Rare metal

pegmatite

Ta, Nb, Zr,

rare earths

Small 1.5 To be re-evaluated

Irkutsk oblast

Vishnyakovskoe Rare metal

pegmatite

Ta, Cs Small 0.09 Reserves outlined

Goltsovoe Rare metal

pegmatite

Ta Large 0.8 Reserves outlined

Urikskoe Rare metal

pegmatite

Ta Large 1.1 No plans for development

Belorechenskoe Rare metal

pegmatite

Ta Small 1.1 No plans for development

Chita oblast

Orlovskoe Tantalum-bearing

garnets

Ta Small 0.3 Care-and-maintenance; Ta

ore was previously mined by

Orlovsky GOK

Achikansky section Tantalum-bearing

garnets

Ta Small 0.3 No plans for development

Table continued….


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….Table continues

Deposit Type of ore Other

metals

Reserves Li2O

Content

(%)

Status

Etykinskoe Tantalum-bearing

garnets

Ta Medium 0.1 Under preparation for

mining

Zavitinskoe Rare metal

pegmatite

Ta, Be Medium 0.7 Care-and-maintenance; ore

was previously mined by

Zabaikalsky GOK

Primorsky krai

Voznesenskoe Mica-fluorite ores Be, CaF2 Medium 0.5 Fluorite is mined by

Yaroslavsky GOK

Pogranichnoe Mica-fluorite ores Be, CaF2 Small 0.2 Fluorite is mined by

Yaroslavsky GOK

Source: Light Metals in the CIS, Roskill Information Services Ltd; InfoMine Note: Small: <100,000t Li2O; medium: 100,000-300,000t Li2O; large: 300,000-600,000t Li2O; very large: >600,000t

Li2O

5.29.2 Russian Lithium Production

Russian production of lithium raw materials declined in the 1990’s as falling lithium

prices and increased supply from brine deposits in Chile ultimately made the Russian

hard rock projects uneconomic and uncompetitive. The Zavitinskoe deposit in Chita

Oblast was the last miner of lithium raw materials in Russia, stopping production of

spodumene concentrate in 1997. The Zavitinskoe mine remains on care and

maintenance, managed by the TVEL Corporation, supporting the possibility that

production from the project may be restarted in favourable market conditions.

TVEL was established in 1996 to improve the production efficiency of nuclear fuel

enterprises in Russia. The corporation is comprised of 15 enterprises involved in the

mining and processing of natural uranium and rare metals including lithium. Two of

TVEL’s subsidiaries, process lithium products, which are JSC Chemical and

Metallurgical Plant in Krasnoyarsk Krai, and JSC Novosibirsk Chemical Concentration

Plant in Novosibirsk Oblast.

5.29.2.1 JSC Chemical and Metallurgical Plant

JSC Chemical and Metallurgical Plant (JSC C&MP) was founded in 1956 to process

spodumene concentrate from the Zavitinskoe (Zabaykalskogo) rare metal pegmatite in

Chita Oblast. Spodumene concentrates were originally processed to produce lithium

hydroxide, however production circuits to produce lithium carbonate, lithium metal and

other rare metals such as rubidium caesium and gallium were added later during the

plants operation. Production capacity at the JSC C&MP is reported to be 8,000tpy

lithium hydroxide and 50tpy lithium metal. The product list in May 2012 includes:

Lithium metal: catalyst grade (98% Li), technical grade (99% Li), battery grade

(99.9% Li)


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Lithium hydroxide anhydrous (99% LiOH)

Lithium carbonate (99.95% Li2CO3)

Lithium hydride (98% LiH)

Lithium hydroxide monohydrate (55% LiOH)

Production from the Zavitinskoe rare metal pegmatite mine declined after the dissolution

of the Soviet Union in 1991, and mining finally ceased in 1997 as a result of falling

lithium prices. The Zavitinskoe mine was originally designed to extract >1Mtpy ore

grading 0.6-0.7% Li2O and produce a spodumene concentrate containing 5% Li2O.

When the mine was closed in 1997 the Zavitinskoe deposit was reported to contain

reserves of >7Mt ore grading 0.6-0.7% Li2O, and if ore adjacent to the known deposit

was considered, mining of 1Mtpy ore could be sustained for a further 20 years.

After the closure of the Zavitinskoe mine in 1997, JSC C&MP began importing lithium

carbonate, mainly from SQM in Chile and various Chinese producers to produce lithium

hydroxide. The processing of lithium chloride at the JSC C&MP is likely to be phased

out when lithium carbonate becomes more readily available.

5.29.2.2 JSC Novosibirsk Chemical Concentration Plant

JSC Novosibirsk Chemical Concentration Plant (JSC NCCP) operates a lithium

processing facility in Novosibirsk oblast. The plant sources its raw materials, typically in

the form of lithium hydroxide from JSC C&MP (Section 5.29.2.1) when available, lithium

carbonate or chloride, and lithium bearing wastes from other Russian enterprises,

producing a range of lithium products including:

Lithium metal (98%, 99% and 99.9% Li purity)

Li-7 hydroxide monohydrate (55.5% or 54.0-59.0% Li7OH)

Hi-aluminium lithium metal (99.9% Li-Al inc. 0.1-5.0% Al)

Lithium chloride (98% or 99.5% LiCl)

LIDOS sanitizer/disinfectant solution

In mid-2011 JSC NCCP’s parent company TVEL agreed to progress with a US$56.5M

project to produce cathode materials for lithium-ion batteries with Rusnano. The new

facility will be constructed at the JSC NCCP site in Novosibirsk oblast and will be

financed US$28M by Rusnano, US$23.5M by TVEL Corp. and US$5M by JSC NCCP.

The plant will be constructed in three phases, the first of which will be a test production

phase with a capacity of 20tpy cathode materials, mainly to determine preferable

cathode material characteristics and quality. The second phase is planned to increase

production capacity to 1,750tpy lithium iron phosphate in Q3 2013 with the third and final

phase of construction anticipated for Q4 2014 which would see production capacity of

lithium iron phosphate increased to 3,500tpy.


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5.29.3 Russian Imports and Exports of Lithium

Between 2002 and 2005 Russian imports of lithium carbonate increased 17%py

reaching 2,903t in 2005 (Table 129). This was caused by an increase in toll processing

of lithium carbonate from SQM in Chile at JSC C&MP and JSC NCCP to produce lithium

hydroxide. A sharp drop in lithium carbonate imports in 2006 coincides with the

completion of SQM’s lithium hydroxide production facility in Antofagasta, Chile resulting

in a reduced amount of lithium carbonate being exported for toll processing in the

subsequent years. Lithium carbonate imports in 2011 increased by over 300% on the

previous year, with material sourced mainly from Chile and lesser amounts from China.

The sudden increase is likely caused by the restart of toll processing lithium carbonate

for SQM in Chile as demand exceeds its lithium hydroxide plant capacity. The lithium

hydroxide produced in Russia is exported to SQM’s European warehouses in Belgium or

to Helm AG (Section 5.15.2) in Germany (Table 130).

Table 129: Russia: Imports of lithium carbonate, 2002 to 2012 (t)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Chile 1,800 1,449 2,331 2,903 891 660 820 526 617 1,884 2,130

China - - 1 - - 66 36 14 74 219 53

Uzbekistan 35 72 58 39 47 26 32 1 - - -

Others - 6 9 13 - 121 3 4 6 7 69

Total 1,835 1,526 2,399 2,955 938 873 891 545 696 2,110 2,200 Source: GTIS

Russian exports of lithium hydroxide show a similar pattern to lithium carbonate imports,

increasing between 2002 and 2005 as toll processing of lithium carbonate to hydroxide

increased. Exports fall sharply by nearly 90% in 2006 as SQM began producing lithium

hydroxide in Chile and selling lithium hydroxide direct to customers. The recovery in

exports of lithium hydroxide in 2011 moved Russia back to being a net exporter of

lithium hydroxide, something which it had not achieved since 2005 (Table 130 and Table

131).

Table 130: Russia: Exports of lithium hydroxide, 2002 to 2012 (t)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Belgium 900 860 1,606 2,300 120 - - - - 690 2,000

Germany 260 520 200 300 200 220 80 180 200 520 310

Japan 21 21 29 - - - - - - - -

Others 3 1 - 9 - 10 - 2 - 1 -

Total 1,184 1,402 1,836 2,610 320 230 80 182 200 1,211 2,310 Source: GTIS


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Table 131: Russia: Imports of lithium hydroxide, 2002 to 2012 (t)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

USA 1,612 191 748 678 481 380 260 60 141 79 -

China 47 193 80 20 53 213 111 90 69 206 185

Chile - - 7 - 232 - - 72 88 161 18

Belgium - - 120 21 20 - - - - 58 200

Others - 18 - - - - 5 - - - 20

Total 1,660 402 955 719 786 593 376 222 297 503 423 Source: GTIS

5.30 Serbia

Rio Tinto holds the Jadar lithium project through its subsidiary Rio Sava Exploration

based in Belgrade, Serbia. The Jadar project is situated 100km west of the city of

Belgrade and was identified in 2004, after exploration for sodium borates covered the

area. The deposit is based upon Jadarite (LiNaB3SiO7(OH)) mineralisation which

contains both the elements lithium and boron. The mineral Jadarite is a relatively recent

discovery, having only been formally identified and named in 2006. Underground mining

methods will be required to extract mineralisation, which occurs between 250m and

600m in depth.

A PFS was released for the Jadar project in January 2009 after Rio Tinto had invested

US$27M in exploration. The initial PFS inferred resource estimation totalled 114.6Mt

grading 1.8% Li2O and 13.1% B2O3. The resource estimation was upgraded in 2010

to125.3Mt grading 1.8% Li2O (contained 5.58Mt LCE) and containing 16.2Mt B2O3. The

later 2010 estimation only assessed the lower jadarite zone of the deposit, on which Rio

Tinto intend to focus future exploration work on until production.

Jadarite ore at the project is described as being amenable to a simple beneficiation and

upgrading process to produce a mineral concentrate. From the mineral concentrate Rio

Tinto plan to produce both lithium carbonate (Li2CO3) and boric acid (H3BO3).

Production is not expected to come online at the Jadar project until 2016.

Pan Global Resource Inc. (Pan Global) is developing the Balkans JV project in co-

operation with Lithium Li Holdings. The Balkans project is comprised of 14 different

license areas in Serbia and Bosnia Herzegovina targeting Jadarite mineralisation, similar

to that observed at Rio Tinto’s Jadar Lithium project. Pan Global has an option to gain

an 80% stake in three of the 14 Balkan JV Licence areas through financing the

development of the project. The licence areas located within Serbia are the Jadar West,

Badanja and Bela Crkva projects which lie adjacent or near to Rio Tinto’s Jadar project,

Raduŝa, Valjevo and Ljig to the east, and the Kosjerić and Gorobilje licences which lie

further south.

The option for Pan Global to gain an 80% stake in the Balkans JV licences is split into a

three phase development program. The company must invest US$4M in exploration

during the first three years to gain a 51% stake in the licence area and satisfy the first


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phase. After the completion of phase 1, Pan Global are required to invest a further

US$12M in the project over a period of four years to gain a 65% stake. To acquire an

80% stake in three of the licences, Pan Global must finance the project through to the

completion of a feasibility study, or have invested US$20M in the project’s development.

Ultra Lithium is exploring six licence areas in Serbia through its wholly-owned local

subsidiary Ultra Balkans. The licences are for the Koceljeva, Trnava, Valjevo East,

Preljina, Ladevci and Kragujevac mineral prospects, which cover over 540km2.

Exploration hopes to identify jadarite mineralisation and define a lithium and boron

resource for the projects. Ultra Lithium intends to initiate exploration drilling in 2013

dependant on favourable results from geochemical and geophysical analysis.

In May 2012, Ultra Lithium signed an agreement with Beijing Explo-Tech Engineering

Co. Ltd. (BETEC) to help develop its projects in the Balkans. BETEC will provide an

initial payment of CAN$1M to fast track exploration. For a period of three years, BETEC

will also provide funding of up to CAN$3.5M to cover exploration costs. For every

CAN$500,000 in funding which BETEC provides, they will acquire a 5% stake in Ultra

lithium’s subsidiary Ultra Balkans, up to a maximum stakeholding of 35%.

5.31 South Africa

South Africa is believed to host a great number of lithium and rare metal containing

pegmatites, although in the majority of cases the pegmatite are not economically viable.

Lithium bearing pegamtites in the Noumas and Norrabees areas of the Cape Province

were estimated by Garrett in 2004 to contain 30,000t Li (160,000t LCE). In Port

Shepstone District, south of Durban, significant quantities of spodumene have been

identified in a number of leucocratic pegmatoidal vein bodies. Although further drilling is

required to estimate the ore reserves, these pegmatites could satisfy the lithium

requirements of South Africa for a number of years. The pegmatite also has potential to

produce dimension stone and feldspar as useful by-products. Other lithium bearing

pegamatites have been identified in the lower Orange River region, forming the

westernmost extension of the Northern Cape pegmatite belt. South Africa is known to import thousands of tonnes of lithium mineral concentrate from Bikita Minerals (Section 5.41.1) in Zimbabwe. In 2011, South Africa imported 35,453t of mineral concentrate from Zimbabwe, most of which is presumed to be petalite concentrate from Bikita minerals. South African imports and exports of lithium compounds are mostly negligible; with the import of approximately 500t of lithium hydroxide and oxide mainly from Chile and India being the only notable trade in 2011.

5.32 South Korea

South Korea possesses no domestic sources of lithium raw materials and needs to

import lithium compounds to supply the strong demand from the country’s battery

materials and lithium grease industries. Since 2005, imports of lithium carbonate have


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generally increased year on year, from 2,335t in 2005 to 11,425t in 2011 (CAGR

30%py). In 2011, the largest supplier of lithium carbonate to South Korea was Chile,

contributing over 95% of total imports (Table 132). Imports of lithium carbonate reached

13,762t in 2012, an increase of approximately 20% from the previous year. The

increase in imports of lithium compounds has been driven by growth in the battery

cathode materials industry, with multinational companies such as Umicore, LG Chemical

and 3M operating production facilities in the country.

Table 132: South Korea: Trade in lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports Chile 2,069 2,357 3,610 5,079 4,942 7,637 10,930 13,762

China 207 117 203 141 136 215 359 252

Argentina 22 - - 2 38 80 90 216

Other 38 66 42 25 25 56 46 39

Total 2,335 2,540 3,855 5,247 5,142 7,987 11,425 13,762

Exports

China 2 - - 54 178 485 299 198

Other 1 - - - - 54 20 187

Total 3 - - 54 178 539 319 385 Source: GTIS

Imports of lithium hydroxide have increased at 14%py since 2005, reaching 1,120t in

2012. The largest suppliers of lithium hydroxide to South Korea in 2012 were Chile,

China and the USA (Table 133).

Table 133: South Korea: Trade in lithium hydroxide, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports

Chile 0 20 93 79 58 194 353 453

China 45 49 137 96 163 185 314 466

USA 292 253 251 297 236 186 274 159

Other 95 22 3 21 3 3 4 42

Total 433 344 484 493 460 568 946 1,120

Exports


5.33 Spain

Spain is estimated by the Geológico y Minero de España (IGME) in 2010 to hold lithium

reserves of 140t Li2O in deposits of amblygonite located in Salamanca, Caceres and

Badejoz provinces, with a further 14.4t Li2O contained within deposits of lepidolite in


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Portavedra. Since 2012, IGME has not updated its national lithium mineral reserve

estimate.

Spain is a net importer of lithium compounds, importing approximately 2,500t lithium

carbonate and 750t of lithium hydroxide and oxides in 2012. France and Chile are the

major suppliers of lithium carbonate to Spain, whilst lithium hydroxide and oxide are

sourced predominately from China, Belgium, Germany and Chile (Table 134). Spanish

exports of lithium carbonate, hydroxide and oxide are comparatively minor.

Table 134: Spain: Imports of lithium compounds, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Lithium Carbonate

France 46 11 1,073 2,349 1,997 1,941 1,913 1,180

Chile 440 572 452 938 657 1,063 1,297 1,178

Other 1,067 246 293 708 171 235 127 117

Total 1,553 828 1,819 3,994 2,825 3,239 3,338 2,476

Litihum Hydroxide and Oxide

Belgium 56 35 96 87 37 286 198 195

China 193 108 166 110 190 172 196 206

Chile 5 45 104 61 19 146 177 136

Germany 217 291 210 228 255 382 104 177

Other 9 94 24 15 20 20 22 46

Total 480 573 600 501 521 1,007 696 759 Source: GTIS

5.33.1 Minera Del Duero

Minera Del Duero is a wholly owned subsidiary of the SAMCA Group based in Aragon,

Spain. The company operates Mina Feli in La Fregeneda, Salamanca province, which

produces minor amounts of lepidolite concentrate used by Euroarce, a member of the

SAMCA Group, in the production of ceramics and glass. The mine is reported to have a

capacity of 10,000tpy lepidolite.

Production from Mina Feli peaked in 2007 at 10,326t; however output has since fallen

sharply (Table 135).

Table 135: Minera Del Duero: Production of lepidolite in Spain, 2003 to 2011 (t)

2003 2004 2005 2006 2007 2008 2009 2010 2011

Lepidolite 6,333 3,226 6,751 8,339 10,326 9,342 4,270 7,824 7,800

LCE1 78 40 83 103 128 116 53 97 96

Source: 2003-2004 IGME, 2005-2011 BGS 1-Based on 0.5% Li2O content


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5.33.2 Solid Resources Ltd.

Solid Resources hold via their Spanish 100% owned subsidiary ‘Solid Mines España

S.A.’ the Doade-Presqueiras project, located 25 km East of Pontevedra in Galicia. The

concessions cover 49km2 overlying an area with multiple identified pegmatite intrusives

hosting rare metal, lithium and tin mineralisation. The property was previously mined for

tin by local teams; however mining ceased when the tin price fell in the 1980s.

Exploration by Solid Resources at the Doade-Presquerias project has focused on two

main areas, the Presquerias area in the north of the project and the Toboazas area

covering parts of the central and southern project. A NI 43-101 compliant resource

estimation for the two areas was released in October 2011 which reported a combined

inferred mineral resource of 9.8Mt grading 0.51% Li2O.

Table 136: Inferred mineral resource estimation for the Doade-Presquerias project,

October 2011

Mt Li2O% Ta2O5 (ppm) Nb2O5 (ppm) Sn (ppm)

Presquerias 5.6 0.31 91.2 83.6 585.7

Taboazas 4.2 0.77 145.0 109.4 648.7

Total 9.8 0.51 114.3 94.7 612.7 Source: Company data

Solid Resources began a follow-up drilling campaign on the Doade-Presqueiras project

in September 2012, which is intended to upgrade the confidence in the resource

estimation to indicated and measured resources. During 2012, SGS UK has been

contracted to conduct metallurgical studies on material from the Doade-Presqueiras

project to produce a lepidolite/spodumene concentrate. Solid Resources then plan to

design and construct a pilot plant according to SGS’s metallurgical report, processing a

100t bulk sample by early 2013.

After completing construction of the pilot plant and receiving a positive feasibility study,

Solid Resources expect to be granted an exploitation licence for the project by the

Spanish mining authorities. Upon receiving an exploitation licence, construction is

expected to begin on a 1,500tpd ore processing facility at the northern end of the

Doade-Presqueiras project.

5.34 Taiwan

Taiwan does not produce lithium raw materials domestically, importing lithium

compounds from predominantly South America, the USA and China to supply national

demand. In 2012, Taiwan imported 545t lithium carbonate, with Argentina supplying

over 60% of total imports (Table 137). Taiwan imported 435t of lithium hydroxide, mainly

from the USA and China.


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Table 137: Taiwan: Imports of lithium carbonate, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Lithium Carbonate

Argentina 16 56 57 18 132 307 522 347

Chile 128 41 20 45 24 65 124 125

China 58 37 53 51 2 30 25 73

Other 26 2 4 1 2 9 7 -

Total 229 136 134 115 160 410 677 545

Lithium Hydroxide

USA 1 23 49 66 42 274 292 232

China 47 41 78 60 50 125 102 200

Chile - - - 9 22 98 18 -

Other - - - - 1 16 - 3


Rockwood Lithium’s operation in Taiwan was founded in 1996 as a 100% owned

subsidiary of Chemetall GmbH. The company’s Taiwanese headquarters are located in

Taipei City and the production plant producing both normal and secondary butyllithium is

located in Chang Hua Industrial Coastal Park, Chanhua County. First production of

butyllithium from the plant was in 1999, which produces all concentrations of n-

butyllithium from diluted product (10%) up to concentrate (90%).

5.35 Tajikistan

Lithium mineralisation has been identified in the Zeravshansky region of Tajikistan,

along with mineralisation of other rare metal minerals. Further exploration is required to

determine the extent of observed mineralisation and if the occurrences have any

economic potential.

5.36 Turkey

Eti Mine, owned by the Turkish government, mines ulexite and colemanite and produces

a range of boron compounds in northern Turkey. A study by Eti Mine and Anadolu

University showed that about 2,000ppm of lithium occurs in clay minerals associated

with boron at the Bigadiç ore field in Turkey. However, the study concluded that it was

not economical to extract the lithium (costs given at US$6.36/kg Li2CO3 in 2005)

compared to extraction from minerals and brines, mainly because of the cost of raw

materials required, but also because of the low lithium content. Further research

continues to find a more economical extraction method.


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5.37 UK

With no domestic source of lithium raw materials, the UK imports all required lithium

concentrates and compounds. Lithium carbonate is imported from mainly Germany,

Belgium and China, with total imports reaching 376t in 2011 (Table 138). Since 2010,

lithium hydroxide and oxide are also predominantly imported from Germany and

Belgium, as the USA ceased exports of lithium hydroxide to the UK. Exports of lithium

carbonate are minor, totalling only 102t in 2012.

Table 138: UK: Imports of lithium carbonate and lithium hydroxides and oxides,

2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Lithium carbonate imports

Germany 109 142 160 118 118 79 158 148

Belgium 0 30 7 101 131 107 104 122

China 18 8 15 3 94 121 96 49

USA 311 291 40 37 10 - - 11

Chile 197 169 363 208 184 105 - -

Other 24 12 204 3 12 8 17 14

Total 658 653 787 471 550 420 376 344

Lithium hydroxide imports

Belgium 94 149 222 292 133 198 164 103

Germany 119 91 58 20 33 20 38 8

USA 154 125 116 95 632 - - -

Other 63 37 66 18 55 14 13 8


FMC Lithium operates a butyl lithium production facility at Bromborough in the UK,

sourcing lithium raw materials from its Salar del Hombre Muerto operation in Argentina

(Section 5.2.1). Until 2009, FMC produced lithium metal at the Bromborough facility;

however, lower global demand and company consolidation resulted in lithium metal

production circuits at the plant being shut down with production moved to the Bessemer

city plant in the USA (Section 5.39.3).

Leverton-Clarke Specialty Chemicals operate a produce a range of lithium

compounds from a plant located in Basingstoke, Hampshire. The company has been in

operation for more than 30 years and supplies lithium products to a wide range of

technically advanced industries.


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5.38 Ukraine

Ukraine is not a current producer of lithium raw materials; however, the country is

reported to contain significant lithium reserves. The Shevchenkivske lithium deposit in

Zaporizka region has been assessed by the State Geological Research Institute and

developed for commercial mining. A prefeasibility study has also been completed for the

Polokhivske lithium deposit in Kirovogradska region. Both deposits are considered to be

economic but the latter seems to be more attractive for mining.

The Ovruchskiy complex formed of sequences of volcano- sedimentary deposits in the

Bilokorovychska, Ovrutska and Vilchanska structural basins, Zhytomyr Oblast, have

been identified to contain lithium mineralisation. The basins are also identified to contain

copper, beryllium and zirconium mineralization within the volcano-sedimentary deposits.

Perekop Bromine is the only producer of bromine chemicals in the Ukraine, producing

lithium bromine dyhydrate and lithium bromine solution at the Sivash plant in

Krasnoperekopsk, Crimea region.

Trade in lithium products in Ukraine is relatively minor, with imports of lithium hydroxide

and oxides contributing almost the entire flow of lithium products into the country. In

2011, Ukraine imported 143t of lithium hydroxide and oxide, with China (77%) and Chile

(19%) being the two largest suppliers.

5.39 USA

Two of the largest lithium companies, Rockwood Lithium and FMC Litihum are based in

the USA, although the majority of their lithium production occurs overseas. FMC Lithium

has no domestic production of lithium minerals or brines and imports lithium carbonate

and chloride from its subsidiary in Argentina. Rockwood Lithium remains the only

domestic producer of lithium compounds from brines in the USA, at the Silver Peak

operation in Nevada.

The USA however has a history of lithium mineral production, most recently from Cyprus

Foote’s (now Rockwood Lithium) Kings Mountain spodumene mine in North Carolina

which ceased production in 1986. During its operation, the Kings Mountain mine and

adjacent plant had a capacity to produce 8,000tpy lithium carbonate and was one of the

world’s largest lithium mines.

As Rockwood lithium was the sole domestic producer of lithium in the USA during 2011,

production information is withheld to stop company specific data being distributed.

Production by Rockwood Lithium in 2011 was estimated to be around 25,000t LCE,

however the majority of this was from the Salar de Atacama property in Chile and Silver

Peak is estimated to have contributed less than 20% of this total.


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In 2012, the USGS estimated the USA contained reserves of 38,000t Li (202,000t LCE),

making it the sixth largest lithium reserve. The USA’s lithium resources were also

estimated by the USGS in 2012 to be 4.0Mt Li (21.3Mt LCE).

5.39.1 Trade in lithium to/from the USA

The USA is a net importer of lithium carbonate, dominated by imports from FMC

Lithium’s Salar de Hombre Muerto operation in Argentina and Rockwood Lithium’s Salar

de Atacama operation in Chile. The USA’s imports of lithium carbonate in 2012 totalled

13,232t, with Chile and Argentina the origin for approximately 54% and 42% of imports

respectively (Table 139). Imports fell by around 8% in 2012 as a result of a drop-off in

imports from Argentina. Exports of lithium carbonate from the USA fell by 60% in 2009,

with exports to Japan, previously a major importer of lithium carbonate from the USA,

falling to just one tonne. The drop in exports was most likely a result of the global

economic downturn and consumers preferring to use up stores and stockpiles of rather

than purchase lithium carbonate. Since 2009, annual lithium carbonate exports have

remained stable at approximately 2,000-2,200t. The main destinations for exports of

lithium carbonate are Canada and Germany, most likely to aluminium smelters in

Canada and Rockwood Lithium’s German subsidiary at the Langelsheim plant.

Table 139: USA: Imports and exports of lithium carbonate 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports Chile 14,675 9,439 9,407 8,453 2,897 2,079 7,205 7,250

Argentina 4,626 6,535 6,104 7,300 6,221 7,359 6,425 5,620

China - 6 15 14 107 48 801 299

Other 39 88 22 8 38 9 34 63

Total 19,340 16,068 15,547 15,775 9,263 9,495 14,465 13,232

Exports

Canada 611 984 1,762 1,983 906 909 868 741

Germany 1,030 961 976 561 576 677 657 810

Belgium - - - - - 17 150 68

India 49 12 56 49 100 71 107 95

Pakistan - - - - 1 4 101 -

S. Korea 38 45 59 100 80 71 101 30

Japan 1,707 1,589 798 1,293 1 32 20 37

Other 1,848 744 561 604 250 498 117 292

Total 5,282 4,336 4,211 4,592 1,915 2,277 2,120 2073 Source: GTIS

Unlike lithium carbonate, the USA is a net exporter of lithium oxide and hydroxide,

reporting exports of 6,711t in 2012 compared with imports of 1,640t (Table 140). Both

FMC Corp. and Rockwood Lithium convert lithium carbonate to various lithium

compounds including oxides and hydroxides at facilities in the USA. Imports increased


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sharply in 2006, probably due to the opening of SQM’s lithium hydroxide plant in Chile

during 2005, which has replaced some imports of lithium carbonates for conversion. In

2012, Japan was the destination for 59% of the USA exports, with Germany (7%) and

Belgium (7%) the next largest markets.

Table 140: USA: Imports and exports of lithium oxide and hydroxide

2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Imports Chile 54 591 865 816 510 915 652 1,451

UK 13 11 25 11 50 7 46 49

China 1 49 296 279 306 99 32 115

Other 64 338 122 58 80 36 69 24

Total 132 989 1,308 1,164 946 1,057 800 1,640

Exports

Japan 1,305 1,988 2,341 2,206 1,865 2,700 3,378 4,003

Germany 931 1,044 904 996 397 676 574 468

Belgium 179 39 1 14 0 951 467 496

Mexico 171 67 75 70 68 264 396 39

Thailand 215 231 187 240 155 274 304 206

S. Korea 262 263 313 268 249 212 264 132

Canada 156 246 355 218 131 240 232 494

Taiwan 17 23 45 85 56 291 223 281

China 180 55 118 123 37 103 119 82

Other 2,202 1,639 1,595 1,564 1,487 1,348 545 507


5.39.2 Rockwood Lithium (Chemetall Group)

The Chemetall Group, acquired by Rockwood Holdings in August 2004, is a major

producer of lithium derivatives, with representative offices in 87 countries. In April 2012,

Rockwood Holdings announced that it was to rename all owned lithium and specialist

metal industries to Rockwood Lithium to unify its lithium businesses under one brand

name. Rockwood Lithium extracts and processes lithium brines at operations in Chile

(Section 5.9.5) and the USA, which are processed at plants in Germany, the USA,

Taiwan and India:

Country Operations

Chile Lithium brine extraction from the Salar de Atacama.

Lithium carbonate and chloride production at the La Negra

plant near Antofagasta.


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Germany Produces over 80 different lithium products at the

Langelsheim plant, Goslar district (Section 5.15.1).

USA Lithium brine extraction from the Silver Peak deposit,

Nevada

Lithium carbonate and hydroxide production at the Silver

Peak, Nevada and King’s Mountain, North Carolina plants.

Normal and secondary butyllithium production at two

plants in New Johnsonville, Tennessee

Taiwan Production of normal and secondary butyllithium at a plant

in Chanhua County

India Production of butyllithium at the Gujarat plant.

5.39.2.1 Silver Peak, Kings Mountain and New Johnsonville operations (USA)

In 1988, the Foote Mineral Company, which operated the Kings Mountain Spodumene

Mine in North Carolina, was purchased by the Cyprus Mineral Company and became

Cyprus Foote Mineral Company. Chemetall GmbH acquired the Cyprus Foote Mineral

Company in 1998 renaming the company Chemetall Foote Corporation, before joining

Rockwood Holdings in 2004. Rockwood Holdings changed the company name to

Rockwood Lithium in April 2012 to unify all its lithium operations under one trading

name.

The company began the production of lithium chemicals in the 1950’s after being

granted mining rights for the King’s Mountain spodumene deposit. The King’s Mountain

deposit sits on a 60km long belt which hosts multiple pegmatite intrusives containing tin

and lithium mineralisation. Pegmatites along the belt are estimated to contain 185,000t

Li (984,000t LCE). A resource estimate of the northern part of the deposit reported

proven reserves of 29Mt grading 0.7% lithium and a further 14Mt of probable reserves.

The associated King’s Mountain lithium carbonate plant had a capacity to produce

8,000tpy lithium carbonate. Both the King’s Mountain mine and lithium carbonate plant

were closed in 1986 and in 1994 the lithium carbonate plant was dismantled.

A pilot lithium chemical facility remained in operation at the King’s Mountain site after the

mine closure, producing lithium salts and metal for primary batteries from lithium brine

concentrates. In 2010, construction of a new battery grade lithium hydroxide plant at the

King’s Mountain site began. The new facility was completed in June 2012, with a design

capacity of 5,000tpy battery grade lithium hydroxide. Originally the existing lithium

hydroxide facility at Silver Peak was set to be closed upon completion of the new facility,

although the site may now continue producing lithium products to some degree.

In the 1960s, Foote Minerals began the extraction of lithium brines at Silver Peak in

Nevada. The extracted brines were used in the production of lithium carbonate at the

Silver Peak plant and other lithium compounds at the King’s Mountain plant. The brines

are extracted from the Silver Peak dry lake (playa) which covers a 16km long and 6.4km


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wide area, estimated to contain 40,000t Li (212,900t LCE). The brines are enriched in

lithium chloride, which in 1966 assayed 400ppm Li. The natural lithium content of the

brines has decreased since 1966, with expected grades of 150-170ppm in 2011. The

brine is pumped to surface from a number of 100-300m deep gravel packed wells and

stored in evaporation ponds. The solution is concentrated to 6% Li via natural

evaporation which can take between 12-18 months to achieve. Lime is added after 10

months to remove magnesium from the solution. The concentrated solution is pumped to

the Silver Peak lithium carbonate plant where soda ash is added to precipitate lithium

carbonate. The precipitate is filtered and dried to produce a saleable lithium carbonate

product. A portion if the produced lithium carbonate is used internally at the Silver Peak

facility for the production of lithium hydroxide.

As the sole producer of lithium carbonate in the USA, Rockwood Lithium has withheld

the publication of production data by the USGS. The Silver Peak plant capacity was

estimated in 2003 to be 9,000tpy LCE; however actual capacity is considered to be

5,000tpy LCE.

In 2010, the then Chemetall Foote was granted US$28.4M by the U.S. Department of

Energy to increase production capacity of lithium materials and construct new lithium

production facilities. The planned expansion includes the construction of the new lithium

hydroxide plant and global technical centre at the Kings Mountain site and expansion of

the Silver Peaks brine ponds and lithium carbonate facility to 10,000tpy LCE capacity.

These projects are part of a US$75M program by Rockwood Holdings to increase its

lithium capabilities in the USA.

Rockwood Lithium operates two production facilities at the New Johnsonville site located

in Tennessee. Both facilities produce normal and secondary butyl lithium, used in the

chemicals and pharmaceuticals industries, along with other specialty products.

5.39.3 FMC Corporation

FMC Lithium forms part of the specialty chemicals division of the diversified chemical

company FMC Corporation, headquartered in Charlotte, North Carolina. The division

operates the company’s lithium production and processing facilities in the USA and

overseas. In 2011, FMC reported revenues of US$224.8M from its lithium operations

worldwide compared with US$213M in the previous year, an increase of approximately

5%. FMC expect revenue from its specialty chemicals division to increase by a futher

10% in 2012 driven by higher lithium and biopolymer prices.

Country Subsiduary Operations

Argentina Minera del Altiplano

S.A.

Lithum brine extraction from the

Salar del Hombre Muerto

Lithium carbonate production at the

Fénix Plant

Lithium chloride production at the

Fuemes Plant, Salta


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USA FMC Lithium Production of various lithium salts

and organo-lithium products at the

Bessemer Plant in North Carolina

Center for Lithium Energy and

Advanced Research in North

Carolina undertakes research on

lithium battery materials.

UK FMC Chemicals Ltd. Butyllithium production at the

Bromborough facility on Merseyside

India FMC India Private

Ltd.

Butyllithium production at a facility

in Hyderabad

China FMC Specialty

Chemicals

(Zhangjiagang)

Butyllithium production at a plant in

the Yangtse River Chemical Park in

Zhangjiagang.

Japan Asia Lithium

Corportation (joint

venture)

Production of butyllithium and

lithium metal at a facility located on

Naoshima Island.

In 2011, FMC extracted lithium brines from the Salar del Hombre Muerto in Argentina

(Section 5.2.1). Historically the company operated a spodumene mine near Cherryville

in North Carolina, which extracted lithium ore from the Hallman-Bean spodumene

pegmatite deposit grading around 0.7% Li. Extracted ore was sent to the Bessemer

plant, North Carolina to be processed into lithium compounds. As a result of new brine

extraction and processing facilities constructed in Argentina during 1997, the Cherryville

mine was closed in 1998 because of the higher extraction cost of spodumene ores.

5.39.3.1 FMC Lithium

The Bessemer plant in North Carolina produces a range of lithium compounds shown in

Table 141. The plant sources lithium raw materials from the Salar del Hombre Muerto

and Salta plant. In late 2011, FMC began a US$50M 2-3 year program of expansion at

the Bessemer plant. The expansion program aims to double the lithium hydroxide

production capacity at the facility and construct a new battery grade lithium metal

production line.


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Table 141: FMC: Product range

ADVACor® ABR Absorption Refrigerant Lithium Hydroxide

ADVACor® Lithium Bromide Solution Lithium Hypochlorite

ADVAGuard® Corrosion Inhibitor Lithium Metal

Cyclopentyllithium Lithium Methoxide

Dibutylmagnesium Lithium Nitrate

Di-t-butylneopentylphosphine Lithium Orthophosphate

Di-t-butylsilyl ditriflate Lithium Phosphate

Di-tert-butylsilane (DTBS) Lithium Sulfate

Ethyllithium Lithium t-Amoxide

Isobutyllithium Lithium t-Butoxide

Isopropyllithium Lithium Tetraborate anhydrous

Isopropylmagnesium chloride Lithium tri-tert-butoxyaluminum hydride

Lectro® Lyte Salts LithMelt® Liquid

Lectro® Max Anode Materials Methyllithium

LifeTech® Superfines & Ultrafines Methylmagnesium chloride

LifeTime® Admixture n-Butyllithium

LiMIT® Liquid desiccants n-Hexyllithium

Lithium 2-Hydroxyethoxide Slurry n-Octyllithium

Lithium Acetate n-Propyllithium

Lithium Amide Phenyllithium

Lithium Bromide Renew® Concrete Treatment

Lithium Carbonate sec-Butyllithium

Lithium Chloride t-Butylphosphine

Lithium Citrate tert-Butyllithium

Lithium Diisopropylamide Tetrakis(ethylmethylamino)zirconium

Lithium Ethoxide Trimethylphosphine

Lithium Fluoride Trimethylsilylmethyllithium

Lithium Hexamethyldisilazide Source: FMC lithium website

The Centre for Lithium Energy and Advanced Research (CLEAR) was opened by FMC

in September 2008, which undertakes research into battery materials. In March 2009,

CLEAR received US$3M from the United States Department of Energy to scale up

production of stabilised lithium metal powders, used in high energy Li-ion battery

cathodes.

5.39.3.2 Other FMC Corporation facilities

In addition to the Salta production facility in Argentina and the Bessemer plant in the

USA, FMC operates butyllithium production facilities at Bromborough in the UK,

Hyderabad in India and Zhangjiagang in China. In 2009, FMC ceased butyllithium

production at the Bayport facility in Texas and also shut down lithium metal production at

the Bromborough facility, due to lower global demand and company consolidation.


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FMC and Honjo Chemical formed a joint venture which began marketing butyllithium in

1986 and lithium metal in 1989. The facility acts as a dilution station for imports of

organo-lithium products from the USA, UK and India, which are redistributed in the Asian

market. The company operates under the name Asia Lithium Corporation and has a

production facility on Naoshima Island, Japan.

5.39.4 Western Lithium Corporation

Western Lithium Corporation (WLC) owns the Kings Valley project located in Humboldt

County, Nevada. The project was first explored by Chevron Resource in 1977, after the

USGS identified the site as having elevated lithium concentrations. Elevated lithium

assays were confirmed by Chevron during a subsequent drilling campaign at the site.

Drilling and surface exploration was continued at the site by Chevron through to 1985,

with the release of a non NI 43-101 compliant resource estimation of 630Mt grading

0.71% Li2O (contained 11Mt LCE). Chevron sold the Kings Valley project to Cyprus

Gold Exploration in 1991; however Cyprus Gold relinquished their ownership after not

renewing their claim in the following year.

Western Energy Development staked the project in 2005. WLC was spun off as a

separate company to develop the project in 2007, and have explored and developed the

project since.

In December 2008, WLC produced a technical report for the Kings Valley project which

included a NI 43-101 compliant resource estimation. An indicated resource of 53Mt

grading 0.58% Li2O and an inferred resource of 46.6Mt grading 0.58%Li2O was

identified using a cut-off grade of 0.2% Li. The Kings Valley resource estimate was

updated in January 2012, which identified a total resource of 92.4Mt grading 0.8% Li2O

(contained 1.8Mt LCE) using a 0.325% Li cut-off grade (Table 142).

Table 142: WLC: Resource estimation for the Kings Valley project, January 2012

Mt % Li % Li2O LCE (000 t)

Measured 18.0 0.40 0.86 380.4

Indicated 38.1 0.37 0.80 756.5

Inferred 36.3 0.37 0.79 713.0

Total 92.4 0.38 0.81 1,849.8 Source: Company data, WLC technical report

A reserve estimate for the Kings Valley property was released in December 2011,

estimating contained reserves of 27Mt grading 0.395% Li (Table 143). The reserve

estimate used a cut off grade of 0.32% Li, and was designed around supporting the

mine at full capacity for a 20 year mine life.


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Table 143: WLC: Reserve estimation for the Kings Valley project, December 2011

Mt % Li % Li2O LCE (000 t)

Proven 14.93 0.4 0.86 317.9

Probable 12.19 0.38 0.82 246.6

Total 27.13 0.39 0.84 564.5 Source: WLC Technical report Notes: Rounded values may affect totals

Lithium at the Kings Valley project is hosted within claystones and altered volcanic tuffs

containing the minerals hectorite, illite and smectite. The claystones and tuffs form a

sequence of alternating strata sandwiched between volcanics at its basal contact and

overlying colluvium. The volcano-sedimentary deposits form part of the McDermitt

caldera moat sedimentary rock unit.

Since the project was acquired in 2005, exploration at the Kings Valley project has

focused on improving the understanding of the local stratigraphy and increasing the

confidence in the ore grades within the deposit. During the latest 2010-2011 drilling

campaign over 13,000m of drilling was completed across 161 drill holes placed

systematically on the site. A total of 15 bulk samples have also been taken by WLC

which are representative of the ore body. Metallurgical test work has been undertaken

on the bulk samples at Outotec in Germany, to refine the processing flow sheet.

The processing flow sheet has been developed by WLC in conjunction with Hazen

Research in the USA, CICTEM in Chile, and K-UTEC and Outoec in Germany.

Processing of Kings Valley material is designed to take place in two separate sections of

the plant, the first of which will reduce material size and thermally prepare it for further

processing. The feed of raw material into this first plant is expected to be around 1%

Li2O. The second plant will contain a wet recovery circuit, including leaching and

filtration stages followed by purification. After purification, the leach brine is evaporated

and glaserite is crystallised out to recover K2SO4 as an underflow. If needed the calcium

and magnesium content may be further decreased by precipitation and ion exchange.

Lithium carbonate is next precipitated, filtered and washed before a final drying stage to

produce a Li2CO3 product.

A PFS study was completed by WLC for the Kings Valley project in December 2011,

which assessed an operation with eventual capacity to produce either 13,000tpy LCE or

26,000tpy LCE, along with up to 90,000tpy potassium sulphate and 100,000tpy sodium

sulphate as by-products. Cash operating costs excluding credits from K2SO4 and

Na2SO4 production, were estimated to be US$3,011/t Li2CO3. Cash operating costs

including by-product credits are estimated to be US$968/t Li2CO3. Overall operating and

capital costs were estimated for two separate scenarios identified as ‘Case 1’ and ‘Case

2’. Case 1 assessed a mill throughput of 2,100tpd over the entire 20 year mine life.

Case 2 assessed the potential for doubling mill throughput to 4,200tpd during year four

of mine life. Estimated operating costs for both cases are shown in Table 144.


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Table 144: WLC: Estimated operating and capital costs for ‘Case 1’ and ‘Case 2’

scenarios at the Kings Valley project.

CASE 1 CASE 2

Capex over LOM Capex over LOM

US$M US$M

Total Mine Capital 45.6 Total Mine Capital 82.1

Total Process Capital 141.5 Total Process Capital 255.6

Indirect costs 36.0 Indirect costs 58.4

Owner's costs 17.8 Owner's costs 17.8

Contingency 21.9 Contingency 35.6

Total 262.7 Total 449.5

Opex over LOM Opex over LOM

US$000 US$000

Mining costs 118,123 Mining costs 215,648

Processing costs 853,452 Processing costs 1,420,471

G & A costs 44,411 G & A costs 44,908

Capitalised operating costs -8,196 Capitalised operating costs -23,553

Total 1,007,789 Total 1,657,473 Source: December 2011 PFS Notes: Estimated LOM is 20 years

In February 2013, Western Lithium announced that it had entered into a royalty financing

agreement with RK Mine Finance Fund II L.P. (Red Kite). The agreement states Red

Kite will pay Western Lithium US$20M, in two tranches, in return for the sale of a royalty

on its Kings Valley Project. Western Lithium will receive the initial tranche of US$11M

upon closure of the agreement, with a further US$9M provided upon completion of the

engineering and design of the lithium demonstration plant and approval of the Bureau of

Land Management with respect to the sale of by-products associated with lithium

production. The royalty payment will consist of 8% of gross revenue until a total of

US$20M has been repaid to Red Kite, after which the interest will be reduced to 3.5% of

gross revenue. Western Lithium will also retain the right to at any time reduce royalty

payments to Red Kite to 1.75% gross revenue, by payment of US$20M to Red Kite.

A production start-up date from the project had been set for during 2015; however it is

unclear if this remains to be a genuine target date for production to commence.

WLC has produced a lithium carbonate product which was incorporated into cathode

materials testing by Argonne National Laboratory of the US Department of Energy. The

batteries performed well when compared to batteries containing cathodes produced from

an industry standard material. WLC is also looking at the possibility of producing gel and

organoclay drilling additives from mined clays, which are already used in certain drilling

scenarios.


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5.39.5 Simbol Materials Corp.

Simbol Materials is a private company formed in 2008. Since its formation, the company

has investigated the potential to extract lithium and other metals from brines and waste

streams at geothermal plants in California. Simbol are focussed on developing the

Salton Sea project, located in the Salton Sea Geothermal Resource Area (SSGR) near

the USA’s border with Mexico.

In July 2008, Simbol signed a financing agreement with a group led by Mohr Davidow

Ventures and Firelake Capital for US$6.7M. These funds were assigned to continue

development of the Salton Sea project. In July 2010, Itochu Corp. of Japan purchased a

20% equity stake in Simbol Materials, providing funding for the company in return

acquiring exclusive sales rights for Simbols future production in Asia.

A lithium carbonate demonstration plant is based at the John. L. Featherstone

geothermal plant, Hudson Ranch, operated by California based renewable energy

company EnergySource. The Featherstone geothermal plant was opened in March

2012 and is designed to produce electricity (50MW) from water extracted from depth.

Simbol’s on-site demonstration pilot plant has a capacity to produce 500tpy battery

grade lithium carbonate, from brines extracted by EnergySource. The capacity of the

demonstration plant is scheduled to be upgraded to 1,500tpy lithium carbonate by end-

2013, although the plant is not for commercial purposes.

Simbol intend to construct a full scale production facility in Brawley, close to the

Featherstone geothermal plant by the end of 2014, with a capacity to produce 16,000tpy

battery grade lithium carbonate over a 20 year period. In 2012, Simbol operates a

smaller capacity purification facility at the Brawley site producing high grade lithium

carbonate from imported materials. Construction of the production facility has received

approval from an environmental impact study released in late 2012 and has the

necessary permitting to proceed. The planned production facility will use a patented

processing method developed by Simbol at the demonstration plant and in previous

metallurgical test work. The patented method is reported to require mostly raw materials

available from the geothermal power plant, such as carbon dioxide, steam and

electricity, to produce a battery grade lithium carbonate product, with only minor raw

materials required to be purchased.

Simbol is also assessing the feasibility of producing lithium hydroxide and other refined

lithium chemicals from geothermal brines and conversion from lithium carbonate. A pilot

facility has been built in Pleasanton, California which has produced lithium hydroxide

solution from imported raw materials with a recovery of up to 90%.

Other geothermal plants in the southern California area have also been highlighted by

Simbol to show potential for lithium, manganese and zinc production in the future. The

Hudson Ranch II being constructed by EnergySource has been identified as a potential

site for Simbol to construct a lithium extraction facility in the future with a similar capacity

to that at the original Hudson Ranch site.


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5.39.6 Albemarle Corporation

Major chemicals and materials producer Albemarle are investigating a possible entry into

the lithium market by producing lithium compounds at its Magnolia plant, Arkansas. The

company processes Smackover oilfield brines to extract bromine at the Magnolia plant,

which has a capacity to produce approximately 148,000tpy bromine compounds. The

residual waste fluid after bromine extraction contains between 100ppm and 300ppm

lithium, and the remaining Smackover brines are estimated to contain 750,000t Li

(contained 3.99Mt LCE).

In April 2011, Albemarle announced that it had developed a process to extract lithium

from the Smackover brines. A pilot plant facility was set-up in mid-2011 to research the

production of lithium carbonate and developing the process to a commercial scale.

Albemarle plan to construct and operate a 20,000tpy LCE capacity facility at the

Magnolia plant site by 2015. Upon start-up only lithium carbonate products are

expected to be produced, however the company intends to explore its option in

producing a range of lithium products in the future.

5.39.7 Toxco Inc.

Toxco recycles battery materials, lithium chemicals and electronics, along with other

metals and precious metals. The company is headquartered in Anaheim, California and

has production/recycling facilities situated at Oak Ridge in Tennessee, Lancaster and

Baltimore in Ohio, and a facility at Trail, British Columbia in Canada.

The Trail facility in British Columbia (Section 5.8.4.9) specialises in the recycling of both

primary and secondary lithium batteries of all sizes. The plant also recycles production

scrap from the manufacturing of lithium-ion batteries.

LitihChem Energy is a wholly owned subsidiary division of Toxco based in Delaware

County, Pennsylvania. The LithChem facility produces primary and secondary cells for

lithium batteries, cathode materials, electrolytes and electrolytic salts.

5.39.8 AusAmerican Mining Corp. Ltd.

AusAmerican Mining holds 100% ownership of the White Picacho specialty metals

project located in Maricopa County, Arizona. The project was first staked by

AusAmerican Mining in October 2010, after analysis of samples taken from the

pegmatites revealed elevated grades of lithium and other rare metals. Since acquiring

its first claims covering the deposit, the company has increased its land holding to

7.12km2 and has initiated metallurgical test work on pegmatite samples from the deposit.


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5.39.9 Other USA Companies

There are a number of other companies undertaking lithium exploration in the USA,

mainly in proximity to Rockwood Lithium’s Silver Peak project in Nevada. Table 145

details companies and projects which are yet to reach a PFS or scoping study stage in

their exploration.

Table 145: USA: Lithium exploration projects yet to reach scoping study or PFS stage

in development


Amerilithium Paymaster Nevada Claims cover a 23.8km2 block. Amerilithium have

undertaken a detailed gravity survey on the property to

assess the possibility of brine and have estimated the

porjects contains a resource of 26,000t Li.

Clayton

Deep

Nevada Project is located less than 10km away from Rockwood’s

Silver Peak project and covers an area of 26.9km2 The

area was identified during gravity surveys by the USGS.

Amerilithium have completed more detailed gravity

surveys or the project to assess the potential for brines.

Full Monty Nevada The Full Monty project was identified during regional

gravity surveys undertaken by the USGS. The project

consists of claims covering 21.8km2 over which

Amerilithium has completed more detailed gravity

surveys.

Jackson

Wash

Nevada Claims cover a 10km2 gravity anomaly identified during

regional surveys by the USGS. Amerilithium has

undertaken more detailed gravity studies of the site which

suggest the potential for brines.

First Liberty Power Lida valley/

Claytons

Wash

Nevada Signed an LOI with GeoXplor Corp. in Jan. 2011 to

purchase 100% of the Claytons Wash project. Initial

exploration suggests local geology is enriched in lithium

which could be concentrated in brines with in

sedimentary basin.

Smokey

Valley

Nevada Acquired claims totalling 45.3km2 in June 2012 from

GeoXplor Corp. which are in proximity to Rockwood’s

Silver Peak operation.

International Lithium

Corp.

Fish Lake

Valley

Nevada Located ~25km away from Rockwood Lithium’s Silver

Peak project, the Fish Lake project covers a 3.8km2.

International lithium corp. has undertaken some sampling

at the project returning brine concentrations for a number

of samples of over 100ppm Li.

Table continued….


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….Table continues


Lithium Corporation Fish Lake

Valley

Nevada Claims cover 25.8km2, sampling to date by Lithium Corp.

has returned grades of up to 140ppm Li, 2,500ppm B and

7,200ppm K. Drilling was scheduled to begin in late 2012

to assess the extent of lithium brines.

San Emidio Nevada Acquired a 6.5km2 block in September 2011. Sampling

during 2011 returned brine concentrations of up to

66.4ppm Li. Drilling samples during 2012 returned

grades of 21.4ppm and 23.7ppm Li.

Ultra Lithium Corp. South Big

Smoky

Valley

Nevada Claims cover 29.5km2 area in proximity to Rockwood

Lithium’s Silver peak project. Regional gravity surveys

and independent geological reports have suggested that

the area may contain brines enriched in lithium.

Blue Lithium Energy

Inc.

Clayton

Valley

Nevada A subsidiary of Black Hawk Exploration, Blue Lithium

Energy staked claim to a 4.5km2 area in proximity to

Rockwood Lithium’s Silver peak project.

American Lithium

Minerals

Borate hills

project

Nevada The Borate Hills project covers 13.7km2 overlying strata

bound claystones and tuff bands with elevated lithium

grades. Drilling in 2011 returned grades of up to 0.25%

Li and 2.0% B in separate samples.

Rodinia Lithium Clayton

Valley

Nevada The Clayton Valley concessions cover 292km2 almost

entirely surrounding the Silver Peak project owned by

Rockwood Lithium. Samples of brines taken by Rodinia

have returned between 180ppm and 420ppm Li. Rodinia

is continuing with exploration at the Clayton Valley site in

2012, undertaking additional drilling.

Li3 Energy Big Smokey

Valley

Nevada Acquired the Big Smoky Valley property covering 688km2

in March 2010.

Mesa Exploration

Corp.

Green

Energy

Lithium

Utah Mesa Exploration acquired the Green Energy Lithium

project in a series of stages between 2008-2011. Since

its acquisition, Mesa has produced a technical report for

the property including a non NI 43-101 resource estimate

of 5,750t Li.

First Lithium

Resources

Teels

Lithium

Nevada Entered into an option to acquire an 80% share in the

Teels Lithium project covering around 12km2. Surface

sampling of brines has returned maximum concentrations

of up to 298ppm Li, with the majority of samples returning

>100ppm Li.

Table continued….


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….Table continues


Harmony Gold Corp. AG 1-47

claims

Nevada Pure Energy Minerals held an option agreement with

GeoExplor to purchase an 80% share in the AG 1-47

claims. Harmony Gold purchased all issued and

outstanding shares in Pure Energy Minerals in August

2012.

Electric Metals Inc.

(formerly Amerpro)

Smokey

Valley

Nevada Purchased the 45.3km2 claim from GeoXplor Corp. in

July 2009. Electric Metals undertook a gravitational

survey of the project in 2010 which showed a

gravitational low over the area.

New America

Energy Corp.

Mud Lake Nevada Claims cover a 12.9km2 area east of Rockwood Lithium’s

Silver Peak facility. Regional sampling and gravity

surveying was undertaken at the site by the USGS.

Clayton

Ridge

Nevada Claim area is located south east of Rockwood Lithium’s

Silver Peak facility. Gravity surveys have identified a

trough believed to be a conduit for lithium bearing brines.

Great American

Energy Inc.

Big Smoky

Valley

Nevada The Big smoky valley project is adjacent to Rockwood

Lithium’s Silver Peak property, covering approx. 31km2.

Brine samples taken by the USGS have return lithium

concentrations of 160ppm on average. Great American

Energy plan to undertake further sampling and

geophysical analysis of the property. Source: Company data

5.40 Uzbekistan

The Shavazsay deposit in the Toshkent Viloyati province of Uzbekistan is reported by

the USGS to contain mineral reserves of 20.2Mt grading 0.57% Li2O, containing

approximately 284,000t LCE. The deposit is comprised of carbonaceous tuff-siltstone

beds with a volcanogenic origin. Exploration during the mid-2000s described the deposit

as being amenable to development by open pit methods, to extract lithium with by-

product potash and potassium sulphate.

Other potential lithium deposits in Uzbekistan include the Sargardon tungsten deposit in

Toshkent Viloyati province and Shabrez fluorite deposit also in the east of the country.

5.41 Zimbabwe

Zimbabwe is the world’s largest commercial producer of petalite mineral concentrate,

from the sole producing project in the country operated by Bikita Minerals. Since 2005,


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Zimbabwe has produced approximately between 40,000-50,000tpy mineral concentrate

grading around 4.2% Li2O.

All produced mineral concentrate in Zimbabwe is marketed by the Minerals Marketing

Corporation of Zimbabwe (MMCZ). Lithium mineral concentrate products are

predominantly exported to South Africa and shipped through Durban to the international

market. There is no trade data available for Zimbabwe’s exports of mineral substances,

although South Africa reported imports of 38,398t from Zimbabwe in 2012, believed to

be predominantly petalite or spodumene mineral concentrates (Table 146). China also

reported imports of more than 15,000t of feldspar from Zimbabwe in 2011, thought to

represent mineral concentrates produced by Bikita Minerals.

Table 146: Zimbabwe: South African imports of mineral substances from Zimbabwe,

2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

17,805 23,680 26,769 26,424 35,783 41,015 35,453 38,398

Source: GTIS

5.41.1 Bikita Minerals Ltd

Bikita Minerals Ltd. (Bikita) operates two open quarries, Bikita and Al Hayat

approximately 65km East of Masvingo and is Zimbabwe’s only miner and processor of

lithium minerals. The two open pits cover just over 10% of the total mining area with

estimated reserves reported to be 11.0Mt grading between 2.0-2.5% Li2O (544,000t-

680,000t LCE). In 2011, the USGS estimated that Zimbabwe held reserves of over

120,000t LCE, presumably with a large portion of this occurring within Bikita’s property.

The pegmatite intrusive in the Bikita property has a strike of approximately 1,700m, a

width of between 30-70m (average 64m) and dips shallowly to the east and north. This

is divided into four sectors known as the Al Hayat, Bikita, Southern and Nigel. The Al

Hayat sector hosts the largest deposit of petalite on the Bikita property. Petalite

mineralisation in the Al Hayat sector is very coarse, with crystals up to 1.8m in length

and with low iron content. Petalite is the dominant ore mineral at the Bikita property,

hosting 90% of contained lithium. Other lithium bearing minerals identified at the Bikita

property include lepidolite, spodumene, pollucite, beryl, eucrypite, amblygonite and

bikitaite.

Bikita has produced lithium mineral concentrate on site for over 60 years, mainly in the

form of petalite concentrates. A two stage heavy media separation circuit is used to

produce petalite and mineral concentrates. Petalite concentrates (4.2% typical and

4.5% typical Li2O grades) account for the majority of Bikita’s sales, the balance being

lower grade products utilised in bulk glass applications in regional markets The plant

has a capacity to produce 100,000tpy lithium concentrate at min. 4.0% Li2O. Production

from Bikita Minerals has ranged between 52,000t-55,000t all grades since 2009,

suggesting the plant is operating at just over 50% capacity. The USGS estimate total


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production of lithium from Zimbabwe in 2010 at 2,500t LCE (25,000t petalite

concentrate).

The main end uses for Bikita’s petalite mineral concentrates are the flacconage and

bottle glass industries in South Africa, the glass-ceramics industry in Germany where it

is blended with spodumene concentrate, and various end uses in China.

Table 147: Bikita Minerals: Mine production and lithium content 2003 to 2011

Mined Li Ore (kt) Cont. Li (t) LCE (t)

2003 12.13 225 1,200

2004 13.71 253 1,350

2005 37.49 695 3,700

2006 40.0-45.0 750-835 4,000-4,450

2007 40.0-45.0 750-835 4,000-4,450

2008 40.0-45.0 750-835 4,000-4,450

2009 52.0-55.0 950-1,020 5,100-5,450

2010 52.0-55.0 950-1,020 5,100-5,450

2011 52.0-55.0 950-1,020 5,100-5,450 Source: 2003-2005 USGS, 2006-2011 Bikita Minerals

5.41.2 Zimbabwe Mining Development Corporation

Zimbabwe Mining Development Corporation (ZMDC) is a state owned mining and

development company, managed by the Ministry of Mines and Mining Development.

The company owns a 51% share in the Kamitivi tin mine located in Hwange,

Matabeleland North province, which ceased production in 1995 as a result of falling tin

prices. The mine previously produced tin and tantalite products during its 58 years of

operation. Upon closure of the mine, the Kamitivi deposit was estimated to still contain

ore reserves of 28.1Mt grading 0.179% Sn and containing 6,951t tantalum oxide,

14,398t niobium oxide, 19,859t tungsten oxide, 106,741t spodumene and 27,306t beryl.

5.41.3 Premier African Minerals

Premier African Minerals (PAM) is exploring the Zulu project located in Matabeleland

South province of Zimbabwe. A historic (non JORC compliant) resource estimation for

the property made by the Rhodesian Selection Trust suggested a possible contained

resource of 1.4Mt grading 1.4 Li2O. The deposit is formed of two structurally controlled

pegmatite intrusives, which have an identified strike of 5km from surface mapping. The

thickness of the intrusives has not been reported by PAM.

Since acquiring the project PAM has completed six diamond drill holes on the property

and taken a suite of grab samples. The samples have returned grades of between

0.2%-0.7% Li2O and 220ppm-1,037ppm Ta. Premier intends to undertake a further

1,000m of trenching and 2,000m of diamond drilling at the Zulu project, along with

http://en.wikipedia.org/wiki/Matabeleland_South

http://en.wikipedia.org/wiki/Matabeleland_South


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metallurgical studies with the overall goal of producing a JORC compliant Mineral

Resource.

5.41.4 Cape Range Ltd.

In October 2010, the Australian information technology company ‘Cape Range’ entered

into a MoU with privately owned Willaway Enterprises Limited (Willaway), to purchase up

to 75% equity in the Domboshawa Hill Lithium Project, Mashonaland Central Province.

The project is identified by Cape Range to have potential for pegmatite related

mineralisation including lithium and rare earth bearing minerals. Historically, the

surrounding area has been worked for pegmatite minerals, for example the Casa

Ventura mine in Goromonzi was mined for lepidolite between 1957 and 1981 producing

606t, and the Mistress Mine produced 1,677t lepidolite and 80t spodumene. Since the

initial announcement in October 2010, there have been no new developments reported

by Cape Range on the progress of the Domboshawa Hill Lithium Project.


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6. International trade in lithium

Lithium is most commonly traded as lithium carbonate, lithium hydroxide, and lithium

chloride. Large volumes of lithium mineral concentrates are also traded particularly from

Australia and Zimbabwe, although lithium minerals are not differentiated from other

mineral concentrates, meaing separate trade data is not available. Trade in lithium

metal is also not recorded separately in official trate statistics, but is less significant in

terms of volume.

6.1 Trade in lithium carbonate

Lithium carbonate is the most commonly traded lithium compound on the international

market, with global exports of lithium carbonate reaching over 75,000t in 2011 (Table

148). During the mid-2000s, exports of lithium carbonate remained stable at

approximately 68,000t, with Chile and Argentina accounting for around 70% of world

exports (Figure 29). Chile and Argentina have dominated the lithium carbonate export

market as they are both major producers of lithium compounds and, unlike the USA and

China, have only small domestic consumption of lithium products.

Table 148: World: Total exports of lithium carbonate, 2005 to 2012 (gross weight t)

2005 2006 2007 2008 2009 2010 2011 2012

Chile 41,832 38,682 41,125 42,586 22,443 40,896 48,248 55,899

Argentina 7,300 8,028 7,794 10,755 8,578 11,296 9,898 9,399

Belgium 5,017 4,962 4,873 3,531 3,028 4,455 4,467 5,022

China 1,366 3,174 3,107 2,490 2,000 2,655 5,362 2,973

USA 5,282 4,336 4,211 4,592 1,915 2,277 2,120 2,073

Germany 2,991 2,907 2,705 2,290 1,881 2,556 2,921 2,258

Others 3,426 6,534 1,646 1,905 1,531 1,762 1,994 1,440


Exports of lithium carbonate fell to just 41,377t in 2009, a decrease of around 40% as a

result of lower demand for lithium in the international market at the height of the global

economic downturn. Exports from the major producing nations recovered quickly

however, with exports from Chile increasing by around 82% in 2010 whilst exports from

Argentina increased 31%. Since 2009, exports of lithium carbonate have grown by

approximately 24%py, reaching over 79,000t LCE in 2012.


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Figure 29: World: Leading exporters of lithium carbonate, 2006, 2008, 2010 and 2012


Belgium and Germany, although having no domestic lithium mining or extraction are

major exporters of lithium carbonate. Lithium carbonate exported from Belgium and

Germany is likely sourced from SQM and Rockwood Lithium in Chile and redistributed to

predominantly other European destinations. Rockwood also operate the Langelsheim

plant in Germany which processes imported lithium carbonate from their subsidiaries. A

proportion of the exports from Germany and Belgium could also represent entrepôt trade

of imports from Argentina, China and the USA.

After falling by around 35% in 2009, imports of lithium carbonate have increased 22%py

as demand for lithium carbonate recovered, totalling 80,623t in 2012 (Table 149). Unlike

with exports, there is not one completely dominant importer of lithium carbonate, instead

there are nine countries importing over 2,000t lithium carbonate each in 2011. Japan

and the USA have been the two largest importers of lithium carbonate between 2005

56%

12%

7%

5%

6%

4%

10%

2006

62%

16%

5%

4%

7% 3% 3%

2008

62%

17%

7%

4%

3% 4%

3%

2010

71%

12%

6%

4% 2%

3% 2%

2012


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and 2011, accounting for 35-45% of total imports (Figure 30). Imports by the USA are

predominantly from Rockwood Lithium and FMC Lithium in Chile and Argentina

respectively, who import lithium carbonate to process into other lithium compounds at

their facilities in the USA. Russian lithium carbonate imports increased three fold to

2,110t in 2011, whilst German imports fell by around 1,000t. It is likely that these two

developments are linked and lithium carbonate previously imported through Germany is

now imported by Russia.

China has displayed strong growth in imports of lithium carbonate since the late-2000s,

with imports increasing on average by 21%py since 2007, after declining between 2005

and 2007. China is estimated to become the second largest importer of lithium

carbonate in 2012, exceeded only by South Korea, whose imports have increased by

29%py since 2005.

Table 149: World: Total imports of lithium carbonate, 2005 to 2012 (gross weight t)

2005 2006 2007 2008 2009 2010 2011 2012

Japan 10,001 14,521 13,553 13,194 8,023 14,029 15,089 12,753

USA 19,340 16,068 15,547 15,775 9,263 9,495 14,465 13,232

South Korea 2,335 2,540 3,855 5,247 5,142 7,987 11,425 13,762

China 8,572 6,365 3,832 4,306 2,389 6,398 8,250 13,622

Belgium 6,320 5,342 5,891 4,410 3,410 4,181 7,768 7,204

Germany 8,097 7,908 8,131 7,142 4,493 6,795 5,738 6,058

Spain 1,553 828 1,819 3,994 2,825 3,239 3,338 2,476

France 1,439 1,227 1,290 1,251 1,172 1,137 2,792 1,756

Russia 2,955 938 873 891 545 696 2,110 2,200

Other 8,732 9,239 10,243 10,150 7,030 8,182 9,287 7,560



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Figure 30: World: Leading importers of lithium carbonate, 2006, 2008, 2010 and 2012


6.2 Trade in lithium hydroxide and oxides

World trade in lithium hydroxide and oxide in 2011 is estimated at approximately

20,000t. Almost all trade is of lithium hydroxide however, as demand for lithium oxide as

a material is very small and usually added to products in the form of lithium minerals or

lithium carbonate, the latter being converted to lithium oxide upon heating.

In 2011, total exports of lithium hydroxide and oxide were reported to be 19,818t.

Exports have increased on average by 8%py from 2005-2011, which includes a fall in

22%

25%

4% 10%

8%

12%

1%

2%

2%

14%

2006

20%

24%

8% 6%

7%

11%

6%

2%

1%

15%

2008

23%

15%

13% 10%

7%

11%

5%

2%

1%

13%

2010

16%

16%

17% 17%

9%

8%

3%

2% 3%

9%

2012


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exports during 2009 because of the global economic downturn and a recovery in 2010.

Three countries, the USA, Chile and China accounted for 80% of total exports in 2011.

The USA has consistently been the largest exporter of lithium hydroxide and oxides, as

domestic production by FMC Lithium and Rockwood Lithium is exported worldwide

(Figure 31). FMC lithium produces lithium hydroxide at the Bessemer City plant in North

Carolina, whilst Rockwood Lithium produces lithium hydroxide at the Kings Mountain

plant in North Carolina and the Silver Peak plant in Nevada. Exports from the USA are

predominantly to Japan and used in the lithium-ion battery industry, or exported to

Belgium and Germany to supply the European grease industry.

Lithium hydroxide is produced in Chile by SQM at the La Negra plant. Prior to

production start-up at the La Negra plant in 2005, Chilean exports of lithium hydroxide

were insignificant, as SQM exported lithium carbonate to Russia to be processed into

lithium hydroxide. When SQM began processing lithium hydroxide in Chile during 2005-

2006, Russian exports of lithium hydroxide and oxide fell by 88% and remained at this

decreased level until 2011. In 2011, SQM restarted exporting lithium carbonate to

Russia to be processed into lithium hydroxide, as production capacity at the La Negra

plant had been reached. This is shown by an increase in Russian imports of lithium

carbonate sourced from Chile in 2011 and 2012 (Table 149), and a five-fold increase in

Russian exports of lithium hydroxide (Table 150).

Table 150: World: Total exports of lithium hydroxide and oxide, 2005 to 2012

(gross weight t)

2005 2006 2007 2008 2009 2010 2011 2012

USA 5,620 5,593 5,935 5,786 4,446 7,057 6,501 6,711

Chile 149 3,500 4,021 4,533 3,214 5,184 4,940 5,303

China 1,574 1,379 3,988 2,875 1,946 2,455 4,381 3,460

Belgium 1,559 1,200 1,352 1,269 810 2,249 1,855 2,345

Russia 2,610 320 230 80 182 200 1,211 2,311

Netherlands 349 286 568 1,206 386 116 259 229

Other 545 789 725 787 3,254 1,002 672 750


In China, lithium hydroxide is produced and exported by many companies converting

lithium carbonate to hydroxide or producing lithium hydroxide directly from spodumene

mineral concentrates. The majority of lithium hydroxide exported is to Japan and South

Korea, for use in the lithium grease and lithium-ion battery industries.

Exports from Belgium and the Netherlands are likely to represent entrepôt trade of

lithium hydroxide from the USA, China, Russia and Chile. Switzerland was reported to

have exported 2,041t of lithium hydroxide in 2009, making it the third largest global

exporter in that year and significantly higher than typical export volumes of <100t. The

2,041t may also represent entrepôt trade through Switzerland, although the average unit

value of <US$100/t suggest it is more likely to be a statistical anomaly.


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Figure 31: World: Leading exporters of lithium hydroxide and oxides, 2006, 2008, 2010

and 2012

Source: GTIS, Table 150

In 2011, total imports of lithium hydroxide and oxide were reported to be 18,570t. On

average, total imports increased by around 6%py between 2005 and 2011, driven mainly

by increasing demand for lithium hydroxide in South Korea, Japan and India (Table

151). Japan was the largest importer of lithium hydroxide and oxide in 2011, importing

3,488t and accounting for around 19% of total imports. Belgium and India, accounted

for 16% and 10% respectively of total imports in the same year.

Belgium and Germany stopped importing significant volumes of lithium hydroxide from

Russia between 2006 and 2010, as SQM halted toll processing of lithium carbonate at

Russian plants. In 2011, Belgium and Germany restarted importing significant volumes

(>400t) of lithium hydroxide from Russia, suggesting SQM has restarted toll processing

43%

27%

11%

9%

2% 2% 6%

2006

35%

27%

17%

8%

1%

7% 5%

2008

39%

28%

13%

12%

1% 1% 6%

2010

32%

25%

16%

11%

11%

1% 4%

2012


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in Russia to supply demand for lithium hydroxide above the capacity of it’s La Negra

plant in Chile.

In 2007, the Philippines supposedly imported more than 4,000t of lithium hydroxide from

Malaysia, with a ver low unit price of <US$250/t. It is highly likely these imports are a

misrepresentation and they have been removed from Table 151.

Table 151: World: Total imports of lithium hydroxide and oxide, 2005 to 2012

(gross weight t)

2005 2006 2007 2008 2009 2010 2011 2012

Japan 1,503 2,138 2,747 2,408 2,170 2,820 3,488 4364

Belgium 2,008 1,198 1,785 1,849 1,179 2,409 2,953 2515

India 1,679 1,312 1,796 1,787 1,503 1,868 1,966 1640

Germany1 1,672 1,790 2,268 2,153 3,102 1,842 1,740 630

S. Korea 443 362 492 505 479 599 970 1120

USA 132 989 1,308 1,164 946 1,057 800 1640

Spain 480 573 600 501 521 1,007 696 759

Other 5,282 5,627 6,156 6,259 5,022 5,490 5,957 6338

Total 13,199 13,989 17,152 16,626 14,922 17,092 18,570 19,006 Source: GTIS Note: 1-Calculated from partner country export data

Imports of 4,126t by the Philippines in 2007 are believed to be erroneous and have been discounted

6.3 Trade in lithium chloride

Trade in lithium chloride is only reported by three countries, Chile, Argentina and China.

Argentina exports lithium chloride predominantly to the USA, accounting for more than

90% of Argentine exports in 2011. Exports to the USA are most likely to originate from

FMC Lithium’s subsidiary company Minera del Altiplano (Section 5.39.3.1). FMC Lithium

export lithium chloride to the USA mainly for conversion into lithium metal or other lithium

chemicals at the Bessemer City plant, North Carolina. Exports of lithium chloride from

Argentina fell sharply to just 4,520t in 2009, as a result of the global economic downturn

(Table 152). A recovery in exports was observed in 2010, however the recovery was

short-lived as exports fell by around 40% in 2011, remaining stable in 2012, the result of

operational problems caused by inclement weather affecting FMC Lithium’s output and

expansion.


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Table 152: World: Major importers and exporters of lithium chloride, 2005 to 2012

(gross weight t)

2005 2006 2007 2008 2009 2010 2011 2012

Chile Imports 2 1 528 343 - - - 3

Exports 767 947 4,280 4,716 2,323 3,471 4,303 4,123

Trade Balance -765 -946 -3,752 -4,373 -2,323 -3,471 -4,303 -4,120

Argentina Imports - - - 41 3 5 6 -

Exports 8,506 8,362 7,651 8,360 4,520 7,222 4,225 4,384

Trade Balance -8,506 -8,362 -7,651 -8,319 -4,517 -7,217 -4,219 -4,384

China Imports 1,827 2,149 5,330 7,639 2,028 4,241 2,561 2,753

Exports 258 314 251 157 189 245 260 353

Trade Balance 1,569 1,835 5,079 7,482 1,839 3,996 2,301 2,400 Source: GTIS

In 2012, Chile exported of 4,123t of lithium chloride mainly to the USA, although China

has increasingly become an important market for Chilean exports since 2010.

Rockwood Lithium restarted production of lithium chloride at the La Negra plant in Chile

during 2005, after a six year period of inactivity. The ramping up of production at the La

Negra plant resulted in increased exports of lithium chloride in 2005 and 2006, and a

second jump in exports in 2007 after the plant neared full capacity.

China imported 2,753t of lithium chloride in 2012 predominantly from Argentina, Chile

and India. Although domestic supply of lithium chloride is far lower than domestic

demand, China exported 3530t of lithium chloride in 2012. The main destinations for

Chinese exports of lithium chloride in 2011 were Europe, South Korea and the USA, with

a number of other countries also importing notable quantities.

6.4 Trade in mineral concentrates

Australian spodumene mineral concentrate is predominantly imported by China,

Belgium, Germany and the USA to be converted into other lithium compounds or used

directly in the glass and ceramics industries. Petalite mineral concentrate produced in

Zimbabwe is exported mainly to South Africa, although this material is typically on-ward

shipped to Asia and Europe. Smaller producers of lithium minerals such as Brazil and

Portugal also export small amounts of lithium minerals to mainly China and Spain

respectively.


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Table 153: World: Exports of lithium minerals by major lithium mineral producing

nations (excl. China), 2005 to 2012 (gross weight t)

2005 2006 2007 2008 2009 2010 2011 2012

Australia 145,472 435,689 243,662 236,441 225,761 324,115 402,688 514,620

Zimbabwe 17,805 23,680 26,769 26,424 35,783 41,015 35,453 38,398

Portugal 120 625 612 372 82 1,401 712 600e

Brazil - - - 211 150 30 28 7

Source: GTIS Note: e-estimate

6.5 Trade in lithium brines

In 2007, SQM signed a five year agreement with Ganfeng Lithium of China for the

supply of lithium chloride brine. SQM has exported lithium chloride brine from Chile

since 2007 but it is not shown in official Chilean export data for lithium chloride. Instead,

the material is listed under the “Mineral Substances, NES” tariff code. Exports

(converted into anhydrous form) increased from 746t in 2007 to 3,043t in 2010 and

exceeded 4,500t for a second year running in 2012 (Table 154). SQM is also thought to

have supplied some lithium chloride for toll treatment to lithium metal by DuPont in the

USA; this was used as feed for its butyl lithium plant in the USA (until that plant was sold

to Chemetall in 2008) and for sale to the merchant market.

Table 154: Chile: Exports of lithium chloride brine1 by SQM to China, 2005 to 2012 (t)

2005 2006 2007 2008 2009 2010 2011 2012

Gross weight - - 2,260 6,638 8,129 9,220 16,534 16,800

% LiCl - - 33 33 33 33 33 33

Lithium chloride - - 746 2,190 2,683 3,043 4,752 4,828 Source: Global Trade Atlas Note: 1-Categorised under the “Mineral Substances, NES” tariff code


Roskill


7. Consumption of lithium

Consumption of lithium is estimated to have increased by 6.8%py since 2000, peaking at

just over 150,000t LCE in 2012 (Figure 32). A small downturn in consumption at the

beginning of the 2000s was caused by recession in the USA. Prior to the on-set of the

global economic downturn in 2008/09, growth in consumption then averaged 10.5%py.

Consumption increased only slightly in 2008 and then fell by 8% in 2009. Consumption

rebounded by almost 17% in 2010 with rises in 2011 and 2012 of around 8.5%py.

Overall, the lithium market has more than doubled in twelve years.

Figure 32: World: Growth in consumption of lithium, 2000 to 2012


7.1 Consumption of lithium by end-use

In 2012, rechargeable batteries accounted for 27% of total global lithium consumption,

or 40,400t LCE. Ceramics (15% of consumption), glass-ceramics (12%) and glass (8%)

together accounted for 35% of total consumption, exceeding rechargeable batteries, but

the use of lithium in these three sectors is variable enough to warrant discussion and

analysis of them separately. Grease was the fourth largest market for lithium in 2012, at

9% of total consumption, slightly ahead of glass. Metallurgical powders accounted for

6% of consumption, and polymers and air treatment 5% each. The primary battery and

aluminium industries are small contributors to lithium consumption, together with around

10-15 minor uses of lithium including sanitization, construction and alloys accounting for

the remainder.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

-15%

-10%

-5%

0%

5%

10%

15%

20%

Co

ns

um

pti

on

(t

LC

E)

Ye

ar-

on

-ye

ar

gro

wth

Year-on-year growth (%) Consumption


Roskill


Figure 33: World: Consumption of lithium by end-use, 2012

Source: Sections 8-18

Growth in consumption of lithium has been led by increased demand from the

rechargeable battery industry, growing at 21.5%py, and which has accounted for just

over 40% of the total rise in consumption since 2002 (Table 155, Figure 34 and Figure

35). With the exception of aluminium smelting, where lithium use has fallen since 2002,

other end-uses for lithium have also shown high rates of growth, between 4.0 and

7.0%py.

Table 155: World: Consumption of lithium by end-use, 2002, 2007 and 2012 (t LCE)1

2002 2007 2012 CAGR ’02-‘12 (%)2

Rechargeable batteries 5,850 17,400 40,400 21.5

Ceramics 12,800 20,500 23,100 6.0

Glass-ceramics 9,550 18,600 18,100 6.5

Greases 8,250 12,400 13,500 5.0

Glass 5,850 9,500 11,800 7.0

Metallurgical powders 4,650 7,000 8,200 6.0

Polymer 4,100 6,100 7,500 6.0

Air treatment 5,100 6,200 7,400 4.0

Primary battery 1,250 2,000 2,500 7.0

Aluminium smelting 4,400 3,600 2,200 -7.0

Other 9,000 14,000 15,500 5.5

Total 70,800 117,300 150,200 8.0 Source: Sections 8 to 18 Note: 1–2002 rounded to nearest 50t LCE, 2007 and 2012 rounded to nearest 100t LCE

2–Rounded to nearest 0.5%

Rechargeable battery 27%

Ceramics 15%

Glass-ceramics 12%

Greases 9%

Glass 8%

Metallurgical powders

6%

Polymer 5%

Air treatment 5%

Primary battery 2%

Aluminium 1%

Other 10%


Roskill


Figure 34: World: Consumption of lithium by end-use, 2000 to 2012 (t LCE)


Figure 35: World: Consumption of lithium by end-use, 2000 to 2012 (%)


Lithium compounds, such as battery-grade lithium carbonate and hydroxide, and

specialist lithium salts and metal, are used in lithium-ion, lithium metal polymer, nickel

metal hydride (NiMH) and nickel cadmium (NiCd) rechargeable batteries. In the first

two applications, lithium provides the ions whose flow from cathode to anode produces

electricity, while in the last two applications lithium additions to the potassium hydroxide

electrolyte help to improve battery performance. Lithium-ion batteries began to emerge

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Rechargeable battery Ceramics Glass-ceramics Glass

Greases Metallurgical powders Polymer Air treatment

Primary battery Aluminium Other

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Rechargeable battery Ceramics Glass-ceramics

Glass Greases Metallurgical powders

Polymer Air treatment Primary battery

Aluminium Other


Roskill


as competitors to NiCd and NiMH batteries in the late 1990s/early 2000s, as

manufacturers of portable consumer devices, particularly mobile phones, started to

utilise them to produce increasingly smaller and lightweight devices. Rising use meant

costs for lithium-ion batteries subsequently fell and their appeal started to grow further,

with replacement of NiCd and NiMH batteries in other portable devices progressing

rapidly, albeit at variable rates depending on lithium-ion’s suitability. During the mid-

2000s, demand for portable consumer goods accelerated, with notebook PC sales

overtaking desktop PCs, the emergence of digital music players, and later netbook PCs

and tablet PCs, helping to boost lithium-ion battery use, and hence lithium consumption.

The rechargeable battery market became the leading end-use for lithium in 2007,

overtaking ceramics, and has almost doubled in size since then.

Lithium compounds and minerals are used only in certain ceramic products, mainly as a

flux in ceramic bodies and enamel and ceramic glazes, but also for the production of

heat-resistant ovenware/cookware. This market has benefitted from higher levels of

construction and output of white goods since the early 2000s.

Glass-ceramics based on the lithia-alumino-silicate (LAS) system have a high

resistance to thermal shock, making them useful for applications where severe

temperature variations are common, such as cooktops, stove and furnace windows and

fireproof architectural panels. This market has benefited from growth in construction,

especially in Asia where the use of electricity for cooking is far more prevalent than

Europe and North America, which use more natural gas. Both lithium carbonate and

lithium minerals (spodumene & petalite) are used, the former in transparent or impurity-

intolerant applications while the latter can be cost effective because of the other

elements contained (alumina & silica) in the mineral.

Lithium-based greases are the most widely produced grease types, accounting for

around 75% of total grease production in 2012. Lithium-based greases are used in a

wide range of applications, from general purpose household uses to marine equipment.

The use of lithium-based greases is strongly tied to manufacturing output, which has

recorded strong growth in the 2000s. Lithium-based greases are the major market for

lithium hydroxide monohydrate.

Lithium has several uses in glass manufacturing, ranging from altering the viscosity of

the melt in container glass production to replacing lead in lighting glass and tableware.

Lithium minerals (petalite and spodumene) and compounds are used, and lithium

consumption in this end-use has risen because of the performance improvement and

environmental benefits lithium brings to the melting process.

In metallurgical powders, lithium’s ability to act as a strong flux makes it useful for

reducing viscosity and increasing flow during the continual casting process, as well as in

the production of ferrous and non-ferrous castings where it helps prevent veining and

deformation. Growth in crude steel output accelerated in the mid-2000s, largely on

surging Chinese output and demand, and together with increased use of casting

powders led to lithium consumption rising by 8.5%py from 2000 to 2012. Both lithium

minerals and lithium carbonate are used in metallurgical powders.

Butyllithium is used as an initiator for anionic polymerisation reactions in the production

of certain synthetic rubber and thermoplastic products, such as styrene-butadiene


Roskill


rubber (SBR) and styrene block copolymers (SBCs). Growth in lithium consumption in

polymers has exceeded that of synthetic rubber as a whole because of strong demand

for the specific products lithium is used to polymerise, especially solution polymerised

SBR (SSBR).

The air treatment market for lithium has witnessed slower growth than some other end-

uses, as absorption chillers, which use large quantities of lithium bromide, remain a

niche product and face competition from electric compressors.

Battery-grade lithium metal and lithium salts are used in primary batteries, which utilise

the electrochemical potential of lithium to provide high energy density in a small cell.

The market for lithium primary batteries has benefitted from consumers switching from

cheaper alkaline batteries in power-hungry portable devices as well as increased use in

applications such as remote utility monitoring. As a result lithium consumption has risen

by 7%py over the last ten years.

Aluminium smelting is the only significant market where consumption of lithium has been falling long-term, as older Söderberg smelters using an open-bath system, in which

lithium carbonate is used to reduce fluorine emissions, are replaced with modern

facilities using pre-baked pot lines. Consumption of lithium in this end-use has halved

since 2002.

Consumption growth in other end-uses has been mixed, with alloys showing the highest

levels as aluminium-lithium enjoys resurgence in use in modern aircraft, together with

increased consumption in organic synthesis and construction.

7.2 Consumption of lithium by country/region

China and Europe are the largest consumers of lithium, accounting for around 35% and

24% of total consumption respectively in 2012 (Table 156 and Figure 36). Chinese

consumption has increased by 11.4%py since 2002, largely through rapid expansion of

its domestic industrial, construction and battery sectors. European consumption has

risen by 7%py, led by its construction and export –led industries. However, while

Chinese consumption has maintained its strong growth trend post the 2009 global

economic downturn, Europe has struggled and has witnessed growth of only 2.5%py

since 2007.

Japan and South Korea represent 12% and 10% of the global market for lithium

respectively. South Korean consumption has grown at >30%py since 2002 because of a

rapid expansion in its domestic rechargeable battery industry, and associated material

requirements. Japan, meanwhile, saw consumption grow by 7%py between 2002 and

2007, again due to the demands of the rechargeable battery industry, but as of 2012

consumption stands 15% below the pre- global economic downturn peak. Japanese

industry has come under pressure from Chinese and South Korean competition, where

lower costs and more favourable exchange rates for exports are benefiting producers of

manufactured goods using lithium.


Roskill


Consumption in North America in 2012 remains only slightly above that of 2002, despite

rising in the mid-2000s at 2%py. North America is a mature market for lithium, and while

some end-uses for lithium have grown, such as construction, others, such as ceramics,

glass and aluminium, have fallen. This trend largely reflects the transfer of basic

manufacturing from North America to Asia.

India and Russia & the CIS remain relatively small markets, together representing 3% of

total consumption in 2012. The Indian market has increased by almost 10%py since

2002, but from a small base and was only around 2,500t LCE in 2012. Other countries

have also displayed strong growth, especially Southeast Asia where ceramic and

primary battery production is growing (e.g. Indonesia, Thailand and Malaysia) as well as

rechargeable battery raw material production (e.g. Taiwan).

Figure 36: World: Estimated consumption of lithium by country/region, 2002, 2007 and

2012 (t LCE)

Source: USGS; Roskill’s Letter from Japan; Trade statistics; Roskill estimates

Table 156: World: Estimated consumption of lithium by country/region, 2002, 2007

and 2012 (t LCE)

2002 2007 2012 ’02-’12 CAGR (%)

China 18,000 32,400 53,000 11.5

Europe 18,600 32,200 36,600 7.0

Japan 14,300 20,000 17,300 2.0

South Korea 1,000 5,900 15,000 31.0

North America 12,800 14,200 13,000 0.5

India 1,000 2,100 2,500 9.5

Russia & CIS 1,000 1,300 1,500 4.0

Others 4,100 9,200 11,300 10.5

Total 70,800 117,300 150,200 8.0 Source: USGS; Roskill’s Letter from Japan; Trade statistics; Roskill estimates Note: Rounded to nearest 100t and 0.5%py

2002

2007

2012

China Europe Japan South Korea North America India Russia & CIS Others


Roskill


7.3 Consumption of lithium by product

The lithium market can be divided between lithium minerals and lithium compounds, the

latter comprised of seven main products. Lithium carbonate was the most widely used

lithium compound in 2012 accounting for 48% of consumption (Figure 37). The split in

consumption between technical-grade and battery-grade lithium carbonate is almost

50:50. Industrial-grade lithium carbonate is used in the manufacture of lithium

hydroxide, bromide, chloride (some of which goes into metal and organolithium

production) as well as inorganic chemicals. Lithium carbonate is therefore also the most

widely produced compound (116,080t LCE in 2012).

Lithium minerals, including spodumene, petalite, lepidolite and amblygonite, accounted

for 21% of lithium consumption in 2012. Lithium hydroxide is the second most widely

used lithium compound, with technical-grade accounting for 12% of consumption and

battery-grade 3%.

Organolithium and lithium bromide accounted for 5% and 4% of consumption

respectively, with battery-grade lithium metal at 1%. Other forms of lithium used

represented 4% of total consumption and include lithium hypochlorite, inorganic and

organic chemicals, catalyst-grade metal and a variety of specialist salts.

Figure 37: World: Consumption of lithium by product, 2012 (%)

Source: Sections 8 to 18 Notes: Division in terms of lithium carbonate equivalent (t LCE)

Other includes specialist lithium chemicals and consumption of compounds and minerals in minor end-uses Consumption in the market, does not include consumption in the production of other lithium products

Major uses for the different lithium products consumed by each market are shown in

Table 157.

Technical-grade carbonate

25%

Battery-grade carbonate

23% Mineral 20%

Technical-grade hydroxide

12%

Organolithium 5%

Bromide 5%

Battery-grade hydroxide

4%

Battery-grade metal 1%

Other 4%


Roskill


Table 157: World: Consumption of lithium by end-use, by product, 2012

Te

ch

nic

al-

gra

de

carb

on

ate

Ba

tte

ry-g

rad

e

carb

on

ate

Min

era

l

Te

ch

nic

al-

gra

de

hy

dro

xid

e

Org

an

oli

thiu

m

Bro

mid

e

Ba

tte

ry-g

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e

hy

dro

xid

e

Ba

tte

ry-g

rad

e

me

tal

Oth

er

To

tal

Rechargeable batteries - 35,100 - - - - 5,200 100 - 40,400

Ceramics 9,500 - 13,600 - - - - - - 23,100

Glass-ceramics 9,500 - 8,650 - - - - - - 18,150

Greases - - - 13,500 - - - - - 13,500

Glass 8,000 - 3,800 - - - - - - 11,800

Metallurgical powders 4,200 - 4,000 - - - - - - 8,200

Polymer - - - - 7,500 - - - - 7,500

Air treatment - - - - - 7,100 - - 300 7,400

Primary battery - - - - - - 200 2,300 - 2,500

Aluminium 2,200 - - - - - - - - 2,200

Other 3,400 - - 5,000 500 - - 100 6,450 15,450

Total 36,800 35,100 30,050 18,500 8,000 7,100 5,400 2,500 6,750 150,200

Source: Sections 8 to 18 Notes: Consumption in the market, does not include consumption in the production of other lithium products

Consumption of individual lithium minerals and compounds increased at different rates

(Figure 38) compared to total lithium consumption because of the variety of end-uses

they are consumed in, and the growth rates and changes in products consumed in some

end-uses. Consumption of technical-grade lithium carbonate has increased by 5.1%py

since 2002 while consumption of battery-grade has risen by 20.5%py. Consumption of

lithium minerals has doubled in twelve years, registering 5.9%py growth. Mineral

consumption briefly exceeded that of carbonate in 2007, but other than that the growth

pattern for each has been relatively similar.

Strong growth has also been recorded in the consumption of battery-grade lithium

hydroxide, at 31%py, albeit from a low base in volume-terms. Meanwhile, consumption

of technical-grade lithium hydroxide has increased more steadily, at 4.4%py. Lithium

bromide and battery-grade lithium metal have increased by around 3.5%py and 6.9%py

respectively since 2000, and butyllithium by 4.9%py.


Roskill


Figure 38: World: Consumption of lithium by type, 2000 to 2012 (t LCE)

Source: Sections 8 to 18 Note: Consumption in the market, does not include consumption in the production of other lithium products

Other includes carbonate, hydroxide and minerals, and other products, not split into some major groupings because of their use in minor end-uses

7.4 Outlook for consumption of lithium by end-use

The medium-term outlook for lithium consumption appears strong, with overall growth

forecast at 9.7%py to 2017 in the base-case scenario (Figure 39 and Table 158). This

rate of growth suggests consumption will rise by around 17,750tpy LCE on average

through to 2017, but growth in volume terms will increase annually through the forecast

period, from just under 13,000t between 2012 and 2013 to around 25,000t between

2016 and 2017.

There are, however, both upside and downside risks to the outlook for growth in

consumption of lithium to 2017. The low-case (pessimistic) scenario foresees slower

global economic growth affecting demand for basic products like ceramics, glass,

aluminium, steel and rubber, as well as lower demand for portable consumer electronics

and delays in the introduction of lithium battery powered EVs. In this scenario, growth in

consumption of lithium is forecast at 4.5%py to reach just under 187,000t LCE by 2017.

Meanwhile, in the high-case (optimistic) scenario, growth in consumption of lithium is

forecast to increase by 15.7%py to reach just under 313,000t LCE by 2017. The

optimistic scenario is based on stronger global economic growth, and surging demand

for lithium secondary batteries in EVs.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Technical-grade carbonate Battery-grade carbonate Mineral

Technical-grade hydroxide Butylithium Bromide

Battery-grade hydroxide Battery-grade metal Other


Roskill


Figure 39: World: Historical and forecast consumption of lithium by end-use, 2007 to

2017 (t LCE)

Source: Sections 8 to 18

Table 158: World: Forecast consumption of lithium by end-use, 2012 to 2017 (t LCE)

2012 2017 CAGR (%py)

Low Base High Low Base High

Rechargeable batteries 40,400 64,900 106,400 169,800 10.0 21.5 33.5

Ceramics 23,100 25,400 27,300 29,350 2.0 3.5 5.0

Glass-ceramics 18,100 20,000 21,500 23,150 2.0 3.5 5.0

Greases 13,500 15,700 16,900 18,100 2.0 3.5 5.0

Glass 11,800 13,030 14,000 15,050 2.0 3.5 5.0

Metallurgical powders 8,200 9,500 10,460 11,500 3.0 5.0 7.0

Polymer 7,500 8,500 9,600 10,800 2.5 5.0 7.5

Air treatment 7,400 8,100 8,700 9,350 2.0 3.5 5.0

Primary battery 2,500 3,180 3,475 3,825 5.0 7.0 9.0

Aluminium smelting 2,200 1,000 1,500 2,000 -15.0 -7.5 -2.0

Other 15,500 17,100 18,400 19,800 2.0 3.5 5.0

Total 150,200 186,410 238,235 312,725 4.5 9.7 15.8

Source: Sections 8 to 18

Consumption of lithium in volume terms will continue to be driven by the rechargeable

battery sector, which is forecast to register 21.5%py growth through to 2017, reaching

106,400t LCE in the base-case scenario.

Demand growth for portable consumer electronics is forecast to remain strong, spurred

by increased sales of smartphones and tablet PCs, but also from other battery-powered

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Rechargeable battery Ceramics Glass-ceramics

Greases Glass Metallurgical powders

Polymer Air treatment Primary battery

Aluminium Other Pessimistic

Optimistic


Roskill


devices. The penetration of lithium-ion batteries in some applications, such as power

tools and household/garden goods, is still low, but is expected to grow and displace

NiCd and NiMH. In power devices and motive power applications, the use of lithium-ion

batteries is expected to continue displacing NiCd, NiMH and lead-acid batteries, and

although growth is forecast at only 13%py in unit shipments, rising capacity per unit will

mean a much greater growth in demand for lithium.

Grid and off-grid storage use of lithium-ion batteries is expected to witness significant

growth in installed capacity to 2017, at >120%py, but from a low base. In this

application, lithium-ion faces much more competition from other battery and storage

types as space constraints are typically less limited than for portable consumer goods,

heavy duty/power and transport applications. Significant potential exists from the EV

market for increased consumption of lithium in rechargeable batteries to 2017. PHEV

and BEV sales have not yet had a dramatic impact on the rechargeable battery industry,

largely because cost and range are prohibitive and hence their appeal to the mass

market is limited.

If production of EVs is higher than forecast, demand for lithium-ion batteries from

consumer electronic producers increases or lithium-ion increases market share in grid

and off-grid storage systems, then consumption of lithium could increase to 169,800t

LCE, a growth rate of 33.5%py. Concerns over the success of EVs in the market, and

the suitability of lithium-ion to meet vehicle electrification goals warrants a more

conservative approach to the baseline forecast however, with a pessimistic scenario

forecasting growth of 10%py, to 64,900t LCE.

Other markets for lithium are also forecast to provide areas of growth for lithium

consumption, but only at around 4%py in the base-case scenario. The volume of lithium

consumption in rechargeable batteries, representing 27% of total consumption in 2012,

is now starting to have much more impact on overall lithium consumption and this

sector’s influence will continue to increase to 2017 when rechargeable batteries could

account for 45% of the total market.

Consumption of lithium in ceramics and glass-ceramics is forecast to increase by

3.5%py to reach 27,300t LCE and 21,500t LCE respectively by 2017. Urbanisation in

developing economies such as China and India will continue to provide rising demand

for products using lithium but growth will be constrained by lower, or even negative,

rates of construction output in developed economies, especially Europe. A rise in US

housing completions since H2 2012 is positive for both these end-uses, and if the

European construction industry returns to growth it could create additional upside

resulting in 5.0%py growth. However, the outlook for both these developed regions

appears uncertain and further recessionary and debt pressures could weigh on demand

and further constrain growth, in which case demand might only grow by 2.0%py.

Growth in consumption of lithium in greases is forecast to increase by 4.5%py to reach

16,900t LCE in 2013, thanks to higher demand in industrialising countries, and

increased production of complex lithium greases which contain 10-15% more lithium

hydroxide than simple lithium greases. If manufacturing output returns to the high levels

seen in the mid-2000s, demand for lithium from the grease industry could show potential


Roskill


upside, but if economic growth continues to remain subdued, or producers start using

alternative soaps (e.g. urea), consumption might rise by as little as 3.0%py.

The use of lithium in glass manufacturing is not widespread and is restricted mainly to

specialist uses. Lithium can provide environmental benefits by substituting for heavy

metals, such as lead; performance benefits by improving output; and, save energy and

therefore reduce costs and CO2 emissions. This trend is expected to see the glass

industry match ceramics and glass-ceramics at 3.5%py, and reach 14,000t LCE by

2017. More widespread use of lithium in glass manufacturing could boost growth to

5.0%py, but equally lower global economic growth might restrict growth in current uses

to 2.0%py.

Steel and foundry production, the major markets for metallurgical powders, has shown

strong growth in the mid-2000s, but is forecast to slow through the mid-2010s on lower

global economic growth. Nevertheless, consumption of lithium carbonate and lithium

minerals in metallurgical powders provides benefits which improve yield and reduce

costs, therefore their use will likely continue to grow faster than steel and foundry output,

at 5%py, with the market reaching 10,460t LCE by 2017.

Growth in consumption of lithium in polymers will be dependent upon demand for

synthetic rubber and thermoplastic products such as tyres, tubes, footwear and

household goods. A weak recovery in automotive sales since the global economic

downturn of 2008/09 has impacted previously strong demand for tyres and rubber tubes,

but in developing countries, particularly China and India, there remains considerable

potential and this is forecast to spur synthetic rubber production through 2017. Lithium

consumption is forecast to increase by 5.0%py to reach 9,600t LCE in this market.

The use of absorption chillers and heaters for the cooling and heating of large buildings

has grown in popularity during the mid-2000s, particularly where waste heat is available

as steam or hot water, or where gas prices are low, as this often makes them more

efficient that electric chillers. On the other hand, the use of lithium chloride as a

desiccant in dehumidifiers has declined in favour of other materials. These trends are

forecast to continue to 2017, with growth in demand for lithium in air treatment

applications increasing by 3.5%py to reach 8,700t LCE.

Consumption of lithium in the primary battery industry is forecast to grow at 7.0%py to

reach 3,475t LCE by 2017. The industry is benefiting from increased output of portable

electronic devices which require primary battery back-up, remote utility monitoring

systems, and replacement of alkaline batteries for longevity improvements in non-

rechargeable devices.

The use of lithium carbonate in aluminium smelting is not widespread, with less than

10% of aluminium smelters utilising lithium carbonate bath additions in 2012. Some of

the major users of lithium in aluminium smelting are upgrading or closing their older

smelters and this trend is expected to continue, resulting in further declines in lithium

consumption, to 1,500t LCE by 2017. If further closures occur the market could decline

quicker, unless newer smelters start adopting lithium for energy saving purposes, which

currently looks unlikely.


Roskill


The outlook for other end-uses for lithium is mixed, but this sector overall is expected to

witness growth of 3.5%py. The use of aluminium-lithium alloy in aerospace applications

is increasing as new aircraft reach the production line and will provide considerable

potential in the mid- to late- 2010s, albeit from a low base in volume terms. The use of

lithium for construction and organic synthesis is also expected to rise, but other end-

uses, such as sanitization, could limit growth.

7.5 Outlook for lithium consumption by product

Commensurate with predicted strong growth in demand for lithium in rechargeable

batteries, battery-grade lithium carbonate consumption is forecast to increase from

35,100t LCE in 2012 to around 82,000t LCE in 2017, an CAGR of 18.5%py (Figure 40).

The increasing use of battery-grade lithium hydroxide in the manufacture of lithium-

mixed metal oxide cathode materials means lithium hydroxide consumption is forecast to

increase at rates above that for lithium carbonate, to reach just over 28,000t LCE in

2017, an CAGR of 36.5%. Consumption of technical-grade lithium carbonate and

hydroxide are expected to rise by 3.2%py and 4.5%py respectively.

Consumption of lithium minerals is forecast to increase by around 3.6%py to just under

36,000t LCE in 2017. Butyllithium and lithium bromide consumption will track that of the

main end-uses sectors they are used in – polymers and air treatment, and grow at

5.0%py and 3.0%py respectively. Consumption of battery-grade lithium metal is forecast

to increase by 8.1%py to 3,500t LCE, as increasing volumes are used in primary and

rechargeable batteries. Lithium metal for use in aluminium-lithium alloys is also

expected to show high rates of growth, but with other lithium products growing by

3.5%py overall to 18,800t LCE in 2017.


Roskill


Figure 40: World: Forecast consumption of lithium by form, 2007, 2012 and 2017

(t LCE)

Source: Sections 8 to 18 Note: This forecast is based on the base-case scenario; actual consumption of lithium by form could therefore be

slightly higher or lower than forecast Consumption in the market, does not include consumption in the production of other lithium products

0

50,000

100,000

150,000

200,000

250,000

300,000

2007 2012 2017

Technical-grade carbonate Battery-grade carbonate Mineral

Battery-grade hydroxide Technical-grade hydroxide Butylithium

Bromide Battery-grade metal Other


Roskill


8. Use of lithium in rechargeable batteries

Rechargeable (secondary) batteries provide the largest, and the fastest growing, market

for lithium. The use of lithium carbonate, lithium hydroxide and other lithium salts, and

lithium metal, in rechargeable battery cathode, anode and electrolyte materials is

estimated to account for 25% of total lithium consumption in 2012, or 40,400t LCE.

Rechargeable lithium (lithium-ion and lithium metal polymer) batteries account for over

99% of total lithium consumption in batteries, or 40,000t LCE, with the remainder (400t

LCE) used in nickel metal-hydride (NiMH) and nickel cadmium (NiCd) batteries.

8.1 Types of rechargeable batteries

Lithium is the lightest metal and has the highest electrochemical potential, which

enables it to achieve very high energy and power densities. Lithium, however, reacts

violently with water and ignites. As a result, early commercial rechargeable cells with

metallic lithium cathodes were considered unsafe. Modern lithium cells combine lithium

with other elements which do not react with water, while research into lithium-air and

lithium-water batteries continues.

Lithium-ion technology offers higher energy density (Figure 41), higher specific energy

and at a lighter weight than nickel-cadmium (NiCd) and NiMH batteries. Lithium metal

polymer technology has the potential to reach an even higher energy density and

specific energy than lithium-ion technology, although commercial systems are not

thought to have reached this target.

Figure 41: Specific energy and energy density of rechargeable batteries

Source: Watts, 2004


Roskill


8.1.1 Lithium-ion batteries

Lithium-ion cells typically consist of a carbon anode, an electrolyte of a lithium salt in

solution or polymer, and a lithium-metal oxide compound as the cathode (Figure 42).

The cell voltage arises from the difference in free energy between the Li+ ions in the

crystal structures of the two electrode materials.

Figure 42: Lithium-ion battery schematic

Source: POSCO

Lithium-ion batteries were designed to overcome the safety problems associated with

the highly reactive properties of lithium metal. No lithium metal is present at any stage of

the charge/discharge cycle. The lithium ions are instead intercalated into the positive

electrode in the discharged state and into the negative electrode in the charged state,

and they move from one to the other across the electrolyte.

The cathode is made up of one of a number of electro-active oxide materials:

Binary system:

Lithium cobalt oxide (LCO)

Lithium manganese oxide (LMO)

Lithium nickel (+/- cobalt) oxide (LNO)

Lithium iron phosphate (LFP)

Fluorinated lithium metal (iron, manganese, cobalt) phosphate (LMPF)

Ternary system:

Lithium nickel-cobalt-manganese oxide (NMC)

Lithium nickel-cobalt-aluminium oxide (NCA)

Binary system battery cathodes, such as LCO and LMO, possess a good power output

and are less complex (and subsequently less expensive) to produce. Ternary system

cathode materials, such as NMC and NCA, replace some of the original metal

component with manganese or nickel, sacrificing some power output for improved safety


Roskill


or life-cycle properties. The binary system cathodes containing phosphates (LFP,

LMPF), however, are an exception, maintaining a good power output along with good

safety and life cycle properties. Development is currently centered around LMPF

cathodes, given their potential to operate at 5V.

To produce lithium cathode materials, a sol-gel or solid-state processes is used to

combine either battery grade lithium carbonate (typically >99.5% Li2CO3) or battery

grade lithium hydroxide (typically >99.5% LiOH) with one or more transition metal oxides

or phosphates.

Liquid electrolytes in lithium-ion batteries consist of lithium salts, such as:

Lithium hexafluorophoshate (LiPF6)

Lithium tetrafluoroborate (LiBF4)

Lithium hexaflouroarsenate (LiAsF6)

Lithium trifluoromethane sulfonate (LiCF3SO3)

Lithium iodide (LiI)

Lithium bis(trifluoromethanesulfonyl) Imide LiN(CF3SO2)2

Lithium bis(perfluoroethylsulfonyl) Imide LiN(CF3CF2SO2)2

Lithium perchlorate LiClO4

Lithium bis(oxalato) borate LiB(C2O4)2

Lithium salts are combined with an organic solvent, such as ethylene carbonate, ethyl

acetate or 1,3-dioxolane, or a solid polymer, such as for example polyethyleneoxide.

The electrolyte conducts Li+ ions, acting as a carrier between the cathode and the

anode.

The anode in lithium-ion batteries is typically a carbon-based material, such as soft or

hard carbons or graphite, however research was undertaken into metallic anodes in the

early- to mid- 2000s and this technology has now been commercialised (although it still

only accounts for 1-2% of the anode market at present):

Lithium-titanate does not react with the electrolytes used in most lithium-ion

systems, unlike graphite, which means no solid electrolyte interphase barrier is

formed around the electrode, making it easier for lithium ions to reach the surface

of the electrode. Lithium-titanate therefore offers improved safety, high rate

capabilities and fast recharge, even at low temperatures.

Silicon has a theoretical capacity of 4200mAh/g but has large volume changes

associated with lithium intercalation (up to 300% vs. 10% for graphite). The large

volume change can mechanically disintegrate the material and result in particles

that are not electrically connected, and battery failure occurs. Current research is

focused on nanomaterials to mitigate the effects of volume changes and promote

cycling stability.

Tin also has a capacity higher than graphite, but is not as good as silicon at

holding onto the lithium ions. A blend of tin and other materials has been used,

including an amorphous tin/carbon anode by Sony in some of its batteries.


Roskill


Graphite, hard-carbon and silicon-based anodes can be pre-lithiated using lithium

metal powder, this lowers the “first cycle” irreversible capacity loss. FMC

produces a Stabilised Lithium Metal Powder (SLMP) for this purpose.

Lithium metal has already been commercialised in the form of lithium metal

polymer (LMP) batteries (see Section 8.1.2).

8.1.2 Lithium metal polymer batteries

Lithium metal polymer (LMP) cells use metallic lithium anodes rather than carbon types.

The cathode is made of a material composed of vanadium oxide, carbon and a polymer

which form a plastic composite. The two electrodes are separated by a solid polymer

electrolyte made of polyoxyethylene doped with lithium salts (e.g. LiPF6), which conducts

lithium ions (Figure 43). To obtain optimal conductivity, the temperature of the battery

must be maintained between 60 and 80°C.

Figure 43: Lithium metal polymer battery schematic

Source: BatScap

The LMP cell was developed in 1979 by Hydro-Quebec with a pilot plant built in 1994 by

Argotech in Quebec to supply batteries for an electric car program, which never

materialised. Bathium Canada, formerly Avestor and now part of the Bolloré group, was

created in 2000 to manufacture LMP batteries for the telecommunication market. By

2006 the company had delivered 20,000 3kWh SW48S80 LMP batteries for the

telecommunications market. However, in 2007, following its acquisition by the Bolloré

group, the company was re-aligned with Bolloré’s subsidiary, batScap in France, to

provide LMP batteries for electric vehicles, specifically Bolloré’s BlueCar launched in

2011. The current batScap unit for the BlueCar provides 30kWh of energy at 410 volts;

the battery has a specific energy of 100Wh/kg and energy density of 100Wh/l.

8.1.3 Lithium-sulphur batteries

Lithium-sulphur cells use a metallic lithium anode and a soluble lithium polysulfide (Li-S)

cathode (Figure 44). Lithium-ions are stripped from the anode during discharge and


Roskill


form lithium polysulfides in the cathode. On recharge, the lithium-ions are plated back

onto the anode. High order lithium polysulfides are soluble in the electrolyte and migrate

to the anode, scrubbing off any dendrite growth.

Figure 44: Lithium-sulphur cell schematic

Source: Sion Power

Lithium-sulphur is both cost effective and cost competitive when compared to other

battery systems. Sulphur is much less expensive than the typical components of lithium-

ion battery cathodes. Lithium-sulphur cells have been designed with a specific energy of

over 350Wh/kg and an energy density of over 400Wh/l, but the theoretical upper limit of

lithium-sulphur chemistry is up to 2,500Wh/kg and 2600Wh/l, five times that of lithium-

ion. However, one of the primary shortfalls of lithium-sulphur cells is intermediary

reactions with the electrolytes. While S and Li2S are relatively insoluble in most

electrolytes, many of the intermediary polysulfides are not. The majority of research on

lithium-sulphur batteries is to improve the choice of electrolytes to minimize this side

reaction.

Lithium-sulphur cells are under development by Sion Power of Arizona, USA and Oxis

Energy of Abingdon, UK, but have yet to be fully commercialised. Sion Power signed an

agreement with BASF in 2009 to further develop Sion Power’s lithium-sulphur

technology using BASF’s electrolyte technology and BASF later (2012) invested

US$50M in Sion Power and took an equity stake. Meanwhile Oxis Energy has received

a US$15M investment from Sasol of South Africa to further develop its own technology.


Roskill


8.1.4 Lithium-air batteries

Lithium-air cells use the oxidation of lithium at the anode and reduction of oxygen at the

cathode to induce a current flow (Figure 45). The major appeal of the lithium-air battery

is the extremely high energy density, which rivals that of traditional gasoline powered

engines. The technology is still in its infancy, however, and will require significant

research efforts in a variety of fields.

Figure 45: Lithium-air cell schematic

Source: Wikipedia

8.1.5 NiMH and NiCd batteries

NiMH batteries use nickel oxyhydroxide (NiOOH) as a cathode and a hydrogen-

absorbing alloy as an anode. NiCd batteries also use nickel oxyhydroxide (NiOOH) as a

cathode, but metallic cadmium or cadmium hydroxide as an anode. NiMH and NiCd

cells both contain an alkaline electrolyte, usually potassium hydroxide. Sodium and/or

lithium hydroxide can be added to the potassium hydroxide electrolyte to deliver higher

capacity while maintaining good life cycle and reduced self-discharge. Hydrophilic

polyolefin nonwovens are used as the separator.

8.2 Production of rechargeable batteries

In 2010, Avicenne estimated the value of the rechargeable battery market (excluding

rechargeable alkaline batteries) at US$30.5Bn. Sales of lead-acid batteries accounted

for 60% of the market by value, lithium 25%, NiMH and NiCd at 6% each, and other

batteries 3%.


Roskill


Production of rechargeable lithium batteries, in unit terms, has grown by 20%py between

2000 and 2012 to reach 5.1Bn units (Figure 46). Lithium overtook NiCd to become the

leading rechargeable battery type produced in 2004.

Figure 46: World: Production of rechargeable batteries1, 1995 to 2012 (M cells)

Source: NiMH, NiCd, Lead Acid & Other 1995-2011 = Avicenne; Lithium 1995-2012 and Others 2012 = Roskill

estimate Note: 1-Excludes rechargeable alkaline batteries

In energy storage capacity terms, production of rechargeable lithium batteries reached 40.4GWh in 2012, up from 3GWh in 2000, a CAGR of 24% (Figure 47). Lithium battery capacity per cell has increased by about 50% since 2000, whereas NiMH and NiCd have remained relatively stationary. Rechargeable lithium batteries have roughly 250% and 350% higher capacity than NiMH and NiCd batteries respectively.

Japan dominated world production of rechargeable lithium batteries until 2004 when

China and South Korea together accounted for more than 50% of global output for the

first time (Figure 48). Between 2000 and 2008, production in Japan increased by

7.9%py, to 1.2Bn cells, but despite a recovery in 2010 following 2009 destocking, output

has since fallen as Japanese companies have concentrated on higher value cells for

larger format batteries whilst their South Korean and Chinese competitors have

concentrated on lower value, smaller format, cells. Output in South Korea and China

has increased by 39%py since 2000 and these two countries now account for almost

80% of global output. In value terms, however, Japan and South Korea each account

for around 40% of market share with China accounting for 20%.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Lithium NiMH NiCd Lead-acid Other


Roskill


Figure 47: World: Production of rechargeable batteries1, 1995 to 2012 (MWh)

Source: NiMH, NiCd, Lead Acid & Other 1995-2011 = Avicenne; Lithium 1995-2012 and Others 2012 = Roskill

estimate Note: 1-Excludes rechargeable alkaline batteries

Figure 48: World: Rechargeable lithium battery production by country, 2000 to 2012

(M cells)

Source: BAJ; CIAPS; BAK; Roskill estimates

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Lead-acid Lithium NiCd NiMH Other

0

1,000

2,000

3,000

4,000

5,000

6,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Japan South Korea China Other


Roskill


8.2.1 Producers of rechargeable lithium batteries

The ten leading producers of rechargeable lithium batteries in 2012, in order of output,

and which accounted for nearly 90% of total global shipments are:

Producer Operations

Samsung SDI South Korea

LG Chem South Korea

Sanyo China, Hong Kong, Japan

Sony China, Japan, Mexico

Tianjin Lishen China

MBI (Panasonic) China, Indonesia, USA

BAK China

ATL China

BYD China, Hong Kong

Hitachi Maxell China, Japan

In addition to the above companies, the following companies produce higher value,

larger-format, lithium batteries for power & motive power, heavy duty applications (e.g.

grid-storage) and transportation markets:

Producer Operations

A123 Systems USA, China

ABAT China

Aleees Taiwan

Altair Nanotechnologies USA

BatScap Canada

Boston Power USA

Dow Kokam USA

E-one Moli Energy Canada

EaglePicher USA, South Korea

Ener1 (EnerDel) USA, South Korea

Electrovaya USA

Evonik Germany

GS Yuasa Japan

International Battery USA

Johnson Controls USA

Liotech Russia

Lithium Technology/GAIA USA/Germany

NEC/AESC Japan

EnerSys Canada

Saft Europe, Asia, North America

SK Energy South Korea

Ultralife USA, Europe, Asia

Valence Technology USA, China

Yardney USA


Roskill


8.2.2 Producers of nickel metal hydride batteries

The leading producers of NiMH batteries in 2012 are as follows:

Producer Operations

BYD China

Canon Japan

Cobasys (Bosch) USA

Energizer Various worldwide

FDK Japan

Furukawa Japan

Gold Peak (GP) Batteries Singapore, Hong Kong, China, Taiwan, and

Malaysia

GS Yuasa Japan

Guangzhou Great Power Battery China

Guangdong Shida Battery China

Harding Energy USA

Henan Huanyu Group China

Hitachi Maxell Japan

Hyundai South Korea

KAN Battery China

Lexel Battery China

Panasonic (PEVE) Japan, China

Saft Europe, Asia, North America

Samsung South Korea, USA

SANIK Battery China

Sanoh Japan

Sanyo Electric Japan

Shenzhen EPT Battery China

Shenzhen GREPOW Battery China

Shenzhen High Power Tech Co. China

TMK Power Industries China

Toshiba Japan

TWD Battery China

Union Suppo Battery Company China

Unitech Battery China

Varta Microbattery China, Indonesia

Walsin China

YiYang Corun Battery China

8.3 Production of rechargeable lithium battery materials

The lithium-ion battery producers listed above, assemble cells from a variety of

intermediate materials. The lithium-containing parts, namely the cathode, electrolyte

and, in some cases, the anode, are all manufactured separately and assembled by the

battery producers. The cells may then be packaged, or combined and packaged, to


Roskill


produce a final saleable battery. Figure 49 shows a simplified flow chart for the battery

materials value chain.

Figure 49: Lithium-ion battery materials value chain

Source: Roskill

As of 2012, total production capacity for rechargeable lithium battery cathode materials

is estimated at just under 150,000tpy. Production, however, is estimated at less than

half this, around 70,000t in 2012. Output of cathode materials has increased by 25%py

since 2000, slightly higher than production of rechargeable lithium batteries in unit terms

(23%py), and closer to that of production in energy storage capacity terms (26%py).

This is probably because of increased output of higher capacity, larger cells requiring

more cathode material per cell.

The most widely produced cathode material in 2011 was LCO, forming 42% of total

cathode production (Figure 50). The production of LCO has, however, been in steady

decline, falling 3.2%py since 2008, as cathode manufacturers have sought to address

high and fluctuating cobalt prices, and concerns with thermal runaway of batteries

containing LCO, with cheaper and safer alternatives. Cathode manufacturers have

replaced LCO with NMC cathode materials, which overtook LCO’s market share in 2012

(Figure 50). Production of LFP, LMO and NCA has accelerated since 2009, as

Lithium

source

Cathode

manufacturer

Metal

source

Lithium-ion battery

assembly line

Chemical

processing

Metal

processor

Carbon

source

Lithium

carbonate or

hydroxide

Cobalt,

manganese, iron,

nickel etc.

Metal

powder/oxide

Battery-grade

lithium carbonate

or hydroxide Lithium salts

e.g. LiPF6

Lithium cobaltite,

manganate etc.

Electrolyte

manufacture

Anode

manufacturer

Organic liquid or

polymer

Graphite, hard or

soft carbon,

lithium titanate

etc.

Carbon

processor


Roskill


producers of both portable electronic devices and automotives have sought materials

with improved energy density, life cycle and safety qualities.

Figure 50: World: Production of lithium cathode materials by type, 2000 to 2012

Source: Roskill estimates, Umicore, Avicenne

The rechargeable lithium battery electrolyte market surpassed 20,000t in 2011,

according to Avicenne, and is estimated at 24,000t in 2012. The market has grown by

23%py since 2000.

8.3.1 Producers of rechargeable lithium battery materials

8.3.1.1 Cathode materials

The cathode materials market is dominated by two companies, Umicore in South Korea

(estimated 25% market share in 2012) and Nichia Corp. in Japan (20%). Producers in

China have extended their market share in 2012 to around 30%. A few companies

produce cathode materials outside Asia, with production facilities located in Belgium, the

USA, Canada and Germany.

There are a large number of cathode material producers in Japan, ranging from small-scale producers manufacturing less than 500tpy, to companies such as Nichia, the world’s second largest producer, with capacity of 15,000tpy (Table 159). Total capacity in Japan is estimated at over 70,000tpy.

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ca

tho

de

pro

du

cti

on

(t)

Ca

tho

de

ma

teri

al m

ark

et

sh

are

LCO NCM LMO LFP NCA LNO Other Total (RHS)


Roskill


Table 159: Japan: Producers of lithium-ion battery cathode materials, 2012

Company Location Capacity

(tpy)

Products

Nichia Corp. Tokushima & Kagoshima 15,000 LCO, NMC, LMO, LNO

Umicore Hyogo 14,500 LCO, NMC

Nippon Denko Fukushima 6,700 LMO

Tanaka Chemical Fukui 6,000 NMC

JX Nippon Ibaraki 5,000 NMC

AGC Seimi Ibaraki 3,000 LCO, NMC, LNO

Toda Kogyo Yamaguchi & Hiroshima 3,000 LCO, NMC, LMO, LNO

Mitsubishi Chemical Okayama 2,200 NMC, LMO, LFP

Toda Kogyo/MES (M&T Olivine) Chiba 2,100 LFP

JGC Catalysts & Chemicals Fukuoka 2,000 LMO

Nippon Chemical Fukushima 2,000 NMC

In-house Battery Companies Various 2,000 NMC, LCO, LFP

Nihon Kangaku Sangyo Fukushima 1,500 LNO

Sumitomo Metal Mining Ehime 1,500 LNO

Santoku Hyogo 1,000 LCO

New Chisso/H.C.Starck Kunamoto 1,000 NMC

Mitsui Mining & Smelting Hiroshima 960 LMO

Seido Chemical Osaka 500 LCO

JFE Mineral Chiba … LMO

Sumitomo Osaka Cement … … LFP

NEC Tokin Kanagawa … …

Total >69,960 Source: Company data, IIT, Roskill estimates

In contrast to Japan, South Korea has fewer cathode manufacturers (Table 160), and

capacity of only a third of that in Japan, but is home to the world’s largest producer,

Umicore.

Table 160: South Korea: Producers of lithium-ion battery cathode materials, 2012


(tpy)

Products

Umicore Cheonan 16,000 LCO, NMC

POSCO ESM Gyeongsangbuk 4,000 LMO, NMC, LTO

3M Korea … 1,000 NMC

L&F Chilgok 1,000 LCO, NMC

Hanwha Chemical Ulsan 600 LFP

Ecopro Ochang Eup >500 LNO, NMC

LG Chem … >500 NMC

Total >23,600 Source: Company data, IIT, Roskill estimates

Cathode material manufacturers in China have more than double the capacity of their

Korean neighbours but only four-fifths of that installed in Japan. The major producers

are Toda Hunan (a JV between Toda Kogyo of Japan and Hunan Shanshan of China),

Tianjin STL, Beijing Easpring, Pulead and Hunan Reshine (Table 161).


Roskill


Table 161: China: Producers of lithium-ion battery cathode materials, 2012


(tpy)

Products

Toda Hunan Shanshan Changsha, Hunan 10,500 LCO, NMC, LFP

Tianjin STL Tianjin 10,000 LFP

Beijing Easpring Yanjiao, Hebei 8,300 LCO, NMC, LMO

Tianke Technology Baofeng, Henan 5,000 LFP

Pulead Beijing 5,000 LCO, LFP

CITIC Mengguli Beijing 2,500 LMO

Xiamen Tungsten Xiamen, Fujian 2,000 LCO

Hunan Reshine Ruixiang, Hunan 2,000 LCO, NMC, LNO, LFP

Xinxiang Green New Energy Xinxiang, Henan 2,000 LMO, LFP

Ningbo Jinhe Yayou, Zhejiang 1,800 LCO

Chengzhou PowerGenie Chengzhou, Jiangsu 1,500 LCO

China Sun Group Dalian, Liaoning 1,000 LCO, LFP

Nanochem Suzhou, Jiangsu 500 LFP

Hunan Haorun Changsha, Hunan 500 LFP

Jiangsu Wuxi L&F1

Wuxi, Jiangsu … LCO

Seimi Tongda2

Wuxi, Jiangsu … LCO, NMC, LNO

Tianjin B&M Tianjin … LCO, LMO, NMC

In-house Battery Companies2

Various … LCO, LMO, LFP, LMFP

Total >52,600 Source: Company data, IIT, Roskill estimates Note: 1-Subsidiary of L&F of South Korea

2-Joint venture between AGC Seimi of Japan and Jiangsu Cobalt Nickel Metal (KKK) of China 2-Includes A123, BYD and Valence

Three companies in Taiwan, Li-Kai Power (LFP, 500tpy), Formosa Lithium Iron Oxide

Corp. (LFP, 4,800tpy; LMO, LNO and NMC, 500tpy) and Mechema Chemicals (LMO,

900tpy) produce cathode materials.

In November 2012, Sumitomo Osaka Cement (SOC) opened its first cathode plant in

Yen My district, northern Hung Yen, Vietnam. The US$62.5M, 2,000tpy plant produces

LMO and could be increased to 10,000tpy, depending on market demands.

In the USA, TRONOX (LMO, >100tpy) and BASF (NMC and LFP) produce cathode

materials in Henderson, NV and Elyria, OH respectively. Toda America, a joint venture

between Toda Kogyo and Itochu of Japan, started construction of a 4,000tpy NCM and

NCA plant in April 2010, in Battle Creek, Michigan, with the first phase completed in

February 2011.

The Clariant Group of Switzerland, through Phostech Lithium, operates two facilities in

Quebec, Canada, with a combined capacity of 2,900tpy LFP, and an additional pilot

facility in Moosberg, Germany (LFP, 300tpy). Phostech and LG Chem signed an MOU

in 2011 to jointly build a 2,500tpy LFP plant in South Korea, slated for completion by

2014.


Roskill


Umicore and Prayon formed a joint venture company, BeLife, to undertake research into,

and produce, LFP cathode materials at a production facility in Engis, Belgium, with a

capacity to produce 100tpy.

8.3.1.2 Electrolyte salts

The lithium-ion battery electrolyte market is dominated by the following ten companies

as well as some smaller Chinese producers:

Mitsubishi Chemical, Japan (24% market share in 2011)

panaX-etec (previously Chiel/EcoPro), South Korea (21%)

Zhangjiagang Guotai Huarong, China (19%)

Ube Industries, Japan (11%)

Battery companies in-house (4%)

Tomiyama Pure Chemicals, Japan (3%)

Shenzhen Capchem, China; Jinniu, China; Mitsui Chemical, Japan; Kishida

Chemical, Japan; Novolyte Technologies (BASF), USA & China (together 18%)

These companies are supplied with lithium salts by a second tier of companies,

concentrated mainly in Japan and South Korea (Table 162).

Table 162: World: Producers of lithium salts for electrolytes, 2012

Company Location Capacity Products

Stella Chemifa Izumi, Japan 2,600 LiPF6, LiBF4

Morita Chemical Industries Japan 1,400 LiPF6

Zhangjiagang, China 3,000 LiPF6

Changsu, China 1,000 LiPF6

Sub-total 5,400

Foosung (Ulsan Chemical) South Korea 1,600 LiPF6

Kanto Denka Mizushima, Japan 1,300 LiPF6

Tianjin Jinniu Power Sources Tianjin, China 1,000 LiPF6

Henan Do-Fluoride Chemicals China 1,000 LiPF6

OCI Materials1

South Korea 300 LiPF6

Jiangsu Jiujiujiu Technology Zhangjiagang, China 300 LiPF6

C&S Energy Materials Shandong, China … LiPF6

Rockwood Lithium Langelsheim, Germany … LiBOB

Total >13,500 Source: Company data, IIT, Roskill estimates Note: 1-Under construction, completion in H1 2013

Kanto Denka formulates LiPF6 using lithium chloride, chlorine and phosphorus trichloride

to produce LiPCl6, and then adds hydrogen fluoride to produce LiPF6. However, the

typical processing route for LiPF6 is by reacting lithium carbonate or hydroxide with

hexafluorophosphoric acid.


Roskill


8.3.1.3 Anode materials

The production of lithium-containing anodes is small, given it accounts for much less

than 1% (<350t) of the 35,000t anode market. Producers of LTO include Titan Kogyo

and Ishihara Sangyo in Japan, POSCO ESM in South Korea and Tronox in the USA.

Several Chinese companies claim to produce LTO but it is not known whether they

market a commercial product, these include Yintong Group, Sichuan Xingneng New

Materials, Shenzhen Tianjiao Technology and BTR Nano Technology.

8.4 Consumption of rechargeable lithium batteries

The market for rechargeable lithium batteries can be split into four product groupings:

Computing, communication and consumer (3C) products

Power devices and small motive power

Heavy duty

Transportation

3C applications are estimated to have accounted for 91% of total rechargeable lithium

battery consumption, in unit terms, in 2012 (Figure 51). Power devices and motive

power account for a further 7% of the market, heavy duty applications 2% and transport

<1%.

Figure 51: World: Market for rechargeable lithium batteries by end-use, 2002, 2007 and

2012 (M cells)

Source: Sections 8.4.1 to 8.4.4

In terms of energy storage capacity, however, power and motive and transport

applications have a much larger share of the market, accounting for 9% and 6% of the

market respectively in 2012 (Figure 52).

0

1,000

2,000

3,000

4,000

5,000

6,000

2002 2007 2012

Transport

Heavy duty

Power & motive

3C


Roskill


Figure 52: World: Market for rechargeable lithium batteries by end-use, 2012 (MWh)

Source: Sections 8.4.1 to 8.4.4

8.4.1 Computing, communication and consumer (3C) market

Rechargeable lithium batteries have now saturated most of the 3C market, including for

mobile phones, digital cameras, camcorders, personal music players (PMPs), laptops,

tablets and handheld games. NiMH and NiCd are still preferred for some lower priced

applications, such as cordless phones and electric toothbrushes, however. Growth in

the rechargeable lithium battery market since the early 2000s has been driven by the

rapid expansion in demand for 3C electronics.

Mobile phones and notebook computers account for almost three-quarters of lithium

battery consumption in the 3C market (Table 163), with a total 3C market consumption

of 4,560M units.

Table 163: World: Lithium battery consumption in 3C products, 2012

Device Shipments

(M units)

Cells

(No. per unit)

Cells consumed

(M units)

Cells consumed

(%)

Mobile phone 1,700 1 2,300 37

Notebook 207 4-6 1,035 23

Tablet 127 1-3 255 6

Digital camera 120 1-2 180 4

MP3 150 1 150 3

Camcorder 50 1-2 75 2

Handheld gaming 45 1 45 1

Others/spares 375 1-6 1,120 25

Total 2,774 1.6 4,560 100 Source: Roskill estimates

3C 79%

Power & motive 10%

Heavy duty 1%

Transport 10%


Roskill


Shipments of mobile (cell) phones, the largest market for rechargeable lithium batteries

by volume, are estimated to have reached 1.7Bn units in 2012, a CAGR of 12.5% from

the 420M units produced in 2000. Smartphone shipments in 2012 are estimated to

account for 46% of the total market, up from 35% in 2011, according to IHS iSuppli, and

will rise to half of all cell phone shipments in 2013.

World production of notebooks (laptops), the second largest market for rechargeable

lithium batteries, is estimated by Digitimes to have reached 207M units in 2012, up from

28M units in 2000, a CAGR of 18%. Improving specifications, falling prices and the

introduction of netbooks boosted the popularity of notebooks and sales exceeded those

of desktop PCs for the first time in 2008. However, despite the launch of ultrabooks in

around 2010, growth in notebook sales has slowed in recent years in face of competition

from tablet PCs. Shipments of ultrabooks are estimated to have reached 10.3M units in

2012 and will rise to 44M units in 2013 according to IHS iSuppli.

Tablet PC shipments in 2012 are estimated at 126.6M units according to HIS iSuppli, up

from 82.1M in 2011. New low-cost devices have provided a boost to the market which

was previously dominated by e-books, such as Amazon’s Kindle, at the lower end and

Apple’s iPad at the higher end.

Shipments of low-middle end digital cameras climbed by 18%py from 15M in 2001 to

around 120M units in 2011. Digitimes predicted 106M low- and middle- end digital

cameras would be shipped worldwide in 2012, down 12.5% from 2011 because of the

rise in popularity of smartphones with in-built cameras. High-end shipments account for

a smaller proportion of sales, taking total digital camera shipments closer to an

estimated 120M units in 2012.

The PMP market was one of the fastest-growing segments in the consumer electronics

industry in the mid-2000s, with Apple as the runaway leader with its successful

iPod line-up, and shipments reached 225M units 2009. However, the market has

witnessed a serious slowdown as Apple shifts its focus to its iPhone and iPad, and as

competitors pop up with similar smartphone and tablet products. Shipments in 2012 are

estimated to have fallen to around 150M units.

Sales of Sony and Nintendo handheld gaming devices are forecast to fall to 38M units

in 2013, down from 47M in 2008. Total shipments of handheld gaming devices

containing lithium batteries is estimate at 45M units.

8.4.2 Power devices and motive power

Unlike the 3C market, rechargeable lithium batteries have not saturated the market for

power devices, with lead-acid and NiCd still holding a large share. Power tools are the

largest market for lithium batteries in this segment, with electric bikes and electric

scooters/motorcycles the other major market (Table 164).


Roskill


Table 164: World: Lithium battery consumption in power devices and motive power,

2012

Device Shipments

(M units)

Cells

(No. per unit)

Cells consumed

(M units)

Cells consumed

(%)

Power tool 22 6 130 37

Electric bike 2 30 60 17

Electric scooter/ motorcycle 1 30-60 45 13

Garden/household 1 15 15 4

Other 5 20 100 29

Total 31 10 350 100 Source: Roskill estimates

In 2011, Avicenne estimated the cordless power tool market at 61M units, up from 35M

units in 2000, a CAGR of 4.7%. Shipments in 2012 are thought to have increased

further, but only by 3-4%, to around 63M units. Lithium-ion has been growing its market

share in the power tool market, from close to zero in 2004 to 35% in 2012, or 22M units,

and the main competition is from NiCd. It wasn’t until around 2003 that a lithium-ion

battery was developed that could cope with short sharp bursts required by power tool

users, and demand from this market for a NiCd alternative effectively resulted in the

mass commercialisation of LMO, and later LFP, cathodes.

In addition to power tools are powered gardening and other household products, such

as powered hedge trimmers, trimmers/bush cutters, powered chain saws and powered

scarifiers. This market is estimated at 10M units, but with a 10% lithium-ion penetration.

Electric bikes, or e-bikes, are predominately an Asian, and more specifically a Chinese,

phenomenon, with China accounting for 92% of global sales in 2012 according to Pike

Research. The market is estimated at just over 30M units, with lithium-ion batteries

accounting for 6% of the market. Lead-acid batteries are the dominant power source for

e-bikes, especially in China, but NiMH also features strongly. Lithium-ion has a much

larger share of the market outside Asia, but this market is also very small in unit terms.

Electric scooters and motorcycles are differentiated from e-bikes by their speed

(<20kph for e-bikes, 20-50kph for e-scooters and >50kph for e-motorcycles). Pike

Research estimated the 2012 electric scooter and motorcycle market at 12M units. The

proportion of models using lithium-ion batteries in 2012 is estimated at less than 10%.

Other motive power applications include forklift trucks, golf buggies and mobility

scooters, but these applications are still dominated by the use of lead-acid technology.

Although requiring high capacity batteries with a large number of cells, they represent

only a small market in unit terms.


Roskill


8.4.3 Heavy duty applications

Other uses for rechargeable lithium batteries include grid- and off-grid storage, industrial

equipment, uninterruptable power supply (UPS) units, and aerospace, marine, space

and military applications.

Lux Research estimated the global grid-storage market at 320MWh in 2012, with

lithium-ion installations capturing 25%, or 80MWh. In this market, lithium-ion faces

competition from sodium-sulphur, sodium-nickel-chloride, molten-salt and flow (e.g.

vanadium redox and zinc bromine) batteries, and alternative energy storage systems like

compressed air, hydro and flywheels, because generally there is less of a size constraint

and cost/MWh is the main determinant to the technology chosen. Off-grid energy

storage systems present another large market in unit terms and probably accounted for

a further 65MWh of capacity installed in 2012. The off-grid market includes residential

and commercial energy storage (e.g. UPS), micro-grids, smart grids and other similar

applications. Much of the growth in lithium-ion battery use in grid- and off-grid storage

has occurred in 2011 and 2012 and, together, this market is estimated to have

accounted for 100MWh of lithium battery consumption, or 30M cells, in 2012 (Table

165).

In other, non-grid related, heavy duty applications (such as in non-motive power, e.g.

planes and ships) lithium-ion faces competition from lead-acid, NiCd and NiMH batteries.

This market is estimated at 195MWh in 2012.

Table 165: World: Lithium battery consumption in heavy duty applications, 2012

Device Shipments

(MWh)

MWh

(per unit)

Cells consumed

(M units)

Cells consumed

(%)

Grid & off-grid storage 100 2.5-7.5 30 35

Other 195 <0.1 55 65

Total 295 0.25 85 100 Source: Roskill estimates

8.4.4 Transportation

There are four common types of electric vehicles (EVs):

Hybrid electric vehicles (HEVs) - start-stop, micro HEV, mild HEV and full HEV

Plug-in hybrid electric vehicles (PHEVs)

Full electric, or battery electric vehicles (BEV)

Fuel-cell electric vehicles (FCEVs)

Electric vehicles are not a new phenomenon. They first came into existence in the mid-

1800s, but quickly lost market share to internal combustion engines (ICEs) because of

the flexibility and energy density of hydrocarbon fuels. Battery power has however

remained commonplace in other vehicle types, especially in smaller vehicles (Section

8.4.2).


Roskill


The energy crises of the 1970s and 80s brought a short-lived interest in EVs, though

those cars did not reach mass marketing. In the early 1990s, the California Air

Resources Board (CARB) began a push for more fuel-efficient, lower-emission vehicles,

with the ultimate goal being a move to zero-emissions vehicles such as EVs. In

response, automakers, such as GM, Chrysler, Toyota, Ford and Honda, developed and

sold several EVs, but these cars were eventually withdrawn.

The modern incarnation of EVs began with the launch of Toyota’s Prius HEV in 1997,

equipped with a 1.4kWh NiMH battery, which has gone on to achieve cumulative global

sales of 2.8M units, as of October 2012. Despite being capable of only a few kilometres

at low speed in electric-only mode, the Prius’ efficiency (60mpg) and commercial

success prompted other manufacturers to invest in hybrid technology using NiMH

batteries with numerous models from Japanese and US automotive companies

developed and sold from the late-1990s to the mid-2000s. Despite strong intentions to

switch to lithium-ion batteries for its 2009 model, Toyota stuck with NiMH leaving

Mercedes to launch the first lithium-ion powered HEV, the S400 Blue, a mild HEV in

2009. Hyundai released a full HEV, the Sonata, in 2010.

The low energy density of NiMH batteries compared to lithium batteries meant

development of PHEVs lagged HEVs until suitable battery technology was developed,

and they did not enter the mass market until 2008 when BYD of China launched its

F3DM to Chinese fleet buyers (although conversion of HEVs to PHEVs by installing

lithium-ion batteries was commonplace from the mid-2000s). General Motors began

deliveries of the Chevrolet Volt to the US market in December 2010 and Toyota’s Prius

Plug-in was released in Japan in January 2012. As of end-2012, almost 60,000 PHEVs

have been sold worldwide.

The first series production of BEVs using rechargeable lithium batteries started in 2008

with deliveries of the Tesla Roadster and TH!NK City, although production of both of

these vehicles has since been halted. Following these in 2009 was the start of mass

production of Mitsubishi’s iMiEV in Japan (re-badged and marketed briefly in Europe as

the Citroen C-zero and Peugeot iON from 2010) and from 2011 Nissan’s Leaf, now the

world's top-selling highway-capable all-electric car with more than 40,000 sold through to

end-2012. Bolloré released its Pininfarina-designed lithium metal polymer battery

powered BlueCar in 2012.

For the 2008 Beijing Olympics, 50 lithium-ion battery powered EV buses were used to

transport athletes from the Olympic village to the stadiums.

In 2006, East Japan Railway and Hitachi Maxell successfully developed the world’s first

HEV train using a lithium-ion battery and an improved diesel engine. The hybrid train

has run from Obuchizawa, Yamanashi prefecture to Komoro, Nagano prefecture since

summer 2007.

Production of BEVs is estimated at 65,000 units in 2012, PHEVs 57,000 units and HEVs

1.57M units, according to Advanced Automotive Batteries, an industry consultant.

Within the HEV segment, sales of HEVs powered by NiMH batteries are estimated at

1.2M units while those powered by lithium-ion are estimated at 370,000 units.


Roskill


The type of lithium-ion cells used in EVs varies, with the Nissan Leaf BEV using 195

laminar pouch cells to deliver 34kWh while the BMW Active Hybrid 3 uses 96 cylindrical

cells to deliver 1.4kWh. Based on the market size above and standard energy storage

of typical HEVs, PHEVs and BEVs, the total market size for transportation applications is

estimated at 4GWh or 65M cells (Table 166). This is equivalent to around 61.5Wh per

cell.

Table 166: World: Lithium battery consumption in transport applications, 2012

Device Shipments

(MWh)

kWh

(per unit)

Cells consumed

(M units)

Cells consumed

(%)

Cars:

HEV1

555 1.4 35.5 41

PHEV2

910 16 11.4 13

BEV3

2,210 34 12.5 15

Other4

325 85 26.8 31

Total 4,000 31 86.2 100 Source: Roskill estimates Notes: 1-Assumes 96 cylindrical cells per unit (based on BMW Active Hybrid 3)

2-Assumes 200 laminar pouch cells per unit (based on Chevrolet Volt) 3-Assumes 195 laminar pouch cells per units (based on Nissan Leaf) 4-Assumes 7000 cylindrical cells (based on Tesla Model S 85kWh)

8.5 Consumption of NiMH and NiCd batteries

Consumption of NiMH cells in 2012 is estimated at 1.4Bn cells. HEVs accounted for

around 56% of NiMH market share, by value, in 2011 according to Avicenne. Toys and

household items accounted for a further 24%, cordless phones 11% and other uses 9%.

By comparison, the main application for NiCd batteries is powertools, accounting for

70% of market share, by value, in 2011. NiCd batteries compete with NiMH and Li-ion in

this application (Section 8.4.2).

8.6 Consumption of lithium in rechargeable batteries

Lithium carbonate, lithium hydroxide and lithium salts are all used in the manufacture of

lithium-ion battery cathode, anode and electrolyte materials. Lithium metal is used as

the anode in lithium metal polymer batteries and as an additive in some doped carbon

anodes.

Each rechargeable lithium battery cell has a differing content of lithium, and estimates

on the exact quantity contained vary enormously. Argonne National Laboratory

estimates 0.6 to 1.3kg LCE per kWh (rising to 2.2kg if LTO is used as the anode).

Meanwhile, Nissan claims its 24kWh Leaf battery contains 22kg LCE (or 0.9kg LCE per

kWh). A figure of 0.9kg LCE per kWh is herein used as the basis for calculating lithium

content in rechargeable lithium batteries.


Roskill


There are production losses of lithium during the manufacture of batteries, both at the

cathode manufacture stage and at the battery assembly stage, and this is estimated at

around 10%.

Based on the above, lithium consumption in rechargeable lithium batteries in 2012 is

estimated at 40,000t LCE (Table 167), with 3C applications accounting for 79% of

consumption, and power applications and transportation 10% each.

Table 167: World: Lithium consumption in rechargeable lithium batteries by end-use,

2012

Production Lithium consumption

Energy storage

capacity (MWh)

No. cells

(M)

Capacity-basis

(t LCE)1

% of total

3C 32,000 4,560 31,680 79

Power 4,105 350 4,070 10

Heavy duty 295 85 290 1

Transportation 4,000 86 3,960 10

Total 40,400 5,081 40,000 100 Source: Section 8.4 Note: 1-Assumes 0.9kg LCE per kWh and 10% losses, rounded to nearest 10t

NiMH and NiCd battery electrolytes are doped with lithium hydroxide to remove any CO2

generated during use, although this application is restricted to large-format versions for

heavy duty and transportation uses. The lithium hydroxide content is typically around

3%, equivalent to 0.1kg LCE in a 1kWh cell. A 1.4kWh (Toyota Prius HEV equivalent)

battery therefore contains around 0.14kg LCE. Assuming half of all NiCd and NiMH

batteries produced contain lithium hydroxide additions, total lithium consumption in these

batteries is estimated at 390t LCE (Table 168).

Table 168: World: Lithium consumption in NiMH and NiCd batteries, 2012

Production Lithium consumption

Energy storage

capacity (MWh)

No. cells

(M)

Capacity-basis

(t LCE)1

% of total

NiCd 2,500 1,100 140 36

NiMH 4,500 1,400 260 64

Total 7,000 2,500 400 100 Source: Section 8.4 Note: 1-Assumes 0.1kg LCE per kWh and 10% losses, rounded to nearest 10t

Between 2000 and 2010, consumption of lithium in rechargeable batteries increased

ten-fold, to 29,800t LCE. Total consumption of lithium in rechargeable batteries is

estimated at 40,400t LCE in 2012, a CAGR of 23% from 2000 (Figure 53).


Roskill


Figure 53: World: Production of rechargeable batteries and consumption of lithium,

2000 to 2012 (MWh and t LCE)

Source: Figure 47 and Roskill estimates

Lithium is predominately used in the cathode of rechargeable lithium batteries, which

accounted for 88% of total consumption in 2012 (Table 169). Electrolyte solutions

consumed a further 11% and anodes <1%.

Lithium carbonate is the dominant raw material used in rechargeable batteries,

accounting for 35,100t LCE, or 87%, of total consumption in 2012. The proportion of

lithium carbonate used in rechargeable lithium batteries has decreased from 93% in

2007, with producers favouring lithium hydroxide, which is finding increased use in

cathode material manufacture. A small amount of lithium metal, estimated at 20t (100t

LCE) is used in the manufacture of lithium-bearing anodes for lithium-ion and lithium

metal polymer batteries.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Lithium NiMH NiCd Lithium consumption


Roskill


Table 169: World: Consumption of lithium in rechargeable batteries by type,

2007 to 2012 (t LCE)

2007 2008 2009 2010 2011 2012

Cathode:

Lithium carbonate 14,440 16,910 19,990 23,400 25,900 31,000

Lithium hydroxide 800 1,250 1,650 3,000 3,950 4,800

Sub-total 15,240 18,160 22,180 26,400 29,850 35,800

Electrolyte:

Lithium carbonate1

1,770 2,100 2,450 2,900 3,400 4,000

Lithium hydroxide2

330 360 370 380 390 400

Sub-total 2,100 2,460 2,820 3,280 3,790 4,400

Anode:

Lithium metal 30 40 50 60 80 100

Lithium carbonate 30 40 50 60 80 100

Sub-total 60 80 100 120 160 200

Product sub-total:


Lithium hydroxide 1,130 1,610 2,020 3,380 4,340 5,200

Lithium metal 30 40 50 60 80 100

Total 17,400 20,700 25,100 29,800 33,800 40,400 Source: Roskill estimates Note: 1-Lithium battery electrolytes, may include some lithium chloride

2-NiCd & NiMH battery electrolytes

Japan is the only country where consumption of lithium in rechargeable batteries is

reported/estimated. Japanese consumption of lithium in cathode materials reached a

peak of 11,100t LCE in 2011, up from 7,540t LCE in 2007, but was down by 4% in 2012

at 10,640t LCE (Table 170).

Starting from around the mid-2000s, there has been a growing trend in Japan towards

increased use of lithium hydroxide in rechargeable lithium battery cathode manufacture,

because producers have switched to sol-gel manufacturing techniques, from sintering, to

produce high performance ternary cathode materials and LFP.

Table 170: Japan: Consumption of lithium in rechargeable batteries, 2007 to 2012

(t LCE)

2007 2008 2009 2010 2011 2012e

Cathode:


Lithium hydroxide 790 1,050 880 1,320 1,850 2,640

Electrolyte:

Lithium carbonate1

550 500 450 700 1,000 1,000

Total 7,540 9,050 7,330 10,520 11,100 10,640 Source: Roskill’s Letter from Japan Nos. 357, 368 and 432; Roskill estimate Note: e-estimated

1-May include some lithium chloride

It is estimated that South Korea and China accounted for around 30% and 35% of

consumption of lithium in rechargeable batteries respectively in 2012, with Japan at 27%


Roskill


and other countries 8%. Japan’s share of consumption has fallen from 43% in 2007

(Table 171).

Table 171: World: Consumption of lithium in rechargeable batteries by country,

2007 to 2012 (t LCE)

2007 2008 2009 2010 2011 2012

Japan 7,540 9,050 7,330 10,520 11,100 10,640

South Korea 3,200 4,000 5,500 7,000 10,000 12,000

China 5,800 6,500 7,500 9,000 10,000 14,000

Other 1,860 1,150 4,770 3,280 2,700 3,760

Total 17,400 20,700 25,100 29,800 33,800 40,400 Source: Japan = Table 170; China, South Korea & Others = Roskill estimates

8.7 Outlook for demand for rechargeable batteries

Growth in demand for rechargeable batteries in unit terms will continue to be led by 3C

products through to 2017, but in capacity terms (MWh) power applications, heavy duty,

but particularly transportation, will grow in importance (Table 172 and Figure 54).

Table 172: World: Rechargeable lithium battery demand by market, 2012 and 2017

2012 2017

Energy storage

capacity (MWh)

No. cells

(M)

Energy storage

capacity (MWh)

No. cells

(M)

3C 32,000 4,560 55,000 6,300

Power 4,105 350 8,100 580

Heavy duty 295 85 15,700 520

Transportation 4,000 86 28,400 610

Total 40,400 5,081 107,200 8,010 Source: Roskill estimates

In the 3C market, cell phone shipments are forecast by Ovum to grow at 6%py to 2017,

reaching 2.5Bn units; the primary growth driver will be demand from emerging markets.

Display Search forecasts mobile PC shipments to hit 800M units by 2017, a CAGR of

19% from 2012; market demand will be led by tablet and ultra-portable PCs. Digital

camera, MP3 players, camcorders and handheld gaming devices are expected to come

under pressure from increasing use of smartphones and tablets with these functions

built-in, meaning shipments will probably be in low single digits or even turn negative to

2017. Overall, 3C shipments are forecast to grow to 4,200M units in 2017, up from

2,744M units in 2012, a CAGR of 9%. Lithium rechargeable battery demand in the 3C

market is forecast to grow at a similar rate, to around 6,300M units, but the increasing

power demands of portable devices mean that in capacity terms demand will likely

exceed unit growth by around 2-3%py, and reach 55,000MWh in 2017.


Roskill


Figure 54: World: Market for rechargeable lithium batteries by end-use, 2002 to 2017

(MWh)

Source: Table 172

As lithium-ion batteries are still gaining market share from NiCd, NiMH and lead-acid

batteries in power devices and motive power markets, demand for lithium-ion batteries

is expected to increase at rates above overall market growth for these products.

Lithium-ion batteries are forecast to account for 50-60% of power tool battery demand by

2017, up from 35% in 2012, with shipments at around 35M units. In 2011, Pike

Research forecast the e-motorcycle and e-scooter market to reach 405MWh in 2017, of

which lithium-ion would account for 75MWh, or around 3.8M units (assuming 0.2kWh per

unit). Pike Research also forecasts the e-bike market to reach 43M units in 2017, up

from 30M units in 2012. The global penetration of lithium-ion batteries in the e-bike

market is expected to increase from 6% in 2012 to 11% in 2017, equivalent to 4.7M

units. Overall, the power device and motive power market for rechargeable lithium

batteries is forecast to reach 58M units in 2017, up from 31M units in 2012, a CAGR of

13%. With growing capacity per unit, this market is expected to almost double in MWh

terms, to 8,100MWh, over the next five years.

In the heavy-duty market, Lux Research forecasts the global installed grid-scale storage

market will reach US$114Bn, or 185GWh, by 2017. Lithium-ion storage systems are

noted for their high energy density, but this metric is not required for utility-scale storage

systems, meaning other technologies at lower cost will prevail in the next five years,

according to Lux Research. By 2017, the market share of lithium-ion is expected to fall

to 13% of installed grid-scale market share (US$15Bn) or 20GWh, of installed capacity,

down from 25% market share in 2012 but up from 80MWh in total installed storage

capacity. Lithium-ion has greater potential in off-grid systems where compact modules

with higher energy density are a pre-requisite; this market is forecast to show high

growth through to 2017. Lux Research forecasts the off-grid market to reach 6GW of

power in 2016, of which lithium-ion will account for 3.7GWh of energy storage capacity

installed in that year, up from 65MWh in 2012, a CAGR of 125%. If unit costs for lithium-

ion fall further, to US$400/kWh, this market could expand even faster according to Lux

Research. Total grid- and off-grid storage capacity is therefore expected to add

0

20,000

40,000

60,000

80,000

100,000

120,000

2002 2007 2012 2017

Transport

Heavy duty

Power & motive

3C


Roskill


15.4GWh of capacity alone in 2017. Other heavy-duty applications are forecast to grow

at around 10%py and reach 300MWh in 2017.

Significant potential exists from the transportation market for increased demand for

large-format rechargeable lithium batteries. However, the take-up of EVs, especially

BEVs, has been slow, as the cost (largely due to the cost of the battery pack), range and

practicality (lack of charging stations in particular) is holding back their potential. The

price of oil has increased to around US$100/barrel, from less than US$50/barrel in early

2009, and government rebates remain in place globally, providing some incentive to

buyers, but the cost/benefit is perhaps only appealing to a select number in the mass

market to warrant a shift away from ICEs. Many EVs and PHEVs have been sold to

corporate fleet buyers to date, while HEVs also find widespread use in corporate fleet

and taxi uses.

All of these, and more, factors make forecasting future EV production levels complex.

Global automotive production (cars, vans, trucks and buses) in 2012 is estimated at 85M

units, and is forecast to reach 100M units in 2017. Production of EVs in 2012 is

estimated at 1.32M units, or 1.6% of the overall automotive market.

Pike Research forecasts that global sales of PHEVs & BEVs will surpass 1M units in

2017, a CAGR of 52%py from the 122,000 units produced in 2012. HEVs will grow more

slowly, at 6%py, according to Pike Research, reaching 2.1M units in 2017. Avicenne

forecasts HEV production to reach 3M units in 2017, BEVs 0.4M and PHEVs 0.25M.

PWC Autofacts® forecasts output of 2.7M HEVs, 0.8M PHEVs and 0.7M BEVs in 2017.

On average, industry estimates suggest production of 2.6M HEVs, 0.5M PHEVs and

0.5M BEVs in 2017 (Table 173). Roskill forecasts that BEVs will account for a much

smaller proportion of demand compared to PHEVs and assumes 0.3M will be produced

in 2017.

Table 173: World: Comparison of EV production estimates in 2017 by industry

consultant

HEVs PHEVs BEVs Total

Pike Research 2.1 0.5 0.5 3.1

Avicenne 3.0 0.3 0.4 3.7

PWC

2.7 0.8 0.7 4.2

Average 2.6 0.5 0.5 3.6

Roskill 2.6 0.5 0.3 3.4 Source: Pike Research; Avicenne; PWC Autofacts; Roskill estimates

There is the potential for new models of current HEVs, especially the market-leading

Toyota Prius, to be released before 2017 using rechargeable lithium batteries. Toyota

has already started using lithium-ion batteries in its Prius V wagon (outside of North

America), although given the updated 2011 variant of the Prius was still based on NiMH

batteries, this scenario is unlikely before 2014/15. Overall, the proportion of lithium-

powered HEVs is likely to increase from the 30% level in 2012 to 50% in 2017, or

around 1.3M units (Table 174).


Roskill


Table 174: World: Forecast rechargeable battery consumption in EVs, 2017

Production

(M units)

kWh

(per unit)

Shipments

(MWh)

Shipments

(M Cells)

HEV NiMH1

1.3 1.5 1,950 312

Sub-total NiMH 1.3 1.5 1,950 312

HEV Li-ion2 1.3 1.4 1,960 125

PHEV3

0.5 16.0 8,000 100

BEV4

0.3 34.0 10,200 59

Other5

0.1 85.0 8,500 700

Sub-total Li-ion 2.2 17.6 28,660 984

Total 3.5 19.1 30,610 1,296 Source: Roskill estimates Notes: 1-Assumes 240 cells per unit (based on Toyota Prius)

2-Assumes 96 cylindrical cells per unit (based on BMW Active Hybrid 3) 3-Assumes 200 laminar pouch cells per unit (based on Chevrolet Volt) 4-Assumes 195 laminar pouch cells per units (based on Nissan Leaf) 5-Assumes 7000 cylindrical cells (based on Tesla Model S 85kWh); also includes other transport types, e.g. buses and trains

8.8 Outlook for consumption of lithium in rechargeable batteries

Demand for lithium from rechargeable lithium batteries is forecast to grow by 21.5%py,

to reach 106,400t LCE in 2017 (Table 176). By 2017, the transportation market will be

roughly half the size of 3C applications and consume around 28,400t LCE. Even with

significant, triple-digit, growth in grid- and off-grid storage battery capacity and hence

lithium demand, this market will only account for 15% of consumption by 2017.

Table 175: World: Lithium consumption in rechargeable lithium batteries by end-use,

2017

Demand Lithium consumption

Energy storage

capacity (MWh)

No. cells

(M)

Capacity-basis

(t LCE)1

% of total

3C 55,000 6,300 54,500 51

Power 8,100 580 8,000 8

Heavy duty 15,700 520 15,500 15

Transportation 28,660 1,296 28,400 26

Total 129,360 9,190 106,400 100 Source: Section 8.4 Note: 1-Assumes 0.9kg LCE per kWh and 10% losses, rounded to nearest 100t

Lithium consumption in rechargeable lithium batteries for 3C applications is forecast to

increase by 11.5%py to reach 54,500t LCE by 2017 (Table 176). Batteries for power

applications will show slightly higher growth, at 14.5%py, and almost double their

consumption of lithium to 8,000t LCE. Batteries for heavy duty applications are forecast

to show the highest growth in demand for lithium, at 121.5%py, but from a low base

meaning they will only account for 15,500t LCE by 2017. Lithium batteries for the


Roskill


transportation market are forecast to show 48%py growth in demand for lithium over the

next five years, but will be the main growth driver in volume terms.

Table 176: World: Forecast demand for lithium in rechargeable lithium batteries,

2012 to 2017 (t LCE)

2012 2017 CAGR (%)


3C 31,680 41,800 54,500 71,000 6.0 11.5 17.5

Power 4,070 5,800 8,000 11,000 7.5 14.5 22.0

Heavy duty 290 3,100 15,500 31,000 60.0 121.5 155.0

Transport 3,960 14,200 28,400 56,800 29.0 48.5 70.5

Total 40,000 64,900 106,400 169,800 10.0 21.5 33.5 Source: Roskill estimates Note: 2017 forecasts and growth rates rounded to nearest 100t and 0.5% respectively

In the high-case scenario, forecast demand for lithium in rechargeable lithium batteries

for heavy duty and transport applications is doubled compared to the base-case, which

results in demand for lithium reaching 31,000 and 56,800t LCE respectively by 2017.

Growth in demand for lithium in 3C and power lithium rechargeable batteries in a high-

case scenario anticipates a 50% higher growth rate resulting in volumes increasing by

30% and 38% respectively. The high-case scenario forecasts higher output of 3C

products and electric bikes, increased requirements (or increased market share) for grid-

and off-grid storage systems using lithium-ion batteries, and faster uptake of EV

technology in the automotive market. In the low-case scenario, however, growth rates

through to 2017 are halved, but the market still expands by 10%py to reach 64,900t

LCE. The low-case scenario foresees a more pessimistic outlook for 3C and power

product sales, lower EV uptake and increased competition in energy storage systems.

Output of NiCd and NiMH batteries will continue to rise, at least through to 2017, but at

much lower growth rates than for rechargeable lithium batteries. NiMH in particular may

see growth in the short term as these batteries are still being used extensively in HEVs

and those models using them, e.g. Toyota’s Prius, may not move to lithium-ion until mid-

decade at the earliest. Rechargeable lithium batteries will, however, remain the

overriding user of lithium with consumption in NiCd and NiMH rising to 550t in 2017, a

CAGR of 6.5%py (Table 177).

Table 177: World: Forecast demand for lithium in rechargeable batteries by battery

type, 2012 to 2017 (t LCE)

2012 2017 CAGR (%)


Lithium 40,000 64,900 106,400 169,800 11.0 21.0 33.5

NiCd 140 160 180 200 2.5 5.0 7.5

NiMH 260 330 370 420 5.0 7.5 10.0

Total 40,400 65,390 106,950 170,420 10.0 21.5 33.5 Source: Roskill estimates Note: 2017 forecasts and growth rates rounded to nearest 100t and 0.5% respectively for lithium and 10t and 0.5%

for NiCd and NiMH


Roskill


The proportion of lithium carbonate used in rechargeable lithium batteries is expected to

further decline, to 77% of total consumption, by 2017, and total 81,880t LCE (Table

178). Lithium hydroxide will increase its market share, to 23%, and total 24,750t LCE in

five years’ time, as the switch to sol-gel processing for lithium-ion battery cathodes

continues and accelerates towards the mid-2010s. The primary driver for this shift is the

growing demand for high-performance cathode material for use in larger format batteries

in heavy duty and transport applications. In the base-case scenario, lithium hydroxide

demand in rechargeable batteries is forecast to increase by 36.5%py, almost double that

for lithium carbonate (18.5%py). The volume of lithium metal required will also increase,

as output of lithium metal polymer batteries, and lithium-doped anodes in lithium-ion

batteries, rises. In a high-case demand scenario, where heavy duty and transportation

applications grow more quickly, demand for lithium hydroxide will rise even faster, at

58.5%py, and will account for 31% of total consumption in rechargeable batteries by

2017.

Table 178: World: Forecast demand for lithium in rechargeable batteries by product

type, 2007 to 2012 (t LCE)

2012 2017 CAGR (%)


Lithium carbonate1

35,100 55,260 81,880 117,800 9.5 18.5 27.5

Lithium hydroxide2

5,200 9,960 24,750 52,080 14.0 36.5 58.5

Lithium metal 100 170 320 540 11.0 26.0 40.0

Total 40,400 65,390 106,950 170,420 10.0 21.5 33.5 Source: Roskill estimates Note: 1-May include some lithium chloride used in lithium battery electrolytes

2-Includes lithium hydroxide used in NiCd & NiMH battery electrolytes 2017 forecasts and growth rates rounded to nearest 10t and 0.5% respectively


Roskill


9. Use of lithium in ceramics

Ceramics provide the second largest market for lithium, when consumption of both

lithium carbonate and lithium minerals is combined. This market is estimated to have

consumed around 23,100t LCE in 2012, 15% of total consumption.

Lithium carbonate is mostly used as a flux in the manufacture of ceramic glazes, used to

coat ceramic bodies, and porcelain enamels, used to coat white goods. Spodumene

can also be used in glazes but its main use, along with other lithium minerals, notably

lepidolite, amblygonite and petalite, is as a flux in the production of ceramic tile,

sanitaryware, tableware and ovenware/cookware bodies.

9.1 Use of lithium in ceramics

Lithium provides advantages in the production of ceramic bodies and glazes, and

porcelain enamels.

In ceramic bodies, lithium offers the following advantages:

lowers firing temperatures (reducing energy demand & extending refractory life)

shortens firing cycle times (leading to higher output)

lowers thermal expansion (imparting thermal shock resistance)

lowers shrinkage in whitewares (reducing reject rates)

promotes formation of glassy phase (vitrification)

increases (with nepheline syenite) or decreases (with feldspar) density

increases mechanical strength

In ceramic glazes and porcelain enamels, lithium offers the following advantages:

improves colour, lustre and resistivity

reduces viscosity (enhancing flowability and surface smoothness)

can replace lead oxide, zinc oxide and barium carbonate additions

lithia-strontia glazes increase hardness and chemical resistance

Table 179 shows typical compositions of various types of whiteware bodies. The

quantity of flux used may vary from 15% to as much as 45% in the case of porcelain tiles

(grès porcellanato).


Roskill


Table 179: Typical whiteware body compositions (%)

Kaolin Ball clay Silica Flux

Earthenware1

25 25 35 15

Porcelain 60 10 15 15

Bone china 25 - - 25

Vitreous china 20-30 20-30 30-40 15-25

Stoneware 502

20 10 20

Electrical porcelain 20 30 20 30

Grès porcellanato 10-20 25-40 10-15 30-45 Source: Industrial Minerals Handybook III

For grès porcellanato (porcelain tiles), SACMI technical brochure: “Pavimento” (floor tiles) Notes: 1-Includes hollow-ware, wall tiles and sanitary earthenware

2-Plastic clays including kaolin

The most common fluxes used in clay bodies are feldspar, either potassium-feldspar or

sodium-feldspar, and nepheline syenite. Spodumene, petalite and amblygonite are all

lithium-feldspars and provide a stronger fluxing action. Lepidolite is a mica but also

provides fluxing properties due to a high lithium and potassium content.

Feldspar and nepheline syenite are the most commonly used fluxes for ceramic glazes

and porcelain enamels. Alkaline earth oxides, such as those of magnesium, calcium,

strontium and barium, as well as zinc oxide, lead oxide and borates, provide fluxing

action without having a major effect on glaze thermal expansion. Lithium, an alkali

metal, has a stronger fluxing action than feldspar and nepheline syenite (which contain

the alkali metals sodium and potassium). Lithium is also added in higher quantities to

form heat-resistant glass-ceramic coatings (see Section 10).

General ranges quoted for lithium additions to realize fluxing benefits in the ceramic

body are as low as 2.0% spodumene or between 0.15 and 2.5% Li2O. In ceramic and

porcelain enamel frits and glazes, lithium additions are up to 5.0% Li2O.

Spodumene is generally calcined before use in ceramic body and glaze, and porcelain

enamel, formulations. In 2003, Talison Lithium developed a new grade of spodumene

concentrate, called ‘Gresflux’, for use in high-grade porcelain tiles (grès porcellanato).

The spodumene can flux or vitrify the high percentage of refractory minerals, such as

zircon and alumina, in the tile batch.

Lepidolite can also be used in ceramic bodies to improve strength and firing range,

when combined with feldspar or nepheline syenite, to produce low temperature semi-

vitreous and vitreous bodies. It is most likely used directly in ceramic applications, and

its use is restricted to China, Portugal and Spain, where it is mined. It has a lower lithia

and higher iron oxide content than other lithium minerals. It also contains fluorine, which

is released during any manufacturing process, thus off-gas requires removal and

increased costs. Lepidolite can also be used in porcelain enamels and ceramic glazes

in additions of between 0.1 to 0.8% Li2O.

Petalite is not used as a principal flux in whiteware because of its high pyrometric cone

equivalent (PCE) of 15; however, it is of interest as an auxiliary flux in combination with


Roskill


feldspar and nepheline syenite. It can be added to porcelain enamels as a source of

alumina and lithium, or in up to 45% concentrations to semi-fritted tableware glazes.

Amblygonite is the least expensive source of alumia-phosphate and it has high lithia

content. As an active flux, it has been used in low-temperature bodies and porcelain

enamels. However, like lepidolite, is not a preferred form of lithia as it contains fluorine.

Production of amblygonite for industrial use is rare, having been produced only in small

quantities in Argentina, Namibia and Zimbabwe in the past.

Lithium carbonate is added to porcelain enamel batches to lower the melting point and

produce a more even, smoother surface with increased gloss. In tableware, lithium

carbonate is used in leadless glazes and frits. It is often used in higher quantities in

vitroceramic glazes to impart heat resistance. Lithium carbonate is rarely used as a flux

in ceramic bodies due to cost.

Lithium borates are used to introduce both boron and lithium to fluxes and glazes.

Lithium borosilicate glass is used in high-temperature, corrosion-resistant coatings and

in combination with lithium fluoride in coating compositions. Lithium fluoride on its

own can be added to porcelain enamels and glazes as a flux and minor opacifier.

Lithium citrate is used as a curing agent in speciality ceramics and lithium sulphate is

used occasionally in fluxes and glazes. Lithium manganate is often added to porcelain

enamel ground coats because of its strong fluxing power. The addition of 0.5 to 1.0%

lithium manganate results in a 30 to 70°C decrease in firing temperature.

Avalon Rare Metals (see Section 5.8.4.3) has developed petalite and high-lithium

feldspar (HLF) products for potential production from its Big Whopper Pegmatite in

Ontario, Canada. The HLF product is a blend of petalite, sodium feldspar, potassium

feldspar, mica and quartz.

9.2 Production and consumption of ceramics

The ceramics industry is divided into a number of sectors, notably “traditional ceramics”

(or “whiteware”) which tend to be high-volume, low value products, and “advanced

ceramics”, which are low-volume, high value products.

Whiteware production is divided between floor and wall tiles (output estimated at 90Mt in

2011), sanitaryware (6Mt), tableware (1.4Mt) and others (including cookware and

bakeware, <1Mt). In terms of value however, the proportion is more evenly split with

floor and wall tiles accounting for ~US$25Bn of sales, sanitaryware US$20Bn, tableware

US$10Bn and other applications US$5Bn.

“White goods” refers to household and commercial kitchen and laundry goods such as

refrigerators, ovens and dishwashers. White goods derive their name from the original

white enamel paint finish of products, despite availability now in other colours. Statistics

on the production and consumption of glazes and porcelain enamels are not reported.


Roskill


As lithium is mostly used as a flux in the manufacture of traditional ceramic bodies and in

ceramic and porcelain enamel glazes used to coat “whiteware” and “white goods”, these

markets are further discussed below.

9.2.1 Ceramic tiles

In 2012, fourteen countries with output of >100M sq.m accounted for 87% of total world

tile production estimated at 10.5Bn sq.m (Table 180). China accounted for 42% of

output in 2012 and is responsible for two-thirds of the net increase in tile output since

2007. Other countries showing strong output growth in recent years include Brazil, India

and Iran, which have overtaken Spain and Italy, the third and fourth largest producers in

2007 respectively. Output from Iran has doubled since 2007.

Table 180: World: Production of ceramic tiles by leading country, 2007 to 2012

(M sq.m)

2007 2008 2009 2010 2011

2012e

CAGR (%)

China 3,200 3,400 3,600 4,200 4,800 4,400 6.6

Brazil 637 713 715 753 844 800 4.7

India 385 390 490 550 617 650 11.0

Iran 250 320 350 400 475 500 14.9

Spain 585 495 324 366 392 400 -7.3

Italy 559 513 368 387 400 400 -6.5

Vietnam 254 270 295 375 380 385 8.7

Indonesia 235 275 278 287 317 340 7.7

Turkey 260 225 205 245 260 275 1.1

Mexico 215 205 183 195 219 230 1.4

Egypt 140 160 200 220 175 200 7.4

Thailand 130 130 128 132 149 160 4.2

Russia 135 147 117 126 136 140 0.7

Poland 112 118 112 112 119 200 12.3

Others 1,267 1,305 1,280 1,310 1,348 1,400 2.0

Total 8,252 8,548 8,533 9,546 10,512 10,480 4.9 Source: 2006-2011 = Ceramic World Review, no.98/2012; 2012 = Roskill estimate Note: e-estimated

Asia dominates world ceramic tile production, accounting for 68% of total production in

2011, up from 58% in 2007 (Figure 55). The EU is the second largest ceramic tile

producing region, mainly due to the presence of Spain and Italy, the fifth and seventh

largest tile producing countries respectively. EU production has fallen by almost half

because of reduced output from these two countries.


Roskill


Figure 55: World: Ceramic tile production by region, 2007 and 2012 (%)

Source: Ceramic World Review, no.78/2008 and no.98/2012 Notes: EU = EU25 in 2007 and EU27 in 2012 Other Europe includes Turkey; North America includes Mexico

In 2011, the countries listed in Table 181 accounted for just over 80% of world

consumption. Chinese consumption accounted for 39% of the global total compared to

30% in 2000. Brazil and India accounted for a further 7.5% and 6% respectively. Global

consumption grew by an average of 6.5%py between 2007 and 2011, despite the global

economic downturn in 2008/09. Much of this growth was in Asian countries such as

China, India, Indonesia and Vietnam. More recently, consumption in the Middle East

has also shown rapid growth, particularly in Iran, Egypt, Saudi Arabia and the UAE. By

contrast, consumption in the USA, Spain and Italy has dropped sharply since 2006 due

to the negative impact of the global economic downturn on construction spending.

The majority of tiles are consumed in the country where they are produced. The

proportion of production exported showed little change during 2006-2011, remaining at

around 20% of production. Producers in Spain and Italy were formerly the largest

exporters, however much of the increase in exports since 2000 has been from China.

China now accounts for 39% of world exports and 13% of rest-of-world consumption (i.e.

excluding Chinese domestic consumption).

0

10

20

30

40

50

60

70

80

EU Other Europe North America Central/SouthAmerica

Asia Africa

2007 2012


Roskill


Table 181: World: Consumption of ceramic tiles by leading countries, 2007 to 2011

(M sq.m)

2007 2008 2009 2010 2011 CAGR (%)

China 2,700 2,830 3,030 3,500 4,000 10.3

Brazil 535 605 645 700 775 9.7

India 397 403 494 557 625 12.0

Iran 236 265 295 335 395 13.7

Vietnam 210 220 240 330 360 14.4

Indonesia 178 262 297 277 312 15.1

Saudi Arabia 110 136 166 182 200 16.1

USA 249 211 173 186 189 -6.7

Russia 176 191 139 155 181 0.7

Mexico 173 176 163 168 177 0.6

Turkey 161 129 138 155 169 1.2

Egypt 105 140 180 200 160 11.1

Thailand 120 120 117 130 134 2.8

Italy 199 176 146 143 133 -9.6

Spain 314 240 156 145 129 -19.9

France 129 128 113 118 126 -0.6

Germany 124 112 106 105 118 -1.2

South Korea 110 99 99 101 105 -1.2

UAE 81 96 77 100 103 6.2

Others 1,753 1,811 1,726 1,823 1,979 3.1

Total 8,060 8,350 8,500 9,410 10,370 6.5 Source: Ceramic World Review, no.98/2012

9.2.1.1 Producers of ceramic tiles

Major producers of ceramic tiles are listed in Table 182; however, these 35 companies’

capacities account for only 25% of world tile output and there are many thousands of

small and medium tile producers located worldwide. The industry is particularly

fragmented in China and is often organised into local or regional co-operatives in

countries such as Spain, Italy and Portugal.

The top 10 producers of ceramic tiles accounted for around 10% of total production in

2010. Consolidation in the ceramic tile industry, particularly in established markets such

as Europe, has resulted in a higher contribution of leading producers to regional output.

For example, the top 5 producers in Europe account for around 25% of European

ceramic tile production, whereas the top 10 producers in Asia account for less than 10%

of Asian ceramic tile production. Consolidation is expected to continue, both in

established and emerging markets.


Roskill


Table 182: World: Leading ceramic tile manufacturing companies, 2010

Company Headquarters Capacity

(M sq. m)

Domestic

operations

Overseas operations

(no. of plants)

RAK Ceramics UAE 119 10 Bangladesh (1), Sudan (1),

China (1), India (1), Iran (1)

Siam Cement Thailand 110 17 Indonesia (1)

New Zhongyuan China >100 5 -

Guangdong New Pearl China >100 6 -

Lamosa Mexico 120 10 -

Ceramica Cleopatra Egypt 103 8 -

Marazzi Italy 100e … France, USA, Russia, Spain

Prime Group Vietnam 90 9 -

Mulia Indonesia 76 7 -

H&R Johnson India 72 9 -

Cersanit Poland 68 1 Russia (1), Lithuania (1)

Majopar Brazil 68 1 -

Kale Group Turkey 66 22 -

Foshan Oceano China 60 2 -

Incefra Brazil 60 3 -

Vitromex Mexico 58 5 -

Dynasty Ceramics Thailand 53 2 -

China Ceramics China 521

2 -

Guangdong Dongpeng China 50 32 -

Roca Gropo Spain 50 2 Brazil (3)

Daltile USA 45 6 Mexico (1)

Ceramic Industries South Africa 42 4 Australia (1)

Corona Colombia 42 5 -

Lasselsberger Czech

Republic

41 5 Slovakia (1), Hungary (2),

Romania (3)

Interceramic Mexico 41 3 USA (1)

Saudi Ceramics Saudi Arabia 40 5 -

Gruppo Concorde Italy 40e 10 France (1), Russia (1)

Arwana Citramulia Indonesia 38 3 -

Eliane Brazil 38 6 -

Vitra Group Turkey 37 2 Germany (2), France (1),

Russia (1)

Shanghai CIMIC China 27 2 -

Guangdong White Rabbit China 26 … -

Foshan KITO Ceramic China 20 3 -

Tengda Ceramic China 19 … -

Guangdong Eagle China 16 2 -

Total listed >2,556

Source: ROW = Ceramic World Review, no.92/2011; China = company data Note: 1-end-2011 capacity e-estimated


Roskill


9.2.2 Sanitaryware

The world sanitaryware market was estimated at 450M pieces in 2010. Despite growth

in production in 2011, it is possible 2012 output has fallen back to 2010 levels as

Chinese construction growth retracted. Global production is distributed across Asia

(particularly China), the Middle East, Europe and the Americas (Figure 56).

Figure 56: World: Sanitaryware production by region/country, 2010

Source: Industrial Minerals, May 2011

Production in China nearly trebled between 2002 and 2010, a 14.6% compound annual

rate of growth. Much of this growth was export led as shipments to foreign markets grew

by an average of 22%py over this period. The majority of exports, around 80%, are sent

to Europe or North America.

9.2.2.1 Producers of sanitaryware

Unlike ceramic tiles, a high proportion of total world production capacity for sanitaryware

is controlled by a fairly small number of companies. The thirty largest producers have a

combined capacity of just over 235M pieces per year (Table 183), over half of world

output. The largest groups have a substantial international presence and their offshore

production can be greater than at their domestic operations.

China, 38%

Europe, 15% SE Asia, 14%

MENA, 11%

South America, 9%

Mexico, 8%

North America, 3% Others, 2%


Roskill


Table 183: World: Leading sanitaryware manufacturing companies, 2010

Company Headquarters Capacity

(M pieces)

Domestic

operations

Overseas operations

(no. of plants)

Roca Group Spain 36e 1 Brazil, China, India, Russia (3),

Portugal, Poland, Morocco, Argentina,

Bulgaria, Malaysia, Romania, Austria,

Czech Republic, Switzerland, Croatia,

Egypt

Kohler Group USA 21e 3 Mexico, France, Spain, Morocco, UK,

China (2), Thailand, India

Ideal Standard Belgium 20e

- EMEA (30 plants in 11 countries),

Costa Rica, Nicaragua, Guatemala

Sanitec Finland 17 1 France (3), Sweden, Germany,

Poland, Switzerland, Norway, Italy,

Netherlands, UK

Toto Japan 12 1 China (3), Vietnam, Taiwan, Mexico,

USA

Duratex Brazil 12 10 -

Corona Columbia 10 2 UK

Tangshan Huida China 9 … -

Inax/Lixil Japan 9 - Vietnam (2), China (3, Indonesia,

Thailand

Villeroy & Boch Germany 8 … Europe (14), Mexico, Thailand

Lecico Egypt 7 3 Lebanon, France

Cersanit Poland 6 1 Romania, Ukraine

Foshan SSWW China 5 … …

Cisa Chile 5e 4 -

RAK Ceramics UAE 5 3 Bangladesh, India

Eczacibasi VitrA Turkey 5 1 -

Joyou China 5 2 -

Chongqing Swell China 5 … -

Duravit Germany 4 1 Egypt, Turkey, France, China,

Tunisia, India

Lamosa Mexico 4 2 -

Bolina Sanitaryware China 4 … -

Monopy Ceramic China 4 … -

Anuwa Ceramic China 4 … -

Civita Castellana Italy 3e 42 -

Saudi Ceramics Saudi Arabia 3e 1 -

Faenza Ceramics China 3 … -

Hegil Ceramics China 3 … -

Arrow Brand Ceramics China 3 … -

CRW Bathrooms China 3 … -

Ceramica Cleopatra Egypt 2 2 -

Total listed ~237

Source: ROW = Ceramic World Review, no.92/2011; China = company data Notes: e-estimated


Roskill


Chinese companies are the world’s leading source of sanitaryware, producing a reported

174M pieces in 2010 over two-thirds of the estimated world total. The industry is highly

fragmented in China, with around 3,000 producers, although output is concentrated

geographically in Henan province and to a lesser degree Guangdong and Hebei. These

three provinces accounted for 77% of Chinese output in 2010.

World consumption of sanitaryware is similar to that for production, with growth in

demand linked to patterns of construction. In developed countries, such as the USA,

Europe and Japan, consumption is mostly of high quality, higher value, units for new

houses or renovations. In developing countries, consumption is of cheaper, lower quality

products.

9.2.3 Tableware

World production of ceramic tableware in 2008 was estimated at 1.4Mt according to the

Turkish Ceramics Federation. The global economic downturn reduced output in 2009

with recovery in 2010; output in 2012 is forecast at around 1.5Mt, slightly above 2008

levels. Production is dominated by China, accounting for nearly half of world output in

2008 and has likely grown to more than half in 2012.

Figure 57: World: Production of tableware by country/region, 2008

Source: Industrial Minerals, March 2010

In 2010, output of tableware in the EU was 376,000t according to Eurostat. Portugal is

the largest producer with an output of 102,000t. Italy produced 73,000t, Germany

42,000t and the UK 29,000t. Data for some tableware products produced in Germany

and the UK are suppressed to avoid disclosing company data, meaning they are

probably larger producers. For example, in 2007, Cerame-Unie estimated the UK and

Portugal to each produce 85-90,000tpy and Germany 75,000tpy of tableware. Other

China 49%

Other Asia 16%

Europe 26%

Americas 4%

MENA 5%


Roskill


large producers in the EU are Romania (31,000t in 2010), Poland (26,000t), France

(14,000t), Spain (13,000t) and the Czech Republic (9,000t). The value of EU tableware

output in 2010 was estimated at around €2Bn, up from €1.8Bn in 2006.

Output of tableware in Japan, once a leading producer together with the EU, fell from

304,000t in 1995 to 67,000t in 2010.

Other countries with large tableware industries are Bangladesh, Malaysia, Indonesia,

Iran and Turkey. Iran is a major tableware producer in the Middle East area, with an

output of 135,000t in 2006. Output in 2011 is estimated to be almost double that of

2006.

China’s tableware production growth and exports has impacted tableware production

worldwide. In 2010, Chinese output of household ceramics reached 27.1Bn pieces, up

31% from 20.6Bn in 2009. The major producing provinces are Hunan, Jiangxi, Guangxi,

Shandong and Henan.

9.2.3.1 Producers of tableware

Major multinational producers of tableware with famous brands include Vista Alegre

Atlantis of Portugal, Lladro of Spain, Mikasa of the USA, Noritake and Nurumi of Japan,

Royal Doulton Waterford Wedgwood of the UK and Villeroy & Boch of Germany. The

main producers in each major producing country are identified below:

Bangladesh – RAK Porcelain, Shinepukur Ceramics, Monno Ceramic Industries,

Farr Ceramics, Artisan Ceramics, Peoples Ceramic

Czech Republic - BVD Pece

France - Sabre

Germany - Villeroy & Boch, Rosenthal

Malaysia - Goh Ban Huat, Claytan Group (Oriental Ceramics and Claytan Fine

China), Kuala Kangsar Ceramics, T&T Ceramics

Indonesia – Indo Keramik, Haeng Nam Sejahtera

India – Tata Ceramics

Iran – Espidar Porcelain, Hamgam Porcelain, Hamid Porcelain, Kashan China,

Maghsoud Porcelain, Toos Porcelain, Zarin Iran Porcelain and at least 25 other

companies

Italy – Alessi, Richard Ginori

Poland – Polish Table

Portugal – Matceramica, SECLA, CAVN, Bemorporce, Porcel

Romania - Ves

South Korea - Hankook Chinaware

Turkey – Kutahya Porselen, Heris Seramik, Altin Cini, Marmara Cini, Dogus Cini,

Evliya Calebi Cini

UAE - RAK Porcelain

UK – Churchill, Royal Worcester, Wedgewood, Steelite, Royal Doulton Waterford

Wedgwood


Roskill


9.2.4 Cookware and bakeware

Cookware and bakeware are types of food preparation containers commonly found in

the kitchen. Cookware comprises cooking vessels, such as saucepans and frying pans,

intended for use on a stove or range cooktop. Bakeware comprises cooking vessels

intended for use inside an oven. Some utensils are both cookware and bakeware.

Cookware and bakeware can be manufactured from a number of different materials

including bare and enamelled metal, ceramics, glass, glass-ceramics (see Section 302)

and silicone. Enamelled metal and ceramic cookware and bakeware can be made using

ceramic glazes and porcelain enamels containing lithium for thermal shock resistance

(see Section 9.3).

There is very little data on production and consumption of ceramic and metallic

cookware/bakeware but this market is largely determined by levels of population and

disposal income growth, and consumer trends. In the USA, shipments of cookware,

bakeware and kitchenware declined in value terms between 2002 and 2004 but then

recovered in the late 2000s (Figure 58).

Figure 58: USA: Shipments of cookware, bakeware and kitchenware, 2001 to 2010

(US$M)

Source: Cookware Manufacturers Association Note: POS = Porcelain on steel

9.3 Production and consumption of glazes and enamels

Enamels and glazes are glassy coatings fused to a substrate to produce a durable

finish. Glazes are coatings applied to ceramic bodies; enamels are used to coat metals.

In both cases, their application renders the substrate chemically inert and heat resistant,

and provides a decorative finish.

0

200

400

600

800

1,000

1,200

1,400

1,600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Aluminum Cookware Stainless Cookware Cast Iron, P.O.S. and Other

Bakeware Kitchenware


Roskill


Enamels and glazes consist mainly of a silica source (quartz, feldspar or wollastonite), a

suspending agent (kaolin, ball clay or bentonite), an alumina source (normally in the clay

or feldspar), opacifiers (such as zircon or tin oxide), fluxes and other minor constituents,

which yield glass when melted. Due to the high reactivity of some enamel and glaze

constituents, in particular fluxes, they are pre-fused and quenched by pouring onto

cooled rollers or into water, which produces a friable glass known as a frit. By virtue of

the quenching process, the frit is easily reduced, wet or dry, to a powdered form.

Vitroceramic glazes and enamels are used to coat all types of ceramics, from tiles to

decorative items. They are also used to coat ceramic or metallic (particularly iron)

cookware/bakeware, with some minor use in industrial applications. This is because

they have a high lithium or boron content which forms thermal shock, heat and chemical

resistant lithium-alumino-silicate or borosilicate glass.

Products that are most commonly enamelled are white goods, such as cookers,

refrigerators, freezers, laundry appliances and dishwashers, and other household items

such as solid fuel stoves. Domestic appliances are reported to account for as much as

85% of demand for porcelain enamel. Enamel is also applied to cast iron and sheet

steel baths, sanitaryware, cooking utensils, chemical plant, hot water tanks, silos,

architectural panels and signs.

Demand for white goods is driven by levels of construction and disposable income. The

world market for white goods reached 334M units in 2010 according to Freedonia

(Figure 59), a CAGR of 3.4% from 2010. The Asia/Pacific region accounted for 51% of

global shipments in 2010. China is the largest producer of white goods, accounting for

34% of global shipments in 2010.

Figure 59: World: Shipments of white goods by region, 2000 to 2020 (M units)

Source: Freedonia, 2011

0

50

100

150

200

250

300

350

400

450

2000 2005 2010 2015 2020

North America Western Europe Asia/Pacific

Latin America Eastern Europe Africa/Mideast


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9.3.1 Producers of glazes and enamels

Production of glazes and enamels is concentrated in the hands of relatively few

companies with significant international presence:

Ferro is one of the largest producers of ceramic and porcelain enamel frits and glazes

worldwide. Products manufactured by Ferro containing lithium include:

Frit for the production of conventional grinding wheels

Special glasses for the bonding of superabrasives

Frit, glaze and fluxes for the production of ceramic tiles

Porcelain enamel for cookware, bakeware and white goods

It operates plants for the production of these products in China, France, Mexico, Spain

and the USA.

PEMCO operates plants producing porcelain enamel coatings containing lithium in

Argentina, Belgium, Italy, Spain and the USA.

Torrecid use lithium in the manufacture of frits for vitroceramics. The company has

plants in Brazil, China, Czech Republic, Indonesia, Mexico, Spain, Thailand and the UK.

GizemFrit is the largest producer of porcelain enamel frit in Turkey, from a plant at

Adapazari, and one of the largest frit producers worldwide.

Tokan Material Technology (Tomatec) is a Japanese company with porcelain enamel

frit manufacturing facilities in Japan and China. Ferro sold a small stake in Tomatec in

2008. Tomatec is thought to be one of the largest enamel frit manufacturers in East

Asia.

Takara Standard purchased the frit business of NGK Frit in 2002 and spun it out into a

new company, Nippon Frit, which produces enamel frit in Japan.

Colorobbia manufactures ceramic and porcelain enamel frits containing lithium at plants

in Brazil, Indonesia, Italy, Mexico, Portugal and Spain.

In addition to the large multi-national producers identified above, other companies

producing ceramic and porcelain enamel frit include:

China – China Glaze, Hunan Lifa Chemicals, Zibo Fuxing Glaze, Zhongguan

Ceramic Glaze, Guangdong Sanshui T&H Glaze, Zibo Guisheng Glaze

Czech Republic - Mefrit

Thailand – Poplar

Poland – QuimiCer Polska

Indonesia – EsmalGlass, Smalticeram

Slovenia – EMO Frite

Companies in Brazil, Croatia, Hungary, India, Iran, Portugal, Romania, Russia

and Ukraine


Roskill


9.4 Outlook for ceramics production and consumption

Consumption of ceramics, glazes and enamels mimics trends in construction activity and

GDP. Urbanisation and rising disposable incomes in Asia, the Middle East and South

America have fuelled expansion in demand for ceramics and white goods, and hence

the raw materials used in them, since the beginning of the 2000s. Housing booms in

North America and Europe, driven by the availability of credit, caused construction

spending to surge between 2003 and 2006 (Figure 60). However, in 2007 the housing

market in the US started to slow and the global economic downturn in 2008/09 reduced

construction growth in developed regions and some developing ones also; construction

spending rebounded in 2010 but growth since has been much lower than in the mid-

2000s.

Figure 60: World: Year-on-year growth in construction spending and GDP,

2000 to 2017

Source: GDP = EIU; Construction (value-terms) = Roskill estimates

According to a 2010 report by Global Construction Perspectives and Oxford Economics,

global construction spending will continue to outpace GDP growth. China and India are

forecast to account for 38% of the increase in construction spending over the period to

2020. The US is forecast to show strong growth, while the outlook for Western Europe

remains weak due to high sovereign debt levels. Bright spots include MENA, forecast at

6%py, and South and Central America at 5.2%py.

China has become the world’s largest producer and consumer of ceramic tiles,

significantly ahead of the next largest producers Brazil and India. China’s sanitaryware

industry has also grown more than 20-fold to 174M pieces in 2010 and is expected to

reach 220M by 2015. It also accounts for over half of world tableware output and

probably a significant proportion of bakeware/cookware. Chinese ceramics producers

are transitioning from low-cost low-value production to higher quality innovations.

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

GDP Construction


Roskill


Shipments of white goods are forecast to increase by 3.4%py to 2015 and by 2.8%py to

2020, to reach 439M units (Figure 59). Western Europe will see declining shipments but

in most other regions growth will be positive. Growth is forecast to be highest in

Asia/Pacific in volume terms, but South America, Eastern Europe and Africa/Middle East

could show high rates of demand growth, albeit from a lower base in volume terms.

Smart appliances - which offer advanced features at higher prices - will gain market

share in developed markets.

Growth in demand for ceramics and white goods is likely to be lower through to 2017

compared to the last decade, although overall demand will continue to grow, especially

in volume terms, as urbanisation and infrastructure requirements in emerging markets

off-set declines in residential housing starts in developed countries. There is also likely

to be increased investment in infrastructure in developed and developing countries,

governments of developed countries have increased spending on public projects to

offset job losses in the private sector, resulting from the global economic downturn.

9.5 Consumption of lithium in ceramics

Lithium, in the form of minerals or compounds, is not added by every ceramics producer,

and typical additions of lithium to different types of ceramic bodies, glazes and enamels

vary widely. In the vast majority of ceramic tiles, sanitaryware, tableware and

cookware/bakeware, no lithium is added at all.

Growth in consumption of lithium minerals in ceramics was strong through the mid-

1990s, with consumption more than doubling between 1988 and 1996 as new

applications were developed. However, this trend was reversed at the end of the

decade as the availability of lower-cost lithium carbonate from SQM in Chile resulted in

producers of ceramic glazes and porcelain enamels shifting away from lithium minerals.

Consumption of spodumene in ceramic glazes and porcelain enamels was estimated

by Industrial Minerals at 5,000t (620t LCE assuming a 5% Li2O product) in 2003. Most

glaze and enamel producers use lithium carbonate, but some companies in China prefer

to use spodumene for glaze production due to its lower cost. As most of the growth in

ceramics output has occurred in China since 2003, consumption of spodumene in

ceramic glazes and porcelain enamel glazes is estimated at 1,100t LCE (9,000t gross

weight) in 2012, a CAGR of 6.7%. Consumption of lithium compounds, largely lithium

carbonate, in ceramic glazes and porcelain enamels, is estimated at 9,500t LCE for

2012, having grown from around 5,000t LCE in 2000, a CAGR of 5.5%. Consumption of

lithium in ceramic glazes and porcelain enamels is mainly concentrated in Europe and

China, coincident with where the major producers’ plants are sited.

Production of lepidolite in Portugal was estimated at 41,000t (2,500t LCE) in 2012 and in

Spain at 5,000t (60t LCE). Chinese output of lepidolite was estimated at 65,000t (4,000t

LCE) in 2012. All of this material, totalling 6,570t LCE, was likely consumed in the

manufacture of ceramic bodies. Consumption of spodumene in ceramic bodies is

estimated at a further 5,930t LCE bringing total consumption of lithium minerals in

ceramic bodies to 12,500t LCE (or around 100,000t gross weight) in 2012.


Roskill


Lithium compounds are the major lithium feedstock for producers of ceramic glazes and

porcelain enamels, accounting for 90% of consumption, meanwhile lithium minerals are

used solely in ceramic bodies. The majority of lithium mineral consumption is in tiles and

sanitaryware, and almost evenly distributed between the two (Table 184); minerals are

consumed in smaller quantities in tableware and cookware/bakeware.

Table 184: World: Consumption of lithium in ceramics, 2012

Type 2012 estimated

production (Mt)

Lithium consumption (t LCE)

Minerals Compounds Total

Ceramic bodies:

Tiles 90.0 6,000 - 6,000

Sanitaryware 6.0 3,500 - 4,000

Tableware

1.5 1,500 - 1,500

Cookware & bakeware <1.0 1,500 - 1,500

Sub-total 98.5 12,500 - 12,500

Glaze & enamel 1.5 1,100 9,500 10,600

Total ~100.0 13,600 9,500 23,100


Consumption of lithium in ceramics has shown a compound annual growth rate of

2.9%py since 2007, although the global economic downturn of 2008/09 reduced demand

at the end of the 2000s (Table 185).

Table 185: World: Consumption of lithium in ceramics, 2007 to 2012 (t LCE)

2007 2008 2009 2010 2011 2012

Lithium compounds 7,500 7,000 5,500 7,000 8,500 9,500

Lithium minerals 13,000 12,000 10,750 12,500 13,000 13,600

Total 20,500 19,000 16,250 19,500 21,500 23,100


9.5.1 Outlook for lithium demand in ceramics

Overall, demand for ceramic glazes and porcelain enamels containing lithium are

forecast to increase by 3-4%py over the next five years. In the base-case outlook,

demand for lithium carbonate and spodumene in this end-use is forecast to increase by

a similar growth rate and reach around 27,300t LCE in 2017. The market is likely to

remain dominated by a small number of large producers with an increasing international

presence. As these producers ship material from plants worldwide, and ceramic and

enamel frits containing lithium are normally of higher value than standard ceramic frits,

demand could come from established consuming countries in mature economies, such

as Italy, Spain, Belgium, and the USA, as well as developing economies with growing

ceramics and white goods industries, such as Mexico, Indonesia, Thailand, Turkey and

China.


Roskill


Table 186: World: Forecast demand for lithium in ceramics, 2012 to 2017 (t LCE)

2012 2017 CAGR (%py)


Lithium compounds 9,500 10,500 11,300 12,125 2.0 3.5 5.0

Lithium minerals 13,500 14,900 16,000 17,225 2.0 3.5 5.0

Total 23,100 25,400 27,300 29,350 2.0 3.5 5.0


There are some potential situations which would increase demand for lithium in ceramics

over the forecast period:

Increased awareness of the use of lithium to lower tile firing temperatures and

hence reduce energy and CO2 emissions by ceramic producers

Development of new markets using high-lithium feldspar products

Faster recovery in global economic growth, especially from the construction

sector, resulting in increased demand for ceramics and white goods

In these scenarios, demand might expand by closer to 5%py to reach 29,350t LCE in

2017. However, there is also the potential for lower than forecast growth, with demand

increasing by only around 2%py to 25,400t LCE by 2017 if the following trends are

observed:

Increasing prices for lithium carbonate and lithium minerals because of a

shortage of supply to meet growth in demand for rechargeable batteries, which

could force current consumers to replace lithium in glass and ceramic batches,

potentially with alternate fluxes

Slower global economic growth for 2013 onwards, which is likely to significantly

affect output of ceramics


Roskill


10. Use of lithium in glass-ceramics

Glass-ceramics provide the third largest market for lithium, when consumption of both

lithium carbonate and lithium minerals (spodumene and petalite) is combined. This

market is estimated to have consumed around 18,150t LCE of lithium in 2012, 12% of

total consumption.

10.1 Use of lithium in glass-ceramics

Glass-ceramics share properties with both glass and traditional crystalline ceramics.

The most common glass-ceramic system is lithia-alumina-silica (LAS), but others include

magnesia-alumina-silica (MAS) and barium-magnesia-alumina-silica (BMAS), as shown

in Table 187.

Table 187: Glass-ceramic matrices

Matrix name Major constituents Minor constituents Major crystalline

phase

Maximum

temperature of

use (°C)

LAS I Li2O-Al2O3-MgO-SiO2 ZnO, ZrO2, BaO, TiO2 β-spodumene 1,000

LAS II Li2O-Al2O3-MgO-SiO2-Nb2O5 ZnO, ZrO2, BaO, TiO2 β -spodumene 1,100

LAS III Li2O-Al2O3-MgO-SiO2-Nb2O5 ZrO2, TiO2 β -spodumene 1,200

MAS MgO-Al2O3-SiO2 BaO Cordierite 1,200

BMAS BaO-Mg2O-Al2O3-SiO2 … Barium osumilite 1,250

Ternary mullite BaO-Al2O3-SiO2 … Mullite 1,500

Celsian BaO-Al2O3-SiO2 … Celsian 1,600 Source: Handbook of Ceramic Composites

Glass-ceramics based on the LAS system are usually formed by using around 75-95%

spodumene or petalite and 5-25% alumina-silicate glass, with the addition of a

nucleating agent such as antimony oxide, barium oxide, titanium dioxide, zinc oxide, or

zirconium dioxide. There has been a trend towards environmentally safer nucleating

agents which means the use of zinc, barium and antimony has declined in favour of

titanium and zirconium. Spodumene or petalite can be replaced with a mixture of lithium

carbonate, alumina, magnesia and silica, or minerals containing alumina, magnesia and

silica, for example kaolin or talc. Glass-ceramics are first ground to a fine particle size,

mixed with organic additives and a liquid, and fired at around 1,700°C to form a glass.

The glass is then recrystallised by heat treatment to form a body with small interlocking

crystals and no pores between the crystals.

Upon recrystallisation of the LAS glass-ceramic, either β-quartz or β-spodumene is

formed. β-quartz forms at lower temperatures (up to 900°C) and is transparent. β-

spodumene forms at temperatures above 1,000°C and enters a stage of greatest

thermal stability at around 1,450°C; it becomes opaque at around 1,000°C. β-

spodumene has a negative coefficient of thermal expansion, which contrasts with the

positive coefficient of the glass. Adjusting the proportions of the two materials offers a

wide range of coefficients in the finished composite. At a certain point, generally


Roskill


between 70% and 78% crystallinity, the two coefficients balance so the glass-ceramic

has a thermal expansion coefficient that is very close to zero.

LAS glass-ceramics typically contain 3-5% Li2O (Table 188). Other glass-ceramics may

use lithium in smaller quantities (0.1-3% Li2O) to increase the crystallisation rate, similar

to lithium’s use in other glass and ceramic products (see Sections 9 and 12); however at

lower concentrations the chemical resistance of the glass-ceramic is poor. Li2O

concentrations of more than 5% increase the crystal growth rate and result in an

undesirable devitrification during the manufacturing process.

Table 188: Compositions of commercial glass-ceramics

Corning Schott NEG Corning

Composition: Visions™ Zerodur® Neoceram

® CorningWare™

SiO2 68.8 55.5 63.4 69.7

Al2O3 19.2 25.3 22.7 17.8

Li2O 2.7 3.7 3.3 2.8

MgO 1.8 1.0 - 2.6

ZnO 1.0 1.4 1.3 1.0

BaO 0.8 - 2.2 -

P2O5 - 7.9 - -

Na2O 0.2 - 0.7 0.4

K2O 0.1 0.5 - 0.2

Fe2O3 0.1 0.03 - 0.1

TiO2 2.7 2.3 2.7 4.7

ZrO2 1.8 1.9 1.5 0.1

As2O3 0.8 0.5 - 0.6

Primary phase: β-quartz β-quartz β-quartz β-spodumene Source: Concise Encyclopaedia of the Structure of Materials

LAS glass-ceramics were originally developed by Corning for use in missile nose cones

in the 1950s, because its low coefficient of thermal expansion makes it resistant to

thermal shock. The technology was subsequently transferred to the domestic market as

cookware and later for ceramic cooktops, where it offers the following advantages:

virtually zero thermal expansion

high-temperature stability and durability

high mechanical strength

system-optimised infra-red transmittance

low thermal conductivity

thermal shock resistance

ability to sustain repeated and quick temperature changes up to 800-1,000ºC

Other uses for glass-ceramics include catalyst supports, optical glass-ceramics for high-

performance telescopes, stove and furnace windows, substrates for high-power LEDs

and 3C (computers, communications and consumer) cover and touchscreen technology.

Glass-ceramic producers commonly use petalite, spodumene and lithium carbonate. In

general, petalite and spodumene are used for opaque and coloured glass-ceramic


Roskill


panels while lithium carbonate is used for translucent panels, particularly stove and

furnace windows, and architectural and special glass-ceramic objects such as fire doors

and mirror substrates. The reason for this is that the impurities in spodumene, notably

iron oxide, can lead to discolouration of the glass-ceramic after firing.

For example, Schott uses lithium carbonate in the production of translucent ROBAX®

glass-ceramic and spodumene and petalite in opaque glass-ceramic CERAN® products.

Corning used a combination of spodumene from TANCO in Canada and petalite from

Bikita in Zimbabwe in the production of opaque CorningWare™, until its glass-ceramic

plant was closed in 2003.

Talison Lithium in Australia is the largest supplier of spodumene to glass-ceramic

producers. TANCO in Canada, prior to its closure, also supplied some spodumene.

Producers of glass-ceramics in China are likely using domestic spodumene and

imported material from Talison Lithium. Bikita are producing and exporting 50-55,000tpy

of petalite, and some of the glass-ceramic producers in Section 10.2.1 are known to be

using petalite.

10.2 Production and consumption of glass-ceramics

As glass-ceramics comprise only a small proportion of total glass and ceramic

production, detailed production data is not available. The largest market for glass-

ceramics is cooktops, with fireplace and stove windows second. These markets are

driven by consumer trends and levels of construction, particularly residential

construction.

Between 2002 and 2009, Schott produced 50 million CERAN® cooktop panels, or just

over 7 million per year, a CAGR of 10.4%. Sales of Schott cooktop panels decreased in

2007 because of a slowdown in the housing market in the USA and in 2008 because of

a slowdown in the housing market in Europe. The cooktop panel market recovered

more strongly in 2010 than expected, due primarily to the improving economy in Europe,

but 2011 saw a decline in the USA and a moderate rise in Europe. Sales of ROBAX®

glass-ceramic viewing panels for fireplaces and wood stoves in particular were excellent

in 2010, mirroring their performance in 2009; the expected delayed effects from the

global financial crisis on ROBAX®

sales never materialised.

In 2008, Fagor, a manufacturer of induction cooktops estimated the European market at

at 1.2M units, up from 0.3M in 2002, a CAGR of 24%py.

Another market which has grown in the 2000s is the use of glass-ceramics in

architectural glass. Shatterproof partitions, windows or fire doors that can withstand

building fires, without the use of strengthening wire mesh, can be manufactured from

glass-ceramic, however it faces strong competition from tempered flat glass and

borosilicate glass, for example Schott’s PYRAN®, which in many cases can satisfty

current fire regulations at lower cost.


Roskill


10.2.1 Producers of glass-ceramics

There are only a small number of companies producing large volumes of lithium-

containing glass-ceramic; NEG, EuroKera and Schott are the market leaders. A few

Chinese companies also produce large volumes but mainly concentrate on the domestic

market.

Nippon Electric Glass (NEG) produces Neoceram®, a zero expansion β-spodumene

glass-ceramic for tableware and industrial, electrical and kitchen appliances.

Neoceram® is produced at Otsu, Shiga prefecture, Japan. The company also has plants

in Malaysia and the USA; however, these are thought to fabricate products from the

glass-ceramic melted in Japan.

EuroKera, a 50:50 joint venture between Saint-Gobain and Corning, produces

KeraGlass, a β-spodumene glass-ceramic material for ceramic hobs, and fireplace and

stove windows. Production takes place at Bagneaux-sur-Loing, near Nemours, France

with fabrication at plants in Chateau-Thierry, France; Fountain Inn, SC, USA; and,

Guangzhou, China.

Schott introduced CERAN® glass-ceramic panel cooktops in 1971. CERAN

® (coloured)

and ROBAX® (transparent) stove tops are produced at Mainz in Germany, the company

also produces small quantities of glass-ceramic at Duryea, PA, USA. Schott established

a new factory at Suzhou in China in 2002 with a CERAN® production line. ROBAX

® is

also used for fireplace and stove windows. Schott developed the ZERODUR® zero

expansion β-spodumene glass-ceramic in 1968 for use as a telescope mirror substrate

for astronomy. A recent addition to Schott’s glass-ceramic line-up is Xensation™ Cover

3D for capacitive touch technologies.

Wenzhou Kanger is reportedly the largest glass-ceramic producer in China. The

company operate at least one plant in China, at Wenzhou, Zhejiang province.

Kedi Glass-Ceramic, based in Puning, Guangdong province, China, produces glass-

ceramic cooktops, and stove and fireplace glass panels.

Huzhou Daxiang produced 12M pieces of glass-ceramic in 2009 from a plant in

Huzhou, Zhejiang province.

It is possible that there are other producers in China manufacturing glass-ceramic

articles, but at a smaller-scale then the companies identified above.

There are several other companies producing glass-ceramics, but as these are for

purposes other than cooktops, they generally produce much smaller volumes:

Colorobbia is mainly engaged in the production of porcelain enamel frit (see Section

9.3.1). The company also operates a plant in Vinci, Italy, producing transparent glass-

ceramic panels for architectural purposes.

In 1953, Corning Glass Works developed a β-spodumene glass-ceramic material with

a high thermal shock resistance called Pyroceram for the US ballistic program. In 1958


Roskill


Corning introduced Corning Ware®, based on Pyroceram, for domestic use. The

Corning Ware® factory was located in Martinsburg, West Virginia. The Corning Ware

®

brand name was licensed to World Kitchens in 2001 and relaunched as CorningWare®;

however, World Kitchens closed the Martinsberg plant in 2003 and current

CorningWare® products instead use imported ceramic stoneware produced in Asia.

Corning continues to produce small volumes of glass-ceramics in the USA and Mexico,

but these are now largely for laboratory hot plates. KeraGlass is sometimes marketed

as Pyroceram in North America by Corning’s subsidiary, EuroKera.

Sitall, a Russian company, produced Astrositall®, a competitor to ZERODUR

®, at a

factory near Moscow; however it is not known if the company is still operational.

CLEARCERAM®-Z, a zero expansion glass-ceramic, is produced by Ohara Glass in

Japan. It is used for semiconductor steppers, laser refraction mirrors, astronomical

telescope mirrors and other high-tech applications.

Shanghai Xinhu Glass produces glass-ceramics for telescopes and aviation directors in

China.

In 2010, Asahi Glass (AGC) of Japan started commercial production of a new glass-

ceramics substrate targeted at manufacturers of stronger, brighter LEDs for residential,

automotive and electronics. The glass–ceramic substrate will be made in a new factory

in Taiwan. AGC claimed the market for high-durability LED substrate material will be

worth US$1.1Bn by 2020 and is aiming for a 20% market share. In this market, LAS

glass competes with alumina substrates.

Ohara, based in Japan, specialises in the manufacture of ultra-low expansion glass-

ceramics and glass-ceramic substrates for hard disc drives (HDD) and filters.

10.3 Consumption of lithium in glass-ceramics

Japanese demand for lithium carbonate in glass-ceramics peaked at 3,500t in 2007 but

fell to 1,700t in 2009. Consumption recovered by a third in 2010 and was flat in 2011,

but 2012 is forecast to show a decline to 1,900t (Table 189). The majority of Japanese

consumption is by NEG for the production of Neoceram® and by Ohara for the

production of glass-ceramic HDD substrates.

Table 189: Japan: Consumption of lithium carbonate in glass-ceramics, 2007 to 2012

(t)

2007 2008 2009 2010 2011 2012e

3,500 2,250 1,700 2,250 2,250 1,900 Source: Roskill’s Letter from Japan Nos. 357, 368, 417 & 432

A typical 4-ring 30”x20” (78x52cm) glass-ceramic cooktop panel has a thickness of

around 4mm, which gives a total volume of around 1,620cm3. Using the typical

composition of CERAN® (Table 188) the density of the glass ceramic is calculated at


Roskill


around 2.7g/cm3, which means a typical glass-ceramic cooktop panel weighs around

4.5kg. Each glass-ceramic cooktop contains 0.15kg of Li2O, assuming an average of

3.3wt% Li2O in the glass-ceramic batch as per a typical CERAN™ composition. If seven

million cooktops were produced by Schott annually, the company’s total annual lithium

requirement would be around 2,570t LCE of lithium carbonate, or around 21,000t of

glass-grade spodumene containing 5% Li2O. However, Schott also produces other

glass-ceramic and its total consumption could be closer to 3,000t LCE.

Assuming EuroKera produce a similar volume of glass-ceramic to Schott and NGC, its

consumption is also estimated at around 3,000t LCE. Chinese consumption in glass-

ceramics is estimated at 4,500t LCE.

Consumption of lithium in other glass-ceramics such as tableware, mirror substrates and

for electronics is unknown, but the volume is likely to be much lower than that consumed

in cooktops, stove and fireplace windows and architectural glass. Total consumption of

lithium in glass-ceramic applications other than cooktops is estimated at around 600t

LCE.

Total consumption of lithium carbonate in glass-ceramics in 2011 is estimated at 9,500t

(Table 190) and minerals 8,650t LCE (or 70,000t gross weight based on 5% Li2O

content).

Table 190: World: Consumption of lithium in glass-ceramics by end-use and product

type, 2012 (t LCE)

Minerals1

Compounds2

Total

Cooktops 8,000 8,000 16,000

Stoves/fireplaces - 1,000 1,000

Other3

650 500 1,150

Total 8,650 9,500 18,150

Source: Roskill estimates Note: 1-Spodumene and petalite

2-Lithium carbonate 3-Includes fire-resistance architectural glass

Consumption of lithium in glass-ceramics has shown a rising growth trend since 2007,

but the global economic downturn of 2008/09 reduced demand, especially for minerals,

and has taken until 2011 to recover fully (Table 191).

Table 191: World: Consumption of lithium in glass-ceramics, 2007 to 2012 (t LCE)

2007 2008 2009 2010 2011 2012

Lithium compounds1 7,500 7,000 6,500 8,000 9,000 9,500

Lithium minerals2

11,100 9,900 5,000 8,000 8,500 8,650

Total 18,600 16,900 11,500 16,000 17,500 18,150

Source: Roskill estimates Note: 1-Lithium carbonate

2-Spodumene and petalite

Recycling rates for glass-ceramics are not known but recycling may be decreasing the

total requirement for virgin lithium carbonate or spodumene, by as much as 10%, if not


Roskill


more. EuroKera, for example, are known to recycle production scrap and used cooktops

in the production of new cooktops in France. There are problems with recycling used

cooktops however, as previous glass-ceramic formulations were different to those used

today and often contained heavy metals such as arsenic and antimony, which producers

have strived to remove.

10.3.1 Outlook for lithium demand in glass-ceramics

The largest market for glass-ceramics is cooktops and stove windows. This market is

driven by consumer trends and levels of construction, particularly residential

construction. Growth in demand for these products is likely to be similar to demand for

household appliances (see Section 9.3), which is forecast to increase by 3-4%py to

2017.

Demand for lithium in glass-ceramics is forecast to increase by a similar growth rate and

reach around 21,500t LCE in 2017. Particular areas of potential high growth for lithium

in glass-ceramics are LED substrates and 3C touchscreens, although these will be from

a low starting point in volume terms given their recent entry into these respective

markets.

Table 192: World: Forecast demand for lithium in glass-ceramics, 2012 to 2017 (t LCE)

2012 2017 CAGR (%py)


Lithium compounds1

9,500 10,600 11,400 12,250 2.2 3.7 5.2

Lithium minerals2

8,650 9,400 10,100 10,900 1.7 3.2 4.7

Total 18,150 20,000 21,500 23,150 2.0 3.5 5.0

Source: Roskill estimates Note: 1-Lithium carbonate

2-Spodumene and petalite

If there is a faster recovery in global economic growth from 2013, especially from the

construction sector, there may be increased demand for glass-ceramics. In this

scenario, demand might expand by closer to 5%py to reach 23,150t LCE in 2017.

However, there is also the potential for lower than forecast growth, with demand

increasing by only around 2.0%py to 20,000t LCE by 2017 if global economic growth is

slower, which is likely to significantly affect the construction market and hence demand

for glass-ceramic products.


Roskill


11. Use of lithium in lubricating grease

Lubricating greases are the fourth largest market for lithium, accounting for an estimated

15,400t (13,500t LCE) of lithium hydroxide in 2012, or 9% of total lithium consumption.

11.1 Types of lubricating grease

Lubricating greases are made up of three basic components: base oil (75-95%); a

thickener to provide body and structure (5-20%); and additives to add properties such as

resistance to oxidation and water (0-10%). Greases function by bleeding oil from the

thickener, which then lubricates the mechanical component. Motion within the

component mixes some of the released oil into the thickener, so the grease does not run

dry of oil. Greases are normally categorised according to the thickener used:

Lithium greases are multi-purpose, relatively inexpensive greases, divided into two

types: conventional (or simple) and complex. Lithium greases are produced by adding a

lithium soap to lubricating oils and reacting them, usually with the application of heat,

pressure and/or agitation. The difference between simple and complex greases is that

simple greases are produced by reacting a metal salt with an acid, and complex greases

react a metal salt with two or more acids. Lithium grease thickeners are manufactured

by reacting lithium hydroxide monohydrate (a lithium salt) with fatty acids; common

lithium thickeners include:

di-lithium azelate

lithium stearate

lithium docosanoate

lithium 12-hydroxystearate

hydrogenated castor oil + lithium salt

C16-22 fatty acids + lithium salt

The advantages of lithium simple greases include:

retention of lubricating properties over a wide temperature range

good resistance to water, oxidation and handling

high temperature resistance providing good viscosity properties up to 140ºC

formation of a stable grease on cooling after melting

good dispersibility and pumpability

exceptional shear stability; suitable for use in high-speed plain and rolling-

element bearings

Lithium complex greases have similar properties to lithium simple greases but can

tolerate higher temperatures and offer longer service life than their simple-soap

counterparts. Typically, dropping points of lithium complex greases are above 260°C

and the maximum service temperature for lithium complex greases is about 175°C.


Roskill


Calcium greases are produced by chemically reacting hydrated lime with tallow fatty

acid in the presence of mineral oil. Their maximum temperature is normally limited to

about 65°C. Calcium greases are used in the automotive, agricultural and steel

industries.

Sodium soap thickened greases have a fibrous texture, but can be made smooth by

altering the raw materials and processing methods. They have been used for wheel

bearing grease for many years, because of their high melting point, and good adhesive

and cohesive properties. The main disadvantage is water solubility; automotive

manufacturers are switching to greases with higher resistance to water wash-out.

Applications lie in bearings, universal joints and anti-friction bearings where low to

medium speeds and light to heavy loads are encountered.

Barium complexes were among the first multi-purpose greases. They are produced by

reacting barium hydroxide in a crystalline form with a fatty acid, complexing the soap

with stabilising agents, and then blending with oil. Applications include wheel bearings,

water pumps, chassis, universal joints and outside gear lubricants, because of their

water resistance and good adhesive properties.

Aluminium stearate greases are less widely-used because of their high cost. They

have high water resistance but poor mechanical stability. Aluminium complex greases

have good water resistance, shear stability and pumpability. They react well with

additives which fortify greases for high loads.

Mixed soap thickened greases are made from two or more metallic soaps to produce a

lubricant with some of the properties of each. The most widely-used is a 16% sodium

soap combined with 2% calcium soap, a highly inhibited oil base plus additives. Other

combinations, such as aluminium-sodium, calcium-zinc, lithium-calcium, lithium-calcium-

sodium and lithium-sodium have been developed. Some have highly specialised uses,

while others are still in the experimental stage.

Non-soap thickened greases include bentone and polyurea. They are produced by

slurrying organophilic montmorillonite clay in a portion of the oil, pre-gelling by adding a

dispersant, and stirring. The dispersant is then removed by heating and the oil is finally

blended to adjust to the desired consistency.

Properties of commercial greases are compared in Table 193.


Roskill


Table 193: Properties of commercial greases

Base thickener Relative

price

range

Normal

appearance

Cold

temperature

pumpability

Mechanical

stability

Water

resistance

Heat

resistance

Calcium (conventional) L to M Buttery Fair Good Excellent Fair

Calcium (anhydrous) Medium Buttery Fair Good Excellent Good

Sodium (conventional) L to M F or Sp Poor Fair Poor Gd to E

Barium (complex) High Fibrous Poor Gd to E Excellent Gd to E

Lithium (12-hydroxy) M to H B or Sm Gd to E Excellent Gd to E Gd to E

Aluminium (complex) M to H B or Sm Gd to E Good Excellent Excellent

Calcium (complex) High B or Gr Fair Good Gd to E Gd to E

Lithium (complex) High Buttery Gd to E Good Excellent Excellent

Non-soap (organic) M to H Buttery Gd to E Fair Good Excellent

Non-soap (inorganic) (bentone) High Buttery Excellent Fair Good Excellent

Source: Muscle Products Corporation, 2005 Note: F=fibrous, B=buttery, Gr=granule, Sp=soap, Sm=smooth, L=low, M=medium H=high, Gd=good, E=excellent

11.2 Production of grease

The National Lubricating Grease Institute (NLGI) releases annual figures for the

production of grease worldwide. The data is complied from a survey of grease

producers. However, not all companies in the NLGI survey responded (in 2011 the

response was around 72%) and there are certain countries where no data is listed, such

as for Russia and the CIS. The NLGI data and figures below should therefore be used

only as a guide to trends in the grease market.

Lithium greases are the most widely-used lubricating grease types, accounting for three

quarters of total grease production in 2011 (Figure 61).


Roskill


Figure 61: World: Production of lubricating grease by additive type, 2011 (%)

Source: NLGI Grease Production Survey Report, 2011 Note: NLGI data is based on a survey of grease producing companies, not all of whom respond. Data should

therefore only be used as a guide to overall trends in the lubricating grease market. Actual grease production is estimated at around 25% higher than the NLGI data

The NLGI reports that following a drop in output in 2001 and again in 2002, world

production of lubricating greases, by those companies that responded to its annual

survey, increased by over 8%py to 1.05Mt in 2007 (Figure 62). Output of greases

declined slightly in 2008, falling by 2.4% year-on-year, and then dropped by 9.3% in

2009 as the global economic downturn significantly reduced demand for grease.

Production rebounded in 2010, rising by 13.2% to 1.05Mt, slightly exceeding the

previous record output set in 2007. Output in 2011 was 1.08Mt, up 2.8% on 2010, and

is thought to have risen to 1.1Mt, a 2% increase on the year previous.

Output of lithium grease increased by 6.3%py between 2000 and 2007, to reach just

under 0.77Mt. By comparison, output of other lubricating greases increased by only

1.7%py to 2007. Production of lithium simple grease fell by 10.7% between 2007 and

2009 compared to only 3% for lithium complex greases. Lithium simple grease

production recovered to 2007 levels in 2010 while lithium complex grease output

exceeded its 2007 high to reach 0.185Mt.

Lithium simple 57%

Lithium complex 18%

Calcium 10%

Aluminium 4%

Polyurea 5%

Organophilic clay 2%

Sodium 1%

Others 3%


Roskill


Figure 62: World: Production of lubricating grease by type, 2000 to 2012e (000t)

Source: NLGI Grease Production Survey Report, 2004, 2007 & 2011; 2012 - Roskill estimates Note: NLGI data is based on a survey of grease producing companies, not all of whom respond. Data should


China overtook North America as the largest producer of lithium grease in 2006 and

accounted for 40% of total lithium grease production in 2011, up from 9% in 2000.

China’s production of lithium greases, as reported by the NLGI, has increased by

20%py, from 45,500t in 2000 to 323,200t in 2011 (Figure 63). In contrast, North

America’s share of the lithium grease market has fallen from 35% in 2000 to 18% in

2011 while Europe’s share has fallen from 26% to 13% over the same period. India and

the Indian subcontinent has shown strong growth in lithium grease output, increasing by

58% between 2000 and 2010 but falling slightly in 2011 (although this could be because

of less respondents answering NLGI’s survey). Production in other regions is also

growing; for example, output in the Pacific and Southeast Asia region doubled between

2000 and 2011, although from a low base in volume terms.

Simple lithium greases accounted for around 76% of total lithium grease production in

2011, down from 80% in 2007, signifying a trend towards increased production of

complex lithium greases. Production of complex greases exceeded that of conventional

greases for the first time in North America in 2003, and now accounts for 58% of lithium

grease output. Growth in production of complex lithium greases in Europe exceeded

growth in production of simple lithium greases between 2000 and 2011, whilst in China

production of complex lithium greases increased by 43%py between 2000 and 2011,

compared to an increase of 18%py for simple lithium greases.

0

200

400

600

800

1,000

1,200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e

Lithium conventional Lithium complex Non-lithium


Roskill


Figure 63: World: Production of lithium grease by region/country and by type,

2000 and 2011 (000t)

Source: NLGI Grease Production Survey Report, 2004 and 2011 Note: NLGI data is based on a survey of grease producing companies, not all of whom respond. Data should


11.2.1 Producers of lithium grease

Shell is the largest producer of lubricating greases, with a market share of around 13%

in 2010 according to Kline & Company. Exxon Mobil and BP account for around 11%

and 7% of the market respectively. TotalFinaElf, Chevron/Texaco and Fuchs Lubricants

are also large suppliers, while the share held by Chinese companies like SINOPEC has

risen dramatically. Grease manufacturers which participated in NLGI’s 2011 production

survey and which agreed to have their names disclosed, are listed in Table 194. It

should be noted that not all companies listed produce lithium greases.

0

50

100

150

200

250

300

350

2000 2011 2000 2011 2000 2011 2000 2011 2000 2011 2000 2011 2000 2011 2000 2011

NorthAmerica

Europe China India &Indian sub-continent

Japan Pacific &Southeast

Asia

CaribbeanCentral &

SouthAmerica

Africa &Middle East

Complex

Simple


Roskill


Table 194: World: Producers of lubricating grease

North America

Canada:

Battenfeld Canada Ltd Jet-Lube of Canada Ltd

Chemtura Corporation Petro-Canada Products

USA:

American Lubricants Company Inc Lubrication Engineers

Battenfeld Grease & Oil Corp of NY Lubrication Technology

Baum’s Castorine Company Inc Niagara Lubricant Company

Chemtool Incorporated NL Grease

Chevron Corporation Nippon Oil Lubricants (America)

Citgo Petroleum Corporation Nye Lubricants

Dow Corning Corporation Primrose Oil Company

Environmental Lubricants Manufacturing Royal Manufacturing Company Inc (TROCO)

Exxon Mobil (North America) Shell Oil Products

Fiske Brothers Refining Company Southwestern Petroleum Corporation

Fuchs Lubricants Company Summit Lubricants Inc

Halocarbon Products Corporation Synco Chemical Corporation

HUSKY Specialty Lubricants Texas Refinery Corporation

Hydrotex The Whitmores Manufacturing Group

Jesco Resources Tomlin Scientific Inc

Jet-Lube VexaPak LLC

Lubricating Specialties Company

Mexico

Comercial Roshfrans Lubricantes de America

Masac Interoil

Europe

ExxonMobil (Europe)

Shell European Oil Products (Belgium, Switzerland, Turkey)

Belgium:

Fuchs Belgium NYCO SA

Central Europe:

Verila (Bulgaria) PARAMO (Czech Republic)

Mol-Lub (Hungary) Total Lubricants (Romania)

Fuchs Oil (Poland)

France:

Christol Grease Raffineries Imperator

Condat

Germany:

Carl Bechem Fuchs Lubritech

Dow Corning Liqui Moly

Dr. Tillwich Setral Chemie

Fuchs Europe Schmierstoffe Zeller + Gmelin

Greece:

Century Oils Hellas

Table continued….


Roskill


….Table continues

Italy:

ENI Petronas Lubricants

ILCO-Industriale Viscol

Netherlands:

Axel Christiernsson Total Beverwijk

Portugal and Spain:

Petrogal S.A. (Portugal) Kraftt

ENI Iberia Petronas Lubricants Spain

Brugarolas. Verkol

Sweden:

Axel Christiernsson

UK:

Jet-Lube (UK) Ltd Rocol Limited

Caribbean, Central and South America

ExxonMobil (Central & South America) Fuchs DO Brasil (Brazil)

Shell Oil Products CANGL (Venezuela)

Destiliria Argentina de Petroleo (DAPSA) Compania de Petroleos de Chile (COPEC)

Chevron (Brazil and Columbia)

Middle East & Africa

Shell Oil Products Chevron (South Africa)

Exxon Mobil Oil (Egypt) Fuchs Lubricants (South Africa)

Pars Oil Company (Iran) Lubritene (Pty) Ltd (South Africa)

Kuwait Dana Lubes (Kuwait) Alhamrani Fuchs Petroleum (Saudi Arabia)

ENOC (UAE)

India and Indian sub-continent

Balmer Lawrie & Co Siddharth Petro Products

Bharat Petroleum Corporation Standard Greases (Mumbai, Silvasa & Tarapur)

Dow Corning India Tide Water Oil Company

Hindustan Petroleum Corp Turbhe Chemicals

Indian Oil Blending Waxpol Industries

Pensol Industries Pak Grease Mfg. (Pakistan)

Raj Petro Specialities

Japan

Chukyo Kasei Kogyo Nippon Grease

Chyuo Yuka Nippon Koyu Co

Cosmo Oi Nippon Koyu

Daido Yushi Nippon Oil

Dow Corning Toray Company NOK Kleuber

Fuchs Japan Sato Special Oil

Hakko Kouyu Co Ltd Shell Oil Products

Kyodo Yushi Sumico Lubricant

Yamabun Yuka

Table continued….


Roskill


….Table continues

Pacific and Southeast Asia

Shell Oil Products Siam Lubricant Industry (Thailand)

Chevron Corporation (Korea and Thailand) Thai Petroleum & Trading (Thailand)

Products Development Manufacturing (Thailand)

China

SINOPEC Fuchs Lubricants (Yingkou)

ExxonMobil Shell Oil Products Source: NLGI, 2011

11.3 Consumption of lithium greases

In general, lithium simple greases are suitable for use in a variety of industrial,

transportation, household and commercial applications. Lithium complex greases are

used in more extreme conditions, predominately in aircraft, automotive, industrial,

marine, mining, construction and military markets, especially for high load areas such as

bearings and joints. The automotive market accounts for around 50% of grease

consumption, although this varies on a country-by-country basis.

Automotive output fell by 3.5% year-on-year in 2001 (Figure 64). It then increased by

4.5%py through to 2007 to a record 73.3M units. Growth in output was most

pronounced in Asia-Oceania, rising by 9.5%py to 30.7M units, almost half world output,

in 2007. Automotive output declined by 3.7% in 2008 and by a further 12.5% in 2009 as

the global economic downturn significantly reduced demand for cars, LCVs, trucks and

buses. Production rebounded strongly in 2010 to a new record of 77.7M units, a 26%

increase over 2009, and by a further 3.1% in 2011 to exceed 80M units for the first time.

PriceWaterhouseCoopers forecasts total automotive output to rise by 6.6% in 2012,

because of strong growth in North American and Asian-Pacific assembly, meaning total

output could eclipse 85M units.

Commercial aircraft deliveries fell sharply in 2002 to 984 units in response to the effects

of the 9/11 terrorist attacks in the USA on passenger air travel, and were lower again in

2003, although orders improved (Figure 65). Deliveries started to pick up in 2004 and

surpassed 1,000 units in 2006, showing continuous growth through to 2009. Deliveries

in 2010 fell by 5.2% to just under 1,100 units, but recovered in 2011 to 1,164 units and

are expected to climb to 1,320 in 2012.


Roskill


Figure 64: World: Output of automobiles by region, 2000 to 2012 (M units)

Source: OICA 2000-2011, PwC Autofacts 2012

Figure 65: World: Deliveries of commercial aircraft, 2000 to 2012

Source: Airline Monitor

Deliveries of marine vessels accelerated in the late-2000s to peak at an estimated 151

million dry weight tonnes (Mdwt) in 2011 (Figure 66). China is forecast to become the

largest shipbuilding country in 2012 with a market share of 42%, exceeding South Korea

and Japan with 33% and 20% of market share respectively.

0

10

20

30

40

50

60

70

80

90

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Asia-Oceania Europe North America South America Africa

-20

-15

-10

-5

0

5

10

15

20

0

500

1,000

1,500

2,000

2,500

3,000

Ye

ar-

on

-ye

ar

ch

an

ge

(%

)

Air

cra

ft d

eli

ve

rie

s (

No

. u

nit

s)

Y-on-y change in deliveries (RHS) Aircraft deliveries Aircraft orders


Roskill


Figure 66: World: Shipbuilding deliveries, 2000 to 2012 (Mdwt)

Source: Clarksons

World industrial production (IP) increased by 2.8%py between 2002 and 2012.

Production of lithium grease has increased faster than IP, at 4.9%py, over the same

period (Figure 67). Lithium grease production has also outpaced automotive output

(3.8%py) since 2002, although since 2007 the growth trend has been similar. During the

mid-2000s there may have been an increase in the intensity of use of grease in its end-

uses, or a switch to lithium greases from other types; the latter certainly appears to have

occurred to some extent (see Section 11.2) with lithium greases increasing their market

share.

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e


Roskill


Figure 67: World: Relative industrial and transport output and lithium grease

production, 2002 to 2011 (2002 = 100)

Source: Industrial production = Economist Intelligence Unit; Figure 64, Figure 65 and Figure 66 Notes: Industrial output and grease production rebased, 2002 = 100

11.4 Consumption of lithium in greases

Simple lithium greases are estimated to contain, on average, 6-12% thickener by weight

and complex lithium greases 10-15%. The lithium hydroxide monohydrate (Li2OH.H2O)

content of lithium 12-hydroxystearate thickener is 13.7%. Assuming 1t of lithium simple

grease is manufactured using an average of 9% lithium 12-hydroxystearate, the lithium

hydroxide monohydrate content of the grease is 1.23%. Complex lithium greases

contain slightly more lithium as more thickener is used. If 12.5% of lithium 12-

hydroxystearate thickener is added to the grease, the lithium content of the final lithium

complex grease product is 1.71% lithium hydroxide monohydrate.

Not all grease producing companies are included in the NLGI data, and there is no data

for some countries, for example Russia and the CIS (where demand for grease is

estimated at around 2Mt). It is estimated that actual grease production is around 25%

higher than that recorded in the NLGI statistics. In addition, there are probably some

losses associated with the manufacture of lithium thickeners; this is estimated at around

10%. Estimates of lithium consumption in grease below are therefore based on the

NLGI grease production data plus 35%.

Using average lithium contents of lithium simple and complex greases, consumption of

lithium hydroxide monohydrate in grease production is estimated at just under 15,300t

(13,500t LCE) for 2012, having grown from around 9,400t (8,200t LCE) in 2002, or

50

100

150

200

250

300

350

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Lithium grease production Industrial production

Automotive output Commercial aircraft deliveries

Shipbuilding


Roskill


5.0%py (Figure 68). Consumption growth was higher between 2002 and 2008 (at

5.8%py), prior to the global economic downturn, because of rapidly increasing grease

output in China.

Figure 68: World: Production of grease and consumption of lithium, 2000 to 2012

Source: NLGI; Roskill estimates Notes: Lithium grease production data has been increased by 25% to reflect companies and regions not included in

the NLGI survey and lithium by a further 10% to represent losses during manufacturing

11.4.1 Outlook for demand for lithium in greases

Lithium grease production is likely to closely follow trends in industrial output as it is

used in applications such as automotive, aerospace, marine and mining equipment, and

in machinery used to manufacture such products.

World industrial output growth is forecast to rise by 3.5%py through to 2017, lower than

in the mid-2000s as a result of slower global economic growth. Growth will continue to

be centred on emerging economies such as China and India; however, it is still likely to

be lower than witnessed over the last decade, especially in China, particularly if exports

of finished goods to western economies decline.

Global automotive output is forecast to rise by 4.5%py to around 100M units in 2016,

according to PriceWaterhouseCoopers. However, this is the baseline forecast, with a

downside scenario closer to 2.5%py, if economic conditions continue to be challenging.

There is also an upside scenario of closer to 7%py, if the global economy shows more

substantial recovery and buoyant long-term growth.

The order backlog for commercial aircraft stands at a record of almost 10,000 units at

end-2012, because of demand from emerging markets and replacement in advanced

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Lit

hiu

m h

yd

rox

ide

co

ns

um

pti

on

(t)

Lit

hiu

m g

rea

se

pro

du

cti

on

(0

00

t)

Lithium grease production Lithium hydroxide consumption


Roskill


economies, meaning growth in deliveries is expected to continue for at least the next five

years. Nevertheless, Airline Monitor forecast growth in deliveries of only 2.9%py, as

Airbus and Boeing struggle to deliver new aircraft such as the A380 and Dreamliner.

The global marine orderbook as of the end-August 2012 stood at almost 282 million dry

weight tonnes (4,795 units) according to Clarkson’s, but 2012 is likely to be the peak

year for deliveries as overcapacity weighs on the shipping industry. Deliveries will

decline in the short-term.

Lithium grease production is forecast to rise by around 4.5%py through to 2017, similar

to global automotive output, the main market driver. However, should manufacturing

output show lower rates of growth because of continued global economic challenges,

such as Europe’s lingering sovereign debt problems and the recent slowing in Chinese

economic growth, lithium grease production growth could be closer to 2.5%py.

In the base case scenario, lithium hydroxide consumption will closely follow lithium

grease production with demand forecast to increase from an estimated 15,400t (13,500t

LCE) in 2012 to around 19,200t (16,900t LCE) in 2016 (Table 195). Growth in lithium

hydroxide consumption in grease will slightly exceed actual grease production because

the rate of growth of lithium complex greases, which contain 15-50% more lithium than

simple lithium greases, is slightly higher than that of simple lithium greases.

Table 195: World: Forecast demand for lithium in greases, 2012 to 2017

2012 2017 CAGR (%py)


Lithium hydroxide (t LiOH) 15,400 17,850 19,200 20,600 3.0 4.5 6.0

Total (t LCE) 13,500 15,700 16,900 18,100 3.0 4.5 6.0


It is unlikely that lithium simple grease will loose its dominant position as the ‘multi-

purpose’ grease of choice for everyday mechanical use in the short (to 2017) and mid

(to 2022) term. The penetration of lithium greases in the market is high and substitution

is unlikely, unless prices for lithium hydroxide increase substantially. In Japan, there is

growing use of polyurea grease in place of lithium grease, but this is probably only a

local trend (the doubling in price of lithium hydroxide between 2004 and 2007 may have

contributed, however). Even if lithium greases were substituted more quickly in the

short-term, it is unlikely growth would be below the low-case scenario above.

Most of the potential growth in lithium greases comes from higher performance

applications, such as in the automotive market, where longevity, higher operating

temperatures and reduced noise are driving demand for more specialist greases based

on lithium complex types. Although these trends could reduce demand for simple lithium

greases, as complex lithium grease contains more lithium hydroxide than simple lithium

grease, so the overall effect will be positive. If lithium complex greases replace lithium

simple grease at a faster rate than forecast, there is potential for increased lithium

hydroxide demand, although this is unlikely to result in growth above the high-case

scenario above.


Roskill


12. Use of lithium in glass

Glass provides the fifth largest market for lithium, when consumption of both lithium

carbonate and lithium minerals are combined. This market is estimated to have

consumed around 11,800t LCE of lithium in 2012, 8% of total consumption.

12.1 Use of lithium in glass

Glass is an inorganic amorphous solid. Soda-lime-silica compositions account for

around 90% of all glass melts. Raw materials are mixed and the resulting batch is fed

into a furnace. Melting of soda-lime-silica glass begins at 600-900ºC, during which

carbon dioxide and other gases are released, creating bubbles in the molten glass. In

order to remove the bubbles and ensure complete melting, temperatures are raised to

1,500-1,600ºC. Refining agents in the glass batch aid the release of gas bubbles,

homogenise the melt and prevent surface scum formation. At the end of refining, the

melt is cooled to 1,100ºC to attain the desired viscosity for working and forming the

glass. The end-product is finally annealed to remove thermal stresses created during

the forming process.

Glass is broadly divided into four categories: container glass, flat glass, fibreglass and

speciality/technical glass. Typical batch compositions for the three main types (by

volume) are shown in Table 196. Compositions of speciality/technical glass can vary

significantly.

Table 196: Typical batch compositions for glass by type (%)

Mineral Container Flat Fibre

Silica sand 59-60 60 28-30

Limestone 14-18 19 28-31

Soda ash 19 20 0-1

Sodium sulphate 1 0.5 0.3-0.8

Alumina 4.5 - -

Kaolin - - 26-28

Boric acid - - 8-11

Colemanite - - 8-17

Fluorspar - - 1-2

Rouge - 0.5 1 Source: Industrial Minerals HandyBook IV

Advantages of lithium oxide additions to glass batches are:

increased melting rates resulting from the lowering of viscosity, leading to

reduced reject rates and higher output

lower melting temperatures, providing energy savings

lower seed (bubble) count

higher chemical durability

total or partial replacement of fluorine and other refining agents, enabling

compliance with increasingly stringent regulations on toxic emissions


Roskill


imparts higher strength at lower weight in some applications

Applications for glass utilising the properties of lithium include flat glass, container glass

(including cosmetic glass / flaconnage), pharmaceutical glass, fibreglass and other

speciality/technical glass. However, lithium is not added to every glass product, and,

when used, typical additions vary widely. The main markets for lithium in glass are

however as follows:

Container glass (including flaconnage, crystal and tableware), which is used as a packaging material and is produced by a continuous process in which glass gobs are blown into moulds of the desired shape by compressed air

Fibreglass (especially E-glass), which is used as a reinforcement fibre or textile, insulation material and optical fibres.

Specialty glass, which includes CRT and LCD/LED glass for television and computer monitor screens, laboratoryware, lighting glass (traditional and compact fluorescent lamps), tableware and other types

Lithium can also be used to chemically strengthening glass by an ionic exchange

process using Li+ and K

+ ions. Major applications for ionic-strengthened glass include:

Sheet glass for safety applications (e.g. aircraft windows)

Display glass for electronic devices (e.g. cell phone or tablet PC screens)

Typical additions of lithium, when used, to various types of glass are as follows:

Glass wt% Li2O

Container 0.10-0.25

Fibre 0.20-0.70

Pharmaceutical, lighting, television and

cosmetic glass and tableware

0.15-0.25

Lithium is mainly added to glass in the form of lithium minerals or lithium carbonate,

although lithium chloride, fluoride, phosphate, silicate or sulphate salts have speciality

applications. Different sources of lithium used in glass, and their characteristics, are

shown in Table 197.

Table 197: Main sources of lithium used in glass

Mineral Formula % Li2O1

Melting point (ºC max)

Spodumene Li2O.Al2O3.4SiO2 8.03 1,450

Petalite Li2O.Al2O3.8SiO2 4.80 1,400

Lepidolite K(Li,Al)3(Si,Al)4O10(OH,F)2 4.10 1,200

Lithium carbonate Li2CO3 40.40 730 Source: Industrial Minerals Note: 1-Theoretical maximum

Spodumene is the main mineral used as a source of lithia in glass production to

increase melting efficiency and decrease melting temperatures. Talison Lithium markets

glass-grade spodumene grading 5.0% Li2O and 0.1% Fe2O, 7.2% Li2O and 0.13% Fe2O3

and 7.7% Li2O and 0.09% Li2O.


Roskill


Petalite is used in large quantities in the production of container glass to lower the

viscosity of the melt. Bikita Minerals markets container-grade petalite containing 4.1%

Li2O.

Lepidolite is used in opal, borosilicate and flint glass. In opal glass, up to 40% lepidolite

is added, giving a final lithium content of around 1.5% Li2O. Lepidolite may also be used

as a convenient source of alumina for CRT television tubes, and is easily melted

because of the presence of lithium and fluorine. This market has all but vanished with

the advent of LCD, LED and plasma display panels however.

For high-grade optical special glasses, where lithia is added in such small quantities that

use of minerals would not be cost-effective, and applications where decolouration from

Fe2O3 is an issue, lithium carbonate (technical grade) and other lithium compounds are

generally preferred to minerals. Some lithium carbonate is consumed in flat glass to

reduce the seed count, however this practice is not considered widespread.

Avalon Rare Metals in Canada (see Section5.8.4.3) developed a high-lithium feldspar

(HLF) product for use in the glass industry. The HLF product is a blend of petalite,

sodium feldspar, potassium feldspar, mica and quartz. This provides lithium pre-mixed

into quartz-feldspar glass sand at minimal additional cost. Avalon has been in

discussions with industrial minerals marketers with a view toward commercialising the

HLF product, but is not currently used commercially.

12.2 Production and consumption of glass

Total production of glass is estimated at around 145Mt in 2012. Container glass accounts

for the largest proportion of glass production by volume, at 50% of the total, followed by flat

glass at 38% (Figure 69). Fibreglass and speciality glass each account for 6% of glass

production.


Roskill


Figure 69: World: Estimated production of glass by type, 2012


The principal types of glass produced using lithium and their markets are discussed in

detail in the following sections.

12.2.1 Container glass

Container glass production is estimated at around 73Mt. The European Union (EU)

accounted for 28% of shipments in 2012, China 21%, other Asia and the USA 12%

each, and others 27% (Figure 70).

Figure 70: World: Production of container glass by region/country, 2012


Fibreglass 6%

Flat glass 38%

Container glass 50%

Speciality glass 6%

Europe 28%

China 21% Other Asia

12%

USA 12%

Other 27%


Roskill


The main international producers of container glass are Owens-Illinois and Saint-

Gobain, accounting for around a third of global sales by value. Other producers of

container glass include:

Amcor

Anadolu Cam

Ardagh Group

Bormioli Rocco Spa

China Glass Holdings

Consol Glass

Gerresheimer

Heinz Glas

Hindustan National Glass & Industries

Koa Glass

Nihon Yamamura

Stolzle

Vetropack

Vidrala

Vitro Packaging

Wiegand-Glas

Yioula

Zignago Vetro

Container glass is a high volume but low price product, meaning it is uneconomic to

transport it over large distances. Therefore, most container glass is consumed in the

country in which it is produced. Once filled, however, container glass may be

transported more widely afield.

The packaging of beer is the single largest market for container glass in the world

(estimated at almost 50% of all container glass use), followed by non-alcoholic

beverages (24%), food (13%), spirits (8%) and wine (6%). This trend varies by region,

however, with beer, wine and spirits accounting for only 20% of container glass

consumption in China. Trends in consumption of beverages are, therefore, major

determinants of container glass demand. Countries producing large amounts of beer

and wine also have significant container glass production.

According to Euromonitor, container glass consumption in 2011 was split almost into

one-third in Asia-Pacific and one-third in Europe (Figure 70).

Figure 71: World: Consumption of glass packaging by region, 2011

Source: Euromonitor in Owens-Illinois investor presentation

Asia-Pacific 37%

Europe 33%

South America 16%

North America 9%

Other 5%


Roskill


European Union (EU) production of glass by type (excluding flat glass) is shown in

Table 198. Container glass production rose by 2.7%py between 1999 and 2007,

peaking at 21.6Mt. Expansion of the EU to include 12 other countries from 2005 means

that some of the growth was attributed to the addition of other producing countries,

rather than organic growth. Production fell by 10.5% between 2007 and 2009, but has

only recovered by 5% to 2012. Leading producing countries are Germany, France and

Italy, which together accounted for 53% of container glass production in the EU in 2009.

Table 198: EU: Production of glass by type, 1998 to 2012 (000t)

Container Tableware1 Fibre

2 Speciality Total

1998 17,676 1,025 506 1,643 20,850

1999 17,464 1,104 529 1,530 20,627

2000 17,690 1,177 550 1,284 20,701

2001 17,917 1,268 546 1,336 21,067

2002 18,333 1,307 648 1,292 21,580

2003 18,414 1,285 649 1,174 21,522

2004 19,900 1,570 693 1,027 23,190

2005 20,724 1,498 727 1,121 24,070

2006 20,967 1,526 796 1,162 24,451

2007 21,624 1,547 821 1,214 25,206

2008 21,270 1,440 823 966 24,499

2009 19,366 1,041 476 946 21,829

2010 19,886 1,016 713 1,004 22,619

2011e 20,100 1,000 720 1,050 22,870

2012e 20,300 1,000 730 1,100 23,130 Source: 1998-2010 = CPIV; 2011/2012 = Roskill estimates Notes: 1998- 2003 = EU15; 2004 = EU25; 2005-2012 = EU27 1-Not including Spain 2-Reinforcement fibreglass only

In 2007, there were 63 container glass manufacturers in the USA, according to the US

Census Bureau. Container glass production has declined from the 1990s but remained

around 8.2Mtpy between 2001 and 2007 before falling to 7.9Mt in 2009 (Table 199).

Table 199: USA: Production of container glass, 1999 to 2008

(M gross1) (000t)

1999 258 8,855

2000 250 8,518

2001 241 8,140

2002 249 8,340

2003 244 8,160

2004 241 8,000

2005 243 8,060

2006 247 8,200

2007 248 8,230

2008 237 7,865

2009 Series discontinued Series discontinued Source: Current Industrial Reports, US Bureau of the Census; Roskill estimates Notes: 1-A “gross” is one dozen-dozen or 144


Roskill


In China, container glass production doubled between 2000 and 2007, to 12.7Mt, and is

estimated at 15Mt in 2012.

Lithium additions to container glass batches (in the form of spodumene and petalite

mineral concentrates or lithium carbonate) increase the surface tension of the glass,

allowing for better workability and the forming of more complex container shapes.

12.2.2 Fibreglass

Fibreglass is a fine, fibrous material made from the same raw materials used to produce

flat glass. Different grades are manufactured by the addition of various compounds to

the basic melt. Fibreglass is characterised by high tensile and impact strength, light

weight, high resistance to chemical attack and relatively low cost.

Textile-grade fibreglass, also known as continuous fibreglass, continuous filament

fibreglass, reinforcement fibreglass or E-glass, is used to increase the strength of

plastics, rubber, cement and other materials. Insulation-grade fibreglass is used

predominately for insulation of buildings, but also as soundproofing.

The chemical compositions of various types of textile-grade fibreglass are shown in

Table 200.

Table 200: Typical chemical composition of types of textile-grade fibreglass (% wt)

A-Glass C-Glass D-Glass E-Glass R-Glass S-Glass AR-Glass

SiO2 72.5 65.0 74.0 54.5 60.0 65.0 71.0

Al2O3 1.5 4.0 - 14.5 25.0 25.0 1.0

CaO 9.0 14.0 0.5 17.0 9.0 - -

MgO 3.5 3.0 0.2 4.5 6.0 10.0 -

Na2O 13.0 0.5 1.0 0.8 0.4 - -

K2O - 8.0 1.5 - 0.1 - -

B2O3 - 5.0 22.5 7.5 - - -

Fe2O3 - - 0.2 0.5 0.3 - - Source: Industrial Minerals Handybook III

Total world production of fibreglass is estimated at around 9.0Mt for 2012. Of this total,

between 6.0 and 6.5Mt is thought to comprise insulation-grade fibreglass, with the

remainder textile-grade fibreglass.

Lithium additions of 0.2-0.7% Li2O decrease the surface tension of the glass and act as

a refining agent by partially, or fully, replacing boron, sodium oxide, potassium oxide or

fluorine. Reduction in boron particulates and fluorine below environmental limits is

feasible by reformulating batch compositions under the use of spodumene, and may

help to meet emissions legislation in certain regions.

In E-glass, additions of Li2O contributes to high strength, low weight, fibres, which have

been utilised for wind turbine manufacture.


Roskill


12.2.3 Speciality glass

Speciality glass accounts for around 6% of world glass production in terms of volume but

around 20% in terms of value. Speciality glass includes:

Cathode ray tube (CRT) glass Thin-film transistor (TFT) glass

Lead-free glass Light bulbs and fluorescent tubes

Glass tubing Tableware

Pharmaceutical glass Scientific and laboratory glassware

Fibreoptics Lasers

Optical glass

Lithium was an essential constituent of monochrome CRT glass where, in combination

with strontium carbonate, it reduced radiation from faceplate glass and improved surface

finish. Lithium is not essential in colour CRT glass, though it can be added to match the

thermal expansion coefficients of the faceplate and funnel, which have different chemical

compositions. Lithium can also replace fluorspar as a flux. The production of CRT glass

has declined rapidly, and is now only produced in small quantities in China and India.

Lithium can be used as replacement to lead in lead-free glass. Additions of up to 3%

Li2O result in glassware with similar properties to leaded glass. Lithium is also used as

a flux in leaded and lead-free crystal glass, together with barium, zinc and boron in

quantities of up to 10%.

Lithia is added as high-purity carbonate to photochromic glass, to give improved

stability. On exposure to ultra-violet light, lithium ions in the glass combines with silver

halide to form a compound which discolours or darkens the glass. This reaction is

reversed when the glass is no longer exposed to ultra-violet light.

Lithium glass detectors are scintillation-type detectors that emit light in response to

energy excitation received from ionizing radiation. The detectors are silicate-based

glasses into which a few weight percent of lithium has been incorporated. They also

contain a small percentage of an activator species (necessary to produce the

fluorescence effect); this is usually cerium in oxide form.

12.3 Consumption of lithium in glass

The market for lithium minerals in glass began to develop in the mid-1980s when Lithium

Australia (now Talison Lithium) introduced its glass-grade spodumene. Almost all

manufacturers of black and white television tubes adopted lithium minerals between

1983 and 1988 because of the availability of competitively-priced spodumene. Lithium

was essential in black and white television tube glass production to act with strontium in

absorbing high-energy radiation. The end of large-scale production of black and white

television tube glass in the early 1990s resulted in lower demand for lithium minerals and

a change in the pattern of consumption. This market, which accounted for 16% of

lithium mineral consumption in 1990, was negligible by 2000.


Roskill


The availability of lower-cost lithium carbonate from SQM in Chile resulted in a shift

away from lithium minerals by consumers in the early 2000s, especially those in the

technical glass industry. From 2004, Consol Glass in South Africa started to use

increasing quantities of petalite from Bikita in Zimbabwe for the production of container

glass, and this now represents the major use of lithium minerals in the glass industry.

Total consumption of lithium in glass in 2012 is estimated at just under 12,000t LCE,

comprising 3,800t LCE of lithium minerals (30,800t gross weight at 5% Li2O) and 8,000t

LCE of lithium compounds, mostly carbonate but also some chloride and other salts for

specialist glass uses. Lithium minerals are mainly consumed in container glass and

fibreglass (Table 201), but lithium compounds are more evenly split between container,

fibre and speciality glasses.

Table 201: World: Estimated consumption of lithium in glass, 2012 (t LCE)

Glass type Production

(Mt)

Lithium

minerals

Lithium

compounds

Container 72.7 2,800 2,000

Fibre 9.1 800 2,000

Speciality 9.0 200 4,000

Total 90.8 3,800 8,000

Source: Roskill estimates Note: Mainly carbonate but also some other specialist salts

Consumption of lithium minerals in glass has increased by 17%py since 2007, largely

due to increased demand from the container glass industry (Table 185). Lithium

carbonate consumption has increased by only 2.7%py, however, and only surpassed the

2008 peak in 2012 following the global economic downturn which reduced consumption

by 13% year-on-year.

Table 202: World: Consumption of lithium in glass, 2007 to 2012 (t LCE)

2007 2008 2009 2010 2011 2012

Lithium compounds1 7,000 7,500 5,500 6,000 6,500 8,000


Total 9,300 9,900 10,400 11,100 10,700 11,800

Source: Roskill estimates Note: Mainly carbonate but also some other specialist salts

12.3.1 Outlook for demand for lithium in glass

A number of factors affect the production of glass and hence demand for raw materials,

including lithium minerals and lithium compounds. GDP growth and rising disposable

incomes in developing economies have fuelled expansion in demand for glass in

general, since the beginning of the 21st century. Trends in demand for lithium, however,

remain largely independent of trends in the global glass market given the specialist, and

restricted, use that lithium endures. For some types of glass in which lithium is used

there is no reliable output data, and loading levels can vary from producer to producer,


Roskill


or lithium is simply not used at all, thus it is difficult to forecast trends in demand for

lithium going forward.

Demand for lithium in glass is forecast to increase by 3.5%py over the next 5 years,

reaching 14,000t LCE by 2017 (Table 203).

Table 203: World: Forecast demand for lithium in glass, 2012 to 2017 (t LCE)

2012 2017 CAGR (%py)



Lithium compounds 8,000 8,830 9,500 10,200 2.0 3.5 5.0

Total 11,800 13,030 14,000 15,050 2.0 3.5 5.0


Demand for lithium in glass could increase by as much as 5.0%py to 15,050t LCE by

2017, if the following trends are observed:

Increased awareness and use of lithium to lower furnace temperatures and

hence reduce energy and CO2 emission by glass producers

Development of new markets, such as for high-lithium feldspar, or other blended,

products

Faster growth in the global economy meaning increased demand for speciality

glass using lithium

However, there is also the potential for lower than forecast growth in lithium demand,

with demand increasing by only around 2.0%py to 13,030t LCE by 2017 if the following

trends are observed:

Increasing prices for lithium carbonate and lithium minerals because of a

shortage of supply to meet growth in demand for Li-ion batteries, which could

force current consumers to replace lithium in glass and ceramic batches

Worse than forecast global economic growth and lower, which would significantly

affect output of ceramics and glass


Roskill


13. Use of lithium in metallurgical powders

Consumption of lithium in metallurgical casting powders is estimated at 8,200t LCE in

2012 or 6% of total lithium consumption.

Lithia, a strong flux, is introduced into metallurgical casting powders either in the form of

lithium minerals (spodumene and petalite) or lithium carbonate. Lithia reduces the

viscosity of the casting powder, which in continuous casting increases flow, allowing the

continuous casting process to operate at greater speeds. In traditional metal casting,

lithia additions to mould sands reduce the co-efficient of thermal expansion, helping to

prevent veining and deformation of the cast.

13.1 Continuous casting

In the continuous casting of steel, a mould flux is generally added to the surface of the

molten steel in the mould, as the steel is poured. The mould flux provides lubrication

between the mould wall and the steel, reduces the loss of heat from the surface of the

steel, protects the surface from oxidation, and it may even remove impurities such as

alumina from the steel.

Continuous casting mould fluxes comprise one or more refractory metal oxides (45-90%

of the mould flux), one or more fluxing agents (10-50%), a binder (0.05-10%), an

expanding agent (0-10%) and carbonaceous material (1-6%).

Typical components in the mould flux are:

Glass formers (SiO2, Al2O3, B2O3, Fe2O3)

Basic oxides (CaO, MgO, BaO)

Alkali oxides (Na2O, Li2O, K2O)

Fluidisers (F2, MnO)

Melt control (C)

Lithium oxide/lithia (Li2O), when utilised, is usually present in concentrations up to 5% to

control the melting behaviour and fluidity of the mould flux. In most cases, lithium oxide

is added in the form of lithium carbonate, which decomposes at the elevated

temperatures in the casting mould. However, lithium oxide can also be introduced into

the mould flux by the addition of spodumene or petalite, which also introduces the glass

forming minerals SiO2 and Al2O3 into the flux. Lithium’s main benefit in the mould flux is

to reduce the viscosity and thereby increase flow, allowing the continuous casting

process to operate at greater speeds.

Mould fluxes come in three forms: powdery, granular, or spherical granular. Powdery

and granular types are chiefly employed in continuous casting. Powdery-type mould

fluxes are used mainly for low carbon aluminum-killed steel which is easily affected by

contamination defects such as pin-holes and blow holes, as well as for high speed

continuous casting where the casting speeds are at least 1.6m/min requiring even

speedier fluxing and slagging. Granular types are superior from an environmental


Roskill


aspect because they generate less dust and produce uniform fusing of the granular

layer. For these reasons, granular additives are mainly used for medium carbon steels

which require uniform fusion and uniform influx of the additive or for use in low speed

casting which gives priority to environmental problems.

13.1.1 Producers of continuous casting mould powders

Producers of continuous casting mould fluxes include:

Lipterm (Macedonia)

Foseco (worldwide)

Xixia Longcheng (China)

Stollberg (worldwide)

Shinagawa Refractories (Japan)

SAM Americas (USA)

Henan Xibao Metallurgy (China)

Thermochem (South Africa)

Kempro (Italy)

Metallurgica (Germany)

RT Vanderbilt (USA)

Grindchem (India)

Hirono Chemical Industries (Japan)

Sakai Chemical Industry (Japan)

Prosimet (Italy)

Nippon Steel & Sumikin Metal

Products (Japan and China)

Xixia Longcheng has a capacity for 100,000tpy of mould flux powders and supplies

major steel mills in China, such as Baosteel, Wuhan Iron and Steel, Shougang, Anshan

Iron and Steel, Maanshan Iron and Steel, Panzhihua Iron and Steel, Taiyuan Iron and

Steel, Jinan Iron and Steel and Sha Steel. The company claims to supply 30% of the

Chinese market, suggesting the Chinese market is around 400,000tpy.

Stollberg (part of S&B Industrial Minerals) had a capacity of 190,000tpy and produced

160,000t of mould fluxes in 2005. The company claimed to hold a 30% share of the

world mould flux market in 2005, suggesting that the total world market in 2005 was

around 535,000t. Stollberg has operations in Germany, USA, South Korea, China

(35,000tpy), France, Brazil (10,000tpy) and India (10,000tpy).

Lipterm supplies mainly the southeast European market. Its SANTALIT product is

recommended for all steel grades cast and various profiles of semi-finished casts at

speeds 0.4-1.8m/min. Consumption of SANTALIT is typically 0.8-1.1kg/t steel.

13.1.2 Continually cast steel production

In 2011, continually cast steel accounted for 94% of total global steel output according to

the German Steel Federation, up from 86% in 2000. World production of continuously

cast steel has increased by 5.8%py since 1998, reaching 1.43Bnt in 2012 (Figure 72).

The mid-2000s witnessed an exceptional period of growth, with output rising by 9.5%py

between 2001 and 2007, but since the 2008/09 global economic downturn, output has

slowed, despite initially rebounding strongly in 2010.


Roskill


Production of continuously cast steel in China has increased by almost 17%py since

1998. China has accounted for 78% of world growth in continuously cast steel

production over that same period. Production in Russia and the CIS has almost tripled

over the last fourteen years, and India has witnessed five-fold growth. Other regions,

where the steel industry is more mature, for example Europe and North America, have

shown more steady growth in production however.

Figure 72: World: Production of continuously cast steel by region, 1998 to 2012 (Mt)

Source: 1998-2010 = World Steel; 2011 & 2012 – Roskill estimates based on crude steel output from World Steel

adjusted for % of continuously cast in 2010 versus total crude Note: Other includes Africa, Middle East, Oceania and South America

13.1.3 Consumption of continuous casting mould powders

Nippon Steel & Sumikin Metal Products estimated the Chinese market for continuous

casting powders at 0.2-0.24Mtpy in 2011. Total output of continually cast steel in China

was 670Mt in 2011, suggesting consumption of mould powders in China is around 0.3-

0.4kg/t of steel produced. Similarly, based on Stolberg’s reported market share in 2005,

the global market was estimated at 535,000t; this suggests global consumption of mould

powder is roughly 5kg/t of steel produced in 2005. Assuming Chinese consumption of

0.35kg/t and rest-of-world consumption at 0.5kg/t, the total global market for continuous

casting mould flux powders is estimated at around 0.6-0.65Mt.

13.1.4 Consumption of lithium in continuous casting mould powders

In 2006, the USGS reported that the use of lithium in continuous casting mould fluxes

used in the steel industry in Asia was an important and expanding new market. This is

presumably because of significant growth in continually cast steel production in that

0

200

400

600

800

1,000

1,200

1,400

1,600

Europe Russia and CIS North America Other China India Other Asia


Roskill


region. Since then, Asian output of continually cast steel has increased further, driven

by Chinese production and demand.

Lithium oxide is added in concentrations between 0 and 5%. At 5%, the amount of

lithium carbonate added per tonne of mould flux could be as much as 125kg LCE (or

50kg Li2O). If spodumene was used, and again assuming a 5% Li2O content, the entire

powder would have to be ground spodumene (at 5% Li2O spodumene grade). But, if no

lithium is required, consumption of lithium carbonate or lithium minerals could be zero.

The maximum volume of lithium consumed in this end-use, based on a 650,000t market

and assuming 5% Li2O content, would be just over 80,000t LCE. Even at 1% Li2O

loading, consumption would be 16,000t LCE. In 2012, total consumption of lithium

minerals and carbonate is estimated to have been 7,200t LCE.

Consumption of lithium in mould flux powders has shown a compound annual growth

rate of almost 4.4%py since 2007 (Table 204). This is significantly higher than output of

continually cast steel, which has grown by only 2.5%py over the last five years, and was

most likely caused by steel makers looking to increase profit by reducing casting time

and defects using higher value casting powders, as well as the modernisation of steel

making process in China and other industrialising countries. The use of lithium could

also be growing because of the replacement of other fluxes, such as sodium and

fluorine, which produce environmentally harmful gases upon heating.

Table 204: World: Consumption of lithium in continuous casting mould powders,

2007 to 2012 (t LCE)

2007 2008 2009 2010 2011 2012

Lithium compounds 3,200 3,800 3,400 3,600 4,000 4,200


Total 5,800 6,400 5,400 5,800 6,600 7,200 Source: Roskill estimates

Japan is the only country where consumption of lithium in mould flux powders is

reported/estimated. Japanese consumption of lithium carbonate in fluxes reached a

peak of 1,400t LCE in 2007, and has remained at a similar level after briefly declining in

2008 and 2009 (Table 205).

Table 205: Japan: Consumption of lithium in fluxes, 2007 to 2012 (t LCE)

2007 2008 2009 2010 2011 2012e

Lithium carbonate 1,400 1,200 900 1,400 1,400 1,400

Total 1,400 1,200 900 1,400 1,400 1,400 Source: Roskill’s Letter from Japan Nos. 357, 368 and 432; Roskill estimate Note: e-estimated


Roskill


13.2 Traditional metal casting

Mould fluxes are used in the casting of metals, including iron, magnesium and

aluminium. Mould fluxes for traditional metal casting act similarly to those in continuous

casting, and lithia is used as a high-power flux where necessary. High lithia content

mould fluxes dramatically reduce rejects caused by veining; these are often referred to

separately as anti-vein agents.

Mould fluxes for metal casting are produced by the same companies as highlighted in

Section 13.1.1.

Anti-vein agents are a more specialised product and the largest supplier of lithia-

containing versions is Prince Minerals (formerly IGC Technologies) of Milwaukee, USA.

The company’s Veinseal® product uses lithia as a flux, which is added to the batch in the

form of spodumene.

Total consumption of spodumene in traditional metal casting fluxes is estimated at

1,000t LCE, or around 6,750t gross weight.

13.3 Outlook for demand for lithium in casting powders

Production of crude steel is forecast by Roskill to increase at 2.9%py through to 2017,

reaching 1.76Bnt. The proportion of steel cast by continuous methods is expected to

rise further, but perhaps only by 1% at most, so overall growth in continuous casting will

rise at a similar rate to crude steel output. Growth in traditional metal casting is likely to

proceed at a similar level.

If demand for lithium-containing casting powders increases at a similar rate to steel

output, total demand could reach 11,590t LCE by 2017. However, lithium-based

products appear to have outpaced both continuous casting output, and the mould flux

market, in general over the last five years. A more realistic base-case scenario is

therefore for growth exceeding steel output, at around 5%py, with demand reaching

12,755t LCE by 2017 (Table 206). Additional upside potential exists, with a growth rate

of 7%py if lithium-based products find wider use or steel output accelerates.

Table 206: World: Forecast demand for lithium in casting powders, 2012 to 2017 (t

LCE)

2012 2017 CAGR (%)


Lithium carbonate 4,200 4,870 5,360 5,900 3.0 5.0 7.0


Total 8,200 9,500 10,460 11,500 3.0 5.0 7.0 Source: Roskill estimates


Roskill


14. Use of lithium in polymers

Rubbers and thermoplastics are estimated to have accounted for 7,500t LCE, or 5%, of

lithium consumption in 2012.

14.1 Types of polymers

Butyllithium is used as an initiator for anionic polymerisation reactions in the production

of styrene-butadiene rubber (SBR) and polybutadiene rubber (BR). n-butyllithium and

smaller quantities of sec-butyllithium catalyse reactions to yield polymers with

thermoplastic properties that require no vulcanisation, such as styrene block copolymers

(SBC).

Synthetic rubbers are a group of man-made elastomers that show one or more

properties of natural rubber. They are classified into SBR, BR, nitriles (NR),

polyisoprenes (IR), butyl rubbers (IIR), ethylene-propylene copolymers (EPR) and

terpolymers (EPT).

Thermoplastic elastomers are a mix of polymers (usually a plastic and a rubber) which

consist of materials with both thermoplastic and elastomeric properties. There are six

generic classes of thermoplastic elastomers: styrenic block copolymers (SBC), polyolefin

blends, elastomeric alloys, thermoplastic polyurethanes, thermoplastic copolyester and

thermoplastic polyamides.

SBR is the most widely-produced synthetic rubber and is used mainly for vehicle tyres.

It accounts for over a third of world SR production capacity. SBR can be further divided

into “latex” and “solid” types and is produced by two methods: emulsion polymerisation

(ESBR) and solution polymerisation (SSBR).

Emulsion polymerisation remains the most common method of producing SBR but does

not use a lithium-based catalyst. Use of solution polymerisation, which requires a

butyllithium catalyst to initiate polymerisation, is increasing. Unlike most catalysts, small

quantities of butyllithium are carried over into the final product (believed to be under

0.1% of monomer weight). Compared to other polymerisation methods, this process

allows the micro level of the rubber to be changed easily, enabling a more economical

burn rate in vehicle tyres and expansion of the design range into products such as all-

season tyres.

BR is the second most widely-produced synthetic rubber, accounting for around a

quarter of world SR production capacity.

Most BR is made by a solution process using either a transition metal (Nd, Ni, or Co)

complex or an alkyl metal, like butyllithium, as a catalyst. Since the reaction is very

exothermic and can be explosive, particularly with alkyllithium catalysts, the reaction is

normally carried out in solvents such as hexane, cyclohexane, benzene or toluene. The


Roskill


solvents are used to reduce the rate of reaction, to control the heat generated by

polymerisation and to lower the viscosity of the polymer solution in the reactor.

Alkyllithium and transition metal catalysts make very different products. Transition metal

(Ziegler) catalysts produce very “stereoregular” BR. Alkyllithium or anionic system

catalysts produce a polymer with the highest cis and the lowest vinyl content (Table

207), when no special polar modifiers are used in the process. The alkyllithium process

is probably the most versatile because the growing chain end contains a negative

charge which can be further reacted with coupling agents or functional groups to make a

variety of modified BR. It also produces gel-free BR, which is suitable for plastics

modification.

Table 207: Microstructure of different types of polybutadienes (%)

Catalyst ion Cis Trans Vinyl

Lithium 35 52 13

Sodium 10 25 65

Potassium 15 40 45

Rubidium 7 31 62

Caesium 6 35 59

Emulsion polymerisation 18 64 18

Vinyl increases the glass transition temperature (Tg) of the BR by creating a stiffer chain

structure. It also tends to cure under high heat conditions, so the high-vinyl polymers

are less stable. Vinyl units can be raised in lithium-based anionic polymerisation through

the use of polar modifiers, normally nitrogen- or oxygen-containing compounds. The

modifiers direct the attack of the propagating ion on the negative charge to give a 1,2

addition to the butadiene monomer.

SBCs were introduced in the mid-1960s and are the most widely produced thermoplastic

elastomers. The molecular configuration consists of polystyrene end-blocks and

elastomeric mid-blocks. The polystyrene end-blocks associate with each other at

ambient temperature forming a pseudo-crosslinked structure similar to a vulcanized

elastomer. However, unlike chemically vulcanized elastomers, SBC structures

disassociate at elevated temperatures. This characteristic allows SBCs to be used

effectively in hot melt adhesives requiring elastomeric-like performance properties and

melt rheology compatible with use in conventional hot melt application equipment.

The elastomeric mid blocks are conventionally butadiene or isoprene -based, and are

referred to as styrene-butadiene-styrene (SBS) or styrene-isoprene-styrene (SIS)

respectively. Hydrogenated SBCs are sometimes called styrene-ethylene-butadiene-

styrene (SEBS) or similar. SBCs are produced by a two-step polymerisation to create

the two polymeric domains and coupling reaction is used to link them. A lithium initiator

(methyllithium, ethyllithium, n- or sec- butyllithium or s-propyl-lithium) is used for the

anionic polymerisation.


Roskill


14.2 Production of polymers

World production capacity for synthetic rubber was estimated by the International

Institute of Synthetic Rubber Producers (IISRP) at 17Mt in 2012, up from around 11Mt in

the early 2000s. Asia accounts for 51% of synthetic rubber capacity (Figure 73). China

has the largest capacity in Asia and accounts for 25% of total world capacity. North

America holds 18% of world synthetic capacity, or around 3.1Mt, while Europe, the

Middle East and Africa have the third largest capacity worldwide at around 2.9Mt.

Figure 73: World: Capacity for synthetic rubber production by country/region, 2012

Source: IISRP

World production capacity for SBR and BR was estimated by the IISRP at around 5.9Mt

and 3.6Mt respectively in 2011. Within SBR, ESBR capacity was around 4.6Mt and

SSBR 1.3Mt.

Asia has the largest capacity for BR, at 1.9Mt (53% of total world capacity) followed by

North America with 0.6Mt (18%) and Europe with 0.6Mt (16%) (Figure 74). Chinese BR

capacity is almost 0.8Mt while Japan and South Korea have around 0.5Mt and 0.3Mt of

capacity respectively. Taiwan and Thailand are the other BR producers in Asia.

For ESBR, China had a capacity at end-2011 of 1.3Mt with other Asia at 1.2Mt, of which

South Korea accounts for 53% and Japan, Thailand, Taiwan and Indonesia the

remainder. North American and European/Middle-East/Africa capacity was 0.64Mt and

0.66Mt respectively. The next largest capacity is held by Russia, followed by South

America of which Brazil is the major regional producer.

SSBR capacity is much smaller than ESBR and North America and Europe are the

leading producers, with capacity of 0.43Mt and 0.29Mt respectively. China had a SSBR

capacity of 0.15Mt in 2011, which is lower than that of its neighbour Japan at 0.2Mt.

China 25%

Other Asia 26%

Central & South America

5%

North America 18%

Europe, Middle East & Africa

17%

Russia & CIS 9%


Roskill


There is a growing need worldwide for more SSBR capacity as demand is outpacing that

for ESBR.

Figure 74: World: Capacity for BR, ESBR and SSBR rubber by country/region,

end-2011

Source: IISRP

SBC capacity is estimated by the IISRP at 2.1Mt. SBC capacity is dominated by Asia,

with almost one-third of world capacity accounted for by China (Figure 75).

Figure 75: World: SBC capacity by region/country, end-2010

Source: IISRP

0

200

400

600

800

1,000

1,200

1,400

China Other Asia Central &South

America

NorthAmerica

EMEA Russia

BR ESBR SSBR

Europe 19%

North America 16%

South & Central America

4%

Russia 2%

China 31%

Other Asia 28%


Roskill


World production of synthetic rubber (which includes SBR, BR and SBC grades) has

shown strong growth since 2002, rising by 3.6%py to reach 15.6Mt in 2012 (Figure 76).

Growth has been centred in Asia, in particular in China where output increased by

12.6%py over the same period, to an estimated 3.7Mt in 2011. The global synthetic

rubber industry was badly affected by the global economic downturn of 2008/09 with

output falling across all regions, including in China where production dropped by 7%

year-on-year.

SSBR output has experienced growth above that for other synthetic rubbers because it

continues to replace ESBR in the tyre market. SBC has also shown strong growth

moving from a speciality elastomer in the 1990s to the third largest commodity synthetic

rubber produced in 2012 (behind ESBR and BR).

Figure 76: World: Production of synthetic rubber by region, 1996 to 2011 (000t)

Source: IRSG; Japan Rubber Manufacturers Association; China Statistical Yearbook Notes: 2011 extrapolated from H1 2011 data

14.2.1 Producers of polymers

Companies known to be producing SSBR, BR and SBC polymers are shown in Table

208. Major producers of SSBR include the tyre producers Firestone, Michelin and

Goodyear. Major BR producers include Sinopec, Kumho, Goodyear, PetroChina,

Lanxess, Firestone and LG Chem.

At end-2010, the seven largest producers of SBCs were Kraton, Sinopec, Lee Chang

Yung, Dynasol Elastomeros, TSRC, Chi Mei and Polimeri Europa, together controlling

over 70% of global production capacity, according to SRI Consulting.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

China North America EU

Other Asia/Oceania Japan Other Europe

South America Africa Others


Roskill


Table 208: World: Producers of SSBR, BR and SBC, 2012

Company Location Products

American Synthetic Rubber Louisville, (KY USA) BR, SSBR

APAR Industries Alkapuri, India SSBR

Asahi Chemical Japan BR, SSBR

BASF Altamira (Mexico), Antwerp (Belgium) and Ludwigshafen

(Germany)

SBC, BR

BST Elastomer Thailand SSBR, BR

CAROM Bucharest (Romania) SSBR, BR

Chi Mei Corp. Taiwan SSBR, BR

CNPC Petrochemical Jilin (China) BR

Dow Chemical Schkopau (Germany) Li-SSBR, BR

Dynasol Elastomers Altamira (Mexico), Santander (Spain), Liaoning (China)1

Li-SSBR, BR,

SBC

Efremov Kautschuk Russia Li-BR

Eliokem (Goodyear Chemical) Villejust (France), Valia (India), Ningbo (China) SSBR, BR

Firestone Polymers Orange (TX, USA), Lake Charles (LA, USA) Li-SSBR, SBC

Goodyear Tire and Rubber Beaumont & Houston (TX, USA) BR

Lanxess (Bayer) Orange (TX, USA), Port Jerome (France), Dormagen

(Germany), Cabo (Brazil)

Li-SSBR, Li-BR

JSR Corp Japan Li-SSBR, BR

Karbochem South Africa SSBR, BR

Kraton Polymers SBC

Kumho Petrochemical Yeosu (Korea) Li-SSBR, BR,

SBC

LG Chem South Korea SSBR, BR, SBC

Michelin Bassens (France) SSBR, BR

Nizhnekamskeneftekhim,

Russia

Nizhnekamsk (Russia) Li-BR

Mitsubishi Chemical Corp. Japan SBC

Nippon Zeon Japan SBC, SSBR, BR

Petkim Turkey BR

Petro China Daqing, Jinzhou and Dushanzi (China) BR

Polimeri Europe (Eni) Hythe (UK), Rawenna (Italy) SSBR, BR

Qenos Australia SSBR, BR

Reliance Industries India BR

Sinopec Various (China) SSBR, Li-BR

Synthos Kralupy nad Vltavou (Czech Republic) Nd-BR

Total Petrochemicals Antwerp (Belgium) SSBR

TSRC Kaohsiung (Taiwan), Rayong (Thailand), Nantong (China),

Plaquemine (USA)

SSBR, BR, SBC

Voronezh Syntezkauchuk

(Sibur Holdings)

Voronezh (Russia) SSBR, BR

Ube Industries Japan and Thailand BR Source: IISRP; www.rubberstation.com; Nomura Research Notes: 1-Under construction Li-BR & Li-SSBR – Companies known to be producing BR and SSBR using a lithium catalyst


Roskill


In December 2010, Sinopec started construction of a 60,000tpy lithium-initiated

polymers (SBC) project at Yeuyang, Hunan. This unit will comprise 40,000tpy of SIS

capacity and 20,000tpy of SEBS capacity and will take Sinopec’s total lithium-initiated

polymer capacity to 280,000tpy when commissioned in 2012. By 2015, Sinopec aims to

have the capacity to produce 1Mtpy of synthetic rubber, including 600,000tpy of lithium-

initiated polymers.

Several other new and expansion projects are underway to increase SSBR, BR and

SBC capacity (Table 209). Most of them are located in East Asia.

Table 209: World: Planned new/expanded SBR, BR and SBC plants

Company Plant Country Type Capacity

LG Chem Daesan South Korea BR 80,000

Sumitomo Jurong Island Singapore SSBR 40,000

Asahi Kasei Jurong Island Singapore SSBR 50,000

Zeon Jurong Island Singapore SSBR 40,000

Formosa Group Mailiao Taiwan SBR, BR1

355,000

Sibur Holding Voronezh Russia SBR, SBC2

388,000

Voronezhsintez Russia SBC 50,000

Lanxess Orange USA BR 50,0003

Port Jérôme France SSBR ...

Synthos Oswiecim Poland BR 80,000

Styron Schkopau Germany SSBR 50,000

Exxon/SABIC Keinya/Al-Jubail Saudi Arabia SBR, BR4

400,000

Dynasol-XinAn Pan-Jing China SBC 100,000

China North Pan-Jing China SSBR 100,000

Meizhou Chlor-Alkali Fujian China BR, ESBR 50,000

PetroChina Sichuan China BR 150,000

Shandong Yuhuang Shandong China BR 50,000

JSR/Bangkok

Synthetics

Rayong Thailand SSBR …

Source: China Rubber Notes: 1-Plus IR, IIR, EPDM & NBR 2-Plus ESBR & NBR 3-Includes additional capacity in Germany and Brazil

4-Plus NBR, EPDM, IIR and other products

14.3 Consumption of polymers

Total consumption of rubber (natural and synthetic) was 26Mt in 2011 according to the

IRSG and is predicted to surpass 27Mt in 2012. Synthetic rubber consumption was

13Mt in 2010, up from 11Mt in 2009, and is estimated to have reached 15.5Mt in 2012.

Asia is the leading consumer of synthetic rubber, accounting for 54% of total

consumption in 2010 or 7.6Mt. North America consumed a further 1.9Mt, or 15% of total

consumption. The USA is by far the largest consuming country in North America but

falls well behind China where consumption is estimated at 3.5Mt. The USA consumes


Roskill


less synthetic rubber than it produces and is a major exporter. Japan is the third largest

consumer of synthetic rubber, followed by Germany, Russia and Brazil. China imports

synthetic rubber from across Asia to satisfy its domestic demand and is estimated to

have imported 1.6Mt in 2010.

World consumption of rubber is forecast by the IRSG to reach 35.9Mt in 2020, of which

synthetic rubber will account for 19.4Mt.

SBR accounted for just over a third of world synthetic rubber consumption in 2012

(Figure 77). ESBR continues to lose ground to SSBR, which is better able to meet the

increasingly stringent specifications of high-performance tires. BR consumption was

around 21% of total synthetic rubber consumption whilst SBC accounted for 14%.

Figure 77: World: Consumption of synthetic rubber by type, 2012

Source: SRI Consulting, Roskill estimates

The tyre industry is the dominant consumer of SBR, accounting for 70% of output. SBR

is also used in conveyor belts, industrial hoses, various moulded and extruded rubber

goods, footwear and other consumer goods. Some grades of SBR, such as those that

are waterproof and free from impurities, are also utilised in the cable industry. Protective rubbers resistant to ƴ-radiation are also SBR-based.

SBR consumption has recovered strongly since the global economic downturn of

2008/09, particularly in China and some other Asian countries. China, the USA and

Europe together account for around two-thirds of total world SBR consumption. China

became the largest consumer in 2009, overtaking the USA. Growth in Chinese

consumption of SBR has been led by the domestic tyre industry.

SBR consumption is forecast to grow at around 5%py between 2010 and 2014

according to SRI Consulting, as a result of high demand in regions such as China, India,

Central and South America, Central and Eastern Europe (including Russia), and other

Asian countries. China is expected to drive much of the SBR demand going forward

given the large volumes consumed, at around 6%py.

SBR 37%

BR 21%

EPR 9%

IIR 8%

IR 5%

NR 4%

Other 2%

SBC 14%


Roskill


BR consumption is estimated to have increased by more than 8% between 2009 and

2010 to 2.8Mt. Tyre and tyre products represent the major use of global BR, accounting

for around 70% of consumption in 2010 (Figure 78). Modification of polystyrene (GP

and HIPS) resins and ABS resins together consume approximately 15% of total BR

output. Specialty applications for BR include carboxyl- and hydroxyl- terminated grades,

golf ball centres, non-tyre rubber products, and other specialty adhesives and binders.

BR consumption is forecast to grow at 4.0%py from 2010 to 2015, and 3.6% per year

from 2015 to 2020.

Figure 78: World: consumption of BR by end-use, 2010

Source: SRI Consulting, 2011

According to SRI Consulting, China was the leading consumer of SBC in 2010,

accounting for around a third of world consumption (Figure 79). The USA and Europe

accounted for around 23% and 19% of SBC consumption respectively, down from 30%

and 21% in 2007. Other large Asian consumers are Japan, South Korea and Taiwan.

Tires 70%

GP/HIPS 12%

ABS 4%

Other 14%


Roskill


Figure 79: World: Consumption of SBC by region/country, 2010


SBCs are commonly used as adhesives. SBCs are sometimes blended with numerous

other elastomers and polymers (such as natural rubber), SBR, or ethylene vinyl acetate

(EVA) to modify rheological properties or to create a degree of elastomeric character.

SBCs are also used for moulded rubber goods such as footwear and weather stripping,

impact resistance additives for plastic products, viscosity index modifiers and modifiers

for asphalt paving.

China is the leading footwear producer in the world, followed by India, and this industry

consumes large amounts of SBCs, predominantly SBS (Figure 80). In Europe, the

major market for SBCs is as an asphalt modifier, while the major US consumers are the

adhesives and sealants and asphalt modifier markets. In Japan, SBC is mainly used as

a polymer modifier.

Figure 80: Consumption of SBC by end-use, 2007


0 5 10 15 20 25 30 35

China

USA

W. Europe

Other Asia

Japan

C. & S. America

C. & E. Europe

Canada

Mexico

Other


Roskill


According to Transparency Market Research, global consumption of SBC is expected to

reach 1.9Mt in 2017, a CAGR of approximately 4% from 2012.

14.4 Consumption of lithium in polymers

The amount of butyllithium required to polymerise SSBR is typically 3kg per tonne. Total

production capacity for SSBR in 2010 was estimated at 1.2Mt with production closer to

1.1Mt. If 1.1Mt of SSBR was polymerised by butyllithium, total consumption of

butyllithium would have been around 3,300t (1,900t LCE). However, not all SSBR is

catalysed by butyllithium, with nickel, cobalt, neodymium, titanium and other rare metal

catalysts used as well.

The amount of butyllithium required to polymerise BR is on average 14kg per tonne.

Total production of BR in 2010 is estimated at 3Mt. If all BR was polymerised by

butyllithium, total consumption of butyllithium would be around 4,200t (2,420t LCE). BR

can also be catalysed by other metals, but to a lesser degree than for SSBR, and the

proportion of lithium to other metals depends on the finished product being produced.

Consumption of butyllithium in the production of BR is therefore likely to be less than

420t.

Finally, the amount of butyllithium initiator required to produce 1t of SBC is, on average,

8kg per tonne. Total production of SBC is estimated at 1.8Mt; therefore, if all SBC was

polymerised by butyllithium, total consumption of butyllithium would have been 14,400t

(8,300t LCE). Again, butyllithium is not the only catalyst used in SBC production, so

14,400t is likely to be the maximum.

Total consumption of lithium organics in polymer catalysis, largely butyllithium and other

organolithium compounds, is estimated at 13,000t (7,500t LCE) for 2012. Consumption

is estimated to have increased by 5%py since 2000, above the CAGR for synthetic

rubber of 3.1%py because of strong growth in SSBR and SBC production.

14.4.1 Outlook for lithium demand in polymers

SSBR and BR synthetic rubber production will largely be driven by trends in their major

end use market, tyres. BR consumption is forecast to increase by 4%py through 2015.

SSBR consumption is likely to increase at a much higher rate, and probably higher than

the 6%py estimated by SRI Consulting, perhaps at 8-10%py, given the on-going switch

by consumers from ESBR to meet the demands for higher performance tyres.

SBC production will largely be driven by trends in manufacturing and construction,

infrastructure and sales of footwear. SBC rubber production is forecast by SRI

consulting to increase by 4-5%py between 2010 and 2015. Demand for lithium in

polymers is forecast to continue increasing by 5%py, consistent with historical growth

patterns, and reach 9,600t LCE by 2017.


Roskill


If tyre production expands faster than is forecast, and the markets for SBC (such as

footwear, manufacturing and construction) do not mirror the current low GDP growth

outlook (3-3.5%py), lithium demand in polymers may increase to 10,800t LCE in 2017, a

CAGR of 7.5%py. However, if growth in tyre production is not as high as forecast, due

to lower demand for OEM and replacement tyres as a result of slower global economic

growth and increasing oil prices (which could reduce replacement volumes to less than

70%) synthetic rubber production could be significantly affected. The net result would

be lithium demand in polymers of only 8,500t LCE by 2017, an CAGR of 2.5%py.

Table 210: World: Forecast demand for lithium in synthetic rubber and

thermoplastics,

2011 to 2017

2012 2017 CAGR (%py)


Butyllithium1 (t C4H9Li) 13,000 14,700 16,600 18,650 2.5 5.0 7.5

Total2 (t LCE) 7,500 8,500 9,600 10,800 2.5 5.0 7.5

Source: Roskill estimates Notes: 1-includes other organolithium compounds 2-Rounded to nearest 100t


Roskill


15. Use of lithium in air treatment

Absorption chilling, dehumidification and carbon dioxide removal are estimated to

account for 5% of the lithium market, equivalent to 7,350t LCE of lithium, in 2012.

Lithium bromide is used as an absorption medium in CFC-free industrial absorption

refrigeration systems. Lithium chloride is used in industrial humidity control and drying

systems. Anhydrous lithium hydride and peroxide remove carbon dioxide from the air in

closed systems such as submarines and space shuttles. Emergency air packs issued to

underground miners use lithium hydroxide to absorb carbon dioxide.

15.1 Absorption chillers

Concentrated (54%) lithium bromide brine is widely-used as the absorption medium in

industrial absorption refrigeration systems. The principle is based on the latent heat

involved in the transfer of water between the vapour and the liquid phase. The solution

can be recycled almost indefinitely as lithium bromide is a stable compound.

The basic cooling system is the same for lithium absorption and traditional electric

compression technology. Both systems use a low-temperature liquid refrigerant that

absorbs heat from the water to be cooled and converts to a vapour. The refrigerant

vapour is then compressed to a higher pressure by a compressor or generator, and is

converted back to a liquid by rejecting heat to the external surroundings in the

condenser section. It is then expanded to a low-pressure mixture of liquid and vapour,

which boils in the evaporator section, absorbing heat and producing the cooling effect.

The cycle is repeated.

The primary difference between electric and absorption chillers is: electric chillers use an

electric motor to operate the compressor raising the pressure of refrigerant vapours,

whereas absorption chillers use heat to compress refrigerant vapours to a high pressure.

Heat is provided either in the form of waste heat from industrial apparatus, for example

steam or hot water from turbines and boilers, which are often referred to as “indirect

fired” systems, or by using an external source of energy such as natural gas, often

referred to as “direct fired” systems.

Absorption systems have higher primary energy requirements and higher initial costs

than electric chillers. They are therefore most cost-effective in applications where waste

heat is available in the form of steam or hot water, where electricity is not readily

available for summer cooling loads, or where high electricity cost structures (including

demand charges) make gas-fired absorption a lower-cost alternative.

As such, absorption chilling is mainly used where supplies of by-product waste heat are

available, such as in industrial facilities, hotels, universities, apartment blocks and

hospitals. Typically, units of 300 refrigerated-tonne capacity are used in large office

blocks or industrial units, and units two to three times as large are used in high-rise

residential buildings.


Roskill


Absorption chillers are increasingly being used for cooling where combined heat and

power (CHP) systems are utilised. A single plant can now produce cold air, hot air and

power simultaneously and cost effectively.

15.1.1 Production of absorption chillers

At the end of the 1940s, a single-effect residential absorption chiller using lithium

bromide was first marketed in the USA. The first commercial/industrial units started to

appear in the 1950s. By the mid-1960's, US manufacturers had 100% of the world

market for absorption chillers using the standard single-effect method. In the late 1960s,

Kawasaki successfully developed the double-effect absorption chiller and Japanese

production subsequently grew. The technology for double-effect chillers was licensed by

Japanese companies to producers in the USA.

In the USA, from the late 1980s to the mid-1990s, the use of absorption chillers

increased as a result of relatively low gas prices, CFC phase-outs, and gas utility

rebates. However, as gas prices increased, deregulation became a factor, and the

commercial replacement market slowed down along with the economy. As a result

absorption chiller markets in the USA dropped sharply.

In 2001, the Japan Air Conditioning, Heating & Refrigeration News (JARN) estimated the

world market for absorption chillers of >100 refrigeration-tonne capacity at US$549M,

divided between China (52% of demand), Japan (21%), USA (7.8%), Korea (6.5%) and

others (12.7%). Total production was 6,539 units, with Asia the largest producer

followed by Europe. Chillers with <100 refrigeration-tonne capacity generally use

ammonia in place of lithium bromide.

In 2005, JARN reported worldwide demand for absorption chillers at 7,500 units, with

BSRIA reporting a market value (for units >100 refrigeration tonne) at US$710M in 2007.

In 2005, a JARN report also indicated the trend for >350kW (>100 refrigeration-tonne)

absorption chillers is mainly confined to the East Asia with China (4,000 units), Japan

(1,600) and Korea (900) leading demand.

BSRIA estimate the total air conditioning market at US$85Bn and 118.2M units as of

end-2011, meaning absorption chillers account for only a very small part of the market,

perhaps 1% in value terms and much less than 1% in volume.

Japanese production of absorption-type refrigerators increased by 14% between 2005

and 2006 but dropped by a similar amount to 3,309 units in 2007, due to attempts to

reduce carbon dioxide emissions by using electric powered compression or screw

chillers instead of gas. Output has continued to fall, and was 2,563 units in 2011, down

2% on 2010. Production is expected to remain similar in 2012.

The total market for chillers in Europe in 2010 was around 55,000 units, according to

JARN, with a value of US$1.7Bn. These were mostly electrically driven compression

units, and absorption chillers accounted for only around US$63M or 3.7% of sales.

Since nearly all these were in the medium to large size range (above 100 kW), in volume


Roskill


terms the market for absorption chillers was 1% at the most, or 300 units. Of this, an

estimated 10% were sold in Germany.

Roskill estimates total shipments of absorption chillers in 2012 to have been around

10,000 units, a CAGR of 3.9% from the 6,539 units produced and sold in 2001 (Figure

81).

Figure 81: World: Production of absorption chillers1, 2003 to 2012 (No. units)

Source: Roskill estimates Note: 1-Absorption chillers over 100 refrigeration-tonne capacity

In 2011, Global Industry Analysts forecast the worldwide market for absorption chillers

could reach US$924M by 2017, prompted by rising environmental concerns,

requirements for low cost, high efficiency cooling systems, and the need to contain

spiraling electricity charges. The major growth area will be Asia Pacific, led by China,

India and Korea. Waste heat and combined heat/power installations are the main

drivers. By contrast, centrifugal and scroll compressors will continue to dominate the

industry in Europe and the United States.

In volume terms, Roskill forecasts absorption chiller shipments to continue to grow at

3.5-4.0%py, reaching around 11,800 units in 2017.

15.1.2 Producers of adsorption chillers

Reflecting patterns in development and demand for absorption chillers, producers are

mainly located in China, Japan, South Korea and the USA. There are also some

producers in Europe who manufacture smaller units, but these are mostly ammonia-

water systems and not lithium bromide-water systems. Major producers are profiled

below.

0

2,000

4,000

6,000

8,000

10,000

12,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

China Japan S. Korea Other


Roskill


China

Shuangliang Eco-Energy Systems produced its first lithium bromide absorption chiller

in 1985 and is the only publically-listed producer of such products in China. The

company markets direct and indirect (e.g. hot water, steam and flue gas) -fired lithium

bromide absorption chillers to the Chinese and export market. The company is a joint

venture between Jiangsu ShuangLiang Group and Teling Company of the USA, and its

products are marketed by Trane.

Zhejiang Lianfeng Refrigeration Machine produces a mechanical and electrical

integration direct-burning style lithium bromide air chiller in Zhejiang.

Broad Air Conditioning is a privately-owned Chinese company established in 1988 and

headquartered in Changsha, Hunan province. The company is thought to be the world's

largest manufacturer of double-effect absorption systems with a 3,000 unit production

line producing absorption chillers between 100 and 2,600 refrigeration-tonne capacity.

Broad's primary product is a direct fired lithium bromide absorption chiller/heater called

“Spectrum”. Double-effect indirect steam and hot water or waste heat driven units are

also produced.

USA

York International, a Johnson Controls company, manufactures absorption chillers in

Houston, Texas. York has the only large tonnage absorption chiller manufacturing plant

in the USA.

Trane, an Ingersoll Rand company, has been manufacturing absorption chillers since

the 1950s. The newest line, the Trane Horizon® two-stage steam-fired absorption water

chiller is the only line of two-stage absorption products designed, built and supported in

the USA.

Yazaki Energy Systems produces gas fired and water fired (i.e. using hot process

water from industrial plant or solar plant) lithium bromide adsorption chillers in Texas.

The company has over 10,000 units in operation worldwide.

India

The absorption cooling division of Thermax, part of the Thermax Group, pioneered

vapour absorption technology in India and offers global solutions for industrial cooling

and air conditioning. Thermax produces hot water, fuel and steam driven absorption

chillers. The company has a technical collaboration with Kawasaki in Japan.

South Korea

CHP Solution (previously Cention Corporation) is a manufacturer of absorption chillers

in South Korea. The company’s main product is a 30-525 refrigeration-tonne (105-1845

kW) hot water driven absorption chiller.


Roskill


LG Machinery produces both single- and double- effect absorption chillers (direct fired

and hot water/steam driven indirect fired) with 100-200 refrigeration-tonne capacities.

Kyung Won Century manufactures double-effect steam absorption chillers in the range

of 80-1,500 refrigeration-tonne capacity. They also produce direct fired double-effect

absorption chillers from 20-1,500 refrigeration-tonne capacity.

Japan

Sanyo entered the absorption chiller market in 1971 and after 3 years became one of

the leading producers in Japan. The company produce a double-effect direct fired

absorption chiller/heater in the cooling capacity range of 100-1,500 refrigeration-tonne, a

double-effect hot water absorption chiller in the cooling capacity range of 30-526

refrigeration-tonne and a double-effect steam absorption chiller in the cooling capacity

range of 100-1,500 refrigeration-tonne. Carrier of Syracuse, New York, is a division of

United Technologies and markets water and steam fired single effect absorption chillers

and direct and steam fired double effect absorption chillers produced by Sanyo in Japan.

Ebara Refrigeration Equipment & Systems of Tokyo started manufacturing lithium

bromide absorption chillers in 1963, the company produces single- and double- effect

absorption chillers.

Other producers in Japan include Mitsubishi Heavy Industries, Daikin, Takuma,

Toshiba, Hitachi Appliances and Kawasaki Heavy Industries, which has ties with

Matsushita Electric. McQuay International, a division of Daikin Industries of Japan, sells

absorption chillers produced by Daikin in Japan to the US market.

Europe

Entropie of France/Germany manufactures absorption chillers in the capacity range

from 300kW (100 refrigeration-tonne) to more than 6,000kW (2,000 refrigeration-tonne).

Robur provides small direct fired chiller and chiller-heaters (natural or propane gas fired)

with 3, 4 and 5 tonne capacities.

A number of companies in Europe are developing small (<100kW) chillers for the home

market and chillers which use solar heated water; these include Schuco, Rotartica,

Abakus, Sonnenkilma, EAW, Climatewell and Pink. However, most of these

companies use ammonia instead of lithium bromide as the absorbent.

15.1.3 Producers of lithium bromide for absorption chillers

Lithium bromide is produced by reacting lithium carbonate with hydrobromic acid.

Lithium bromide is used almost exclusively in absorption chillers.

Lithium bromide is produced by only a few upstream integrated lithium companies,

notably FMC Lithium and Rockwood Lithium (Table 211). The remainder of output is


Roskill


from bromine-related chemical companies, such as Dead Sea Bromide or Perekop

Bromine, other chemical companies producing specialist chemicals, and some of the

absorption chiller manufacturers themselves who have integrated upstream, including

Shuangliang Eco-Energy and Broad AC in China. Capacity for the production of lithium

bromide as of end-2012 was estimated at 34,500t LiBr (14,700t LCE). These

companies use lithium carbonate, or recycle waste lithium bromide solutions.

Table 211: World: Capacity for lithium bromide production, end-2012 (t LiBr)

Company Plant location Capacity

Hanchang Hwangsun-gun, South Korea 6,000

Dalian Honjo Dalian, Liaoning 6,000

Dead Sea Bromide Ramat Hovav, Israel 5,000

Broad Air Conditioning Changsha, Hunan 3,000

FMC Lithium Bessemer City, NC, USA 3,000e

Rockwood Lithium Kings Mountain, NC, USA 2,000e

Honjo Chemical Naoshima, Japan 2,000e

Honshu Chemical Honshu, Japan 1,000e

Perekop Bromine Krasnoperekopsk, Ukraine 1,000e

Shuangliang Eco-Energy Ligang, Jiangsu 2,000

Nanjing Taiye Nanjing, Jiangsu 1,000e

Other Various 2,500e

Total 34,500 Source: Company and Roskill estimates Note: e=estimated

Iron or ferrous-based metals in the absorption chiller steel shell and the copper or

cuprous-based metals of the heat transfer tubes react with oxygen and corrode under

varying conditions. Different lithium chemicals have been used to protect the steel shell

and heat transfer tubes including:

Lithium hydroxide

Lithium nitrate

Lithium chromate

Lithium arsenate

Lithium molybdate

Lithium hydroxide modifies the solution's pH and alkalinity while other lithium chemicals

are specific inhibitors mainly designed to protect the ferrous metals. These chemicals

are often added to the lithium bromide prior to use. FMC Lithium sells five lithium

chemical corrosion inhibitors under the ADVAGuard® brand name.


Roskill


15.1.4 Consumption of lithium in absorption chillers

A 100 refrigerated-tonne absorption chiller is estimated to contain 700kg lithium bromide

(300kg LCE), while a 1,250 refrigerated-tonne unit is estimated to contain 3,600kg

lithium bromide (1,550kg Li).

Roskill estimates that production of absorption chillers in 2012 was around 10,000 units.

Assuming the average chiller produced has a capacity of 250 refrigerated-tonnes and

consumes an average of 1,500kg of lithium bromide, total consumption of lithium

bromide in 2012 was around 15,000t (6,375t LCE). Consumption has probably

increased at a similar rate to overall absorption chiller production, or around 3.9%py

(Figure 82).

Figure 82: World: Consumption of lithium bromide in air treatment, 2001 to 2012


Consumption of lithium bromide in Japan has fallen from 3,300t (1,400t LCE) in 2000 to

2,000t (850t LCE) in 2012 (Table 212). Between 2003 and 2008, consumption remained

fairly stable at around 2,700tpy as output of absorption chillers remained flat, but lower

output since 2009 due to competition from Chinese producers has caused consumption

to fall in recent years.

Table 212: Japan: Consumption of lithium bromide, 2007 to 2012

2007 2008 2009 2010 2011 2012

Lithium bromide (t) 2,700 2,800 2,500 2,000 2,000 2,000

Total (t LCE) 1,150 1,190 1,060 850 850 850 Source: Roskill’s Letter from Japan Nos. 381 & 432

In addition to demand for lithium bromide in new absorption chillers there is demand for

replacement absorbents in old chillers. The life of an absorption chiller is between 15

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Ab

so

rpti

on

ch

ille

r p

rod

uc

tio

n (

No

. u

nit

s)

an

d lit

hiu

m b

rom

ide

co

ns

um

pti

on

(t

LiB

r)

Lithium bromide consumption in new units

Lithium bromide consumption for absorbent renewal

Chiller production


Roskill


and 20 years and the frequency of replacement of the absorbent is around every 5

years. The number of absorption chiller units in use worldwide is unknown but is

probably around 120,000 units. However, recycling of old lithium bromide absorbent is

common and therefore the additional requirement for lithium bromide in servicing older

units is estimated at 10% of total consumption. Consumption of lithium chemicals to

prevent corrosion in absorption chillers is estimated at less than 5t LCE per year.

15.2 Dehumidification

Desiccant dehumidification systems are widely-used in industrial, commercial and

institutional environments where humidity control is a concern and low humidity has an

economic benefit. Examples include photographic processing, laboratories, food

processing and pharmaceuticals manufacturing.

A desiccant dehumidifier uses a drying agent, or sorbent, to release water from air.

Desiccants can work in conjunction with chillers or commercial air conditioning systems

to significantly increase overall system energy efficiency, by avoiding over-cooling and

reheating air. Desiccants can run off the waste heat from distribution generation

technology, with system energy efficiency reaching 80% in combined heat and power

(CHP) plants.

The desiccant process involves exposing the desiccant material (silica gel, activated

alumina, lithium chloride salt or molecular sieve) to a moisture-laden air stream.

Allowing the sorbent to extract and retain heated regeneration air streams drives off the

retained moisture from the desiccant.

A solid desiccant dehumidifier is usually placed on the surface of a corrugated matrix in

a wheel that rotates between the process and regenerated air streams. The desiccant

removes moisture from the air while releasing heat (resulting from the sorption process)

into the process airstream. As the wheel rotates onto the regeneration side, natural gas,

waste heat or solar energy can be used to regenerate the desiccant material.

Liquid desiccant dehumidifiers spray the process air with a regenerated desiccant

(lithium chloride and glycol solutions) to remove the moisture in a conditioner. The

diluted desiccant solution is pumped to a separate refrigerator and heat is applied to the

solution to release the absorbed water into an exhaust air system.

Lithium chloride is an extremely powerful absorbent and is one of the most economical

systems on an operating cost basis. Advantages include:

Moisture removal capacity: Lithium chloride can attract and hold over ten times its

weight in water and is one of the most hygroscopic compounds in existence. It

has the best moisture removal capacity over a very broad range of inlet air

conditions.

Bacteriostatic: The bacteriostatic properties of lithium chloride can significantly

reduce the number of organisms which may be carried in the air stream.


Roskill


Stability: As a salt having very stable chemical qualities, lithium chloride is not

dependent on a pore system for its water absorption capability. Lithium chloride is

unaffected by most air stream pollutants and resistant to many contaminants like

petroleum vapour, solvents and phenols.

Efficiency: The ability of the lithium chloride to both absorb and release large

amounts of water from a small amount of desiccant creates a tremendous drying

capacity. Thus for each unit of energy input, a greater percentage goes to the

useful work of removing water rather than heating and cooling the structure.

However, if exposed to high relative humidity air without sufficient regeneration, lithium

chloride rotors will deliquesce, a phenomenon whereby the desiccant over-adsorbs

moisture to the point where damage occurs. If it is not regenerated, the lithium chloride

will continue to absorb moisture until it becomes such a weak solution that it can drain

out of the matrix. The combination of water weight and the soaking effect can also

destroy the structural integrity of the matrix.

In addition, lithium chloride is not flame proof and can cause desiccation contamination

carryover, a process where lithium is released into the air and settles on ferrous

surfaces, subsequently causing corrosion.

15.2.1 Production of desiccant dehumidification systems

Lithium chloride was first used as a liquid desiccant dehumidifier in the 1940s. The

lithium chloride desiccant impregnated honeycomb wheel was introduced by Cargocaire

Engineering and Munters in the 1960s and provided engineers with a new type of

dehumidifier with a tremendous capacity for moisture absorption. In the 1980s and

1990s however, new desiccants were developed using silica gel, activated alumina,

titanium dioxide or the molecular sieve and have largely replaced lithium chloride as the

desiccant of choice. Munters, of the USA, indicate that lithium chloride as a desiccant in

dehumidifiers is now restricted mainly to specialist industrial applications where

resistance to contamination is needed. They also indicate there is some demand for

replacement lithium chloride disks for older machines, but that this is now very small.

15.2.2 Producers of desiccant dehumidification systems

Munters, of the USA, is thought to be only company producing rotary desiccant

dehumidifiers based on lithium chloride. Other companies that used to produce lithium

chloride-containing dehumidifiers have converted to using other desiccants, mainly silica

gel. Munters indicated that lithium chloride desiccant dehumidifiers comprise less than

10% of its sales.

Kathabar, of the USA, produces industrial dehumidification systems using Kathene®, a

lithium chloride brine solution that dehumidifies or humidifies the air as necessary.


Roskill


FMC Lithium produces the LIMIT® range of lithium chloride solutions for

dehumidification.

15.2.3 Consumption of lithium in desiccant dehumidifiers

Total desiccant demand for rotor materials was estimated by HB Engineering at 2,500m3

in 2008. Of this total, 85% is silica gel. Assuming lithium chloride comprised 10% of

desiccant demand, total demand for lithium chloride would have been 105m3 or around

220t (190t LCE). Lithium chloride demand for other dehumidifiers was estimated at

around 50t (43t LCE) in 2008. Consumption in 2012 is estimated to have fallen to

around 200t LCE, as lithium chloride’s market share falls, especially as old units are

replaced.

15.3 Air purification

There are many methods of removing carbon dioxide from a closed or semi-closed

breathing atmosphere including chemical (chemisorption), physical (absorption and

adsorption) and mixed methods. In chemical methods, carbon dioxide is removed with

the use of alkali hydroxide substances.

Lithium hydroxide is used in breathing gas purification systems for spacecraft,

submarines, and rebreathers, such as those used in underground mines for

emergencies. These systems remove carbon dioxide from exhaled gas by producing

lithium carbonate and water:

2LiOH·H2O + CO2 → Li2CO3 + 3H2O

Anhydrous lithium hydroxide is preferred for its lower mass and lesser water production

for respirator systems in spacecraft. 1 gram of anhydrous lithium hydroxide can remove

450cm3 of carbon dioxide gas:

2LiOH + CO2 → Li2CO3 + H2O

Even better materials are lithium peroxide (Li2O2) and lithium superoxide (LiO2) that, in

presence of moisture, besides absorbing carbon dioxide to form lithium carbonate, they

also release oxygen back into the atmosphere:

2Li2O2 + 2CO2 → 2Li2CO3 + O2

The process is irreversible, so in applications where several days of carbon dioxide

removal are required, such as on the space shuttle, regenerative carbon dioxide removal

systems are used instead because the weight of lithium hydroxide required would be

prohibitive.


Roskill


Consumption of lithium in air treatment is estimated at around 100t LCE. Companies

producing carbon dioxide absorption equipment include ExtendAir of the USA.

Hamilstrand Sundstrand, also of the USA, used to use lithium hydroxide but now uses

a metal oxide canister regeneration system. Rockwood Lithium produces lithium

hydroxide and peroxide for air treatment purposes, and EPSI Metals sells high purity

lithium hydride.

15.5 Outlook for demand for lithium in air treatment

Demand for absorption chillers comes mainly from large industrial and commercial

buildings, such as manufacturing and power plants, schools, hospitals and offices, as

well as large residential buildings. Industrial, commercial and residential development

expanded strongly in the mid-2000s, particularly in emerging economies and especially

in China. There has also been an increased focus on indirect-fired absorption chillers as

a means to reduce energy demand and CO2 emissions by using them instead of electric

chillers where waste heat is available. Sales of direct-fired absorption chillers, which use

natural gas or other fossil fuels, are slowing as users seek to reduce their CO2

emissions.

Potential new markets for absorption chillers include their use in combination with solar

powered hot water production and the residential market, where electricity supply

security is becoming a concern but where natural gas may be available. Growing shale

gas supplies could also boost direct-fired absorption chillers, especially if natural gas is

available at low cost.

The use of lithium in desiccant dehumidifiers is now restricted to niche industrial markets

as silica gel and other desiccants have replaced lithium chloride. In addition, older

equipment has been upgraded to use newer desiccants so replacement demand is also

declining. There is potential for increased use of lithium chloride desiccants in solar

powered refrigeration units which utilise dehumidifiers, although these are more likely to

use silica gel or similar.

The use of lithium hydroxide for carbon dioxide removal is also restricted to niche

markets such as space travel, submarines and for emergency ventilation. Lithium has

been largely replaced by regenerative systems in this market.

Demand for lithium in air treatment is forecast to increase by 3.5%py to 8,700t LCE in

2017 in the base case scenario (Table 209). The base case envisages continuing

growth in demand for absorption chillers using lithium bromide, a stable for market

lithium chloride desiccants, a slight growth in demand for lithium hydroxide for carbon

dioxide removal and a small increase in lithium chemicals demand for corrosion

prevention in lithium bromide systems.

Solar powered refrigeration technology using absorption chillers and desiccant

dehumidification systems, where both systems use lithium, could increase demand by

5.0%py to 9,350t LCE by 2017. However, if direct-fired absorption chillers are replaced

by electric compressors, and lithium chloride desiccants are further replaced by


Roskill


competitive desiccant materials in the few remaining applications, demand for lithium in

air treatment could alternatively rise by only 2.0%py to 8,100t LCE by 2017.

Table 213: World: Forecast demand for lithium in air treatment, 2012 to 2017

2012 2017 CAGR (%py)


Lithium bromide (t LiBr) 16,665 18,400 19,790 21,270 2.0 3.5 5.0

Lithium chloride (t LiCl) 210 195 210 225 -1.5 0.0 1.5

Other (t LCE) 100 110 120 130 2.0 3.5 5.0

Total (t LCE) 7,350 8,100 8,700 9,350 2.0 3.5 5.0 Source: Roskill estimates


Roskill


16. Use of lithium in primary batteries

Primary batteries provide a significant market for lithium metal as well as lithium salts,

and are estimated to account for just under 2% of total lithium consumption in 2012, or

2,500t LCE.

16.1 Types of primary batteries

Primary batteries are assembled with high-energy content compounds and the stored

chemical energy is withdrawn as electrical energy at a later time. Once discharged,

primary batteries cannot be recharged. Primary batteries are lightweight and have high

energy density.

There are a wide variety of primary batteries produced; the most common for consumer

electronic applications are the alkaline and zinc-carbon varieties. Lithium is widely-used

in primary cells which require a high energy density, especially when there are weight or

size constraints. Lithium is also commonly used when the current drain is very small,

such as in calculators and pacemakers, and lithium primary batteries are commonly

distinguished by their button- or coin- like appearance. The main disadvantage of

lithium primary batteries has been the high cost compared to other primary batteries.

However, as unit costs have fallen, cylindrical lithium primary batteries have begun to

replace alkaline and zinc-carbon batteries for use in consumer electronics, as users

seek to boost product performance through extended battery life.

Lithium primary batteries offer greater specific energy than other forms of primary

batteries and are only exceeded by zinc-air types in energy density (Figure 83).

Figure 83: Specific energy and energy density of primary batteries

Source: Watts, 2004


Roskill


Lithium is the lightest metal and has the highest electrochemical potential of all metals.

These properties give lithium the ability to achieve very high energy and power

densities, enabling batteries to have a very long useful life in small cell packages. As

lithium reacts violently with water, as well as nitrogen in air, lithium batteries need to be

sealed. High-rate lithium cells build up temperature and pressure if they are short-

circuited or abused. The cell design therefore needs to include safety vents, which

release the pressure or rupture to prevent explosion.

Lithium primary batteries can operate over a wide temperature range of -60ºC to 160ºC.

Cell voltages generally range between 1.5V and 4V and cell forms include coin cells and

cylindrical packages. Thin film cells based on ceramic or flexible substrates are also

available.

Advantages of lithium primary batteries are:

high energy density (double that of premium alkaline batteries)

low weight

high cell voltage

flat discharge characteristics

low self discharge

very long shelf life

very long operating life (15 to 20 years for lithium-thionyl chloride)

wide operating temperature range

excellent durability

small cell size

The most widely-used primary lithium battery systems in terms of value are lithium-

manganese dioxide (50% market share in 2010) and lithium-thionyl chloride (30%);

these and other less common types are compared in Table 214 and discussed below.

Table 214: Characteristics of primary lithium batteries

Li-MnO2 Li-SO2 Li-SOCl2 LiCFn LiCFx LiFeS2

Energy density:

-Gravimetric (Wh/kg) 150-250 240-280 250-400 200-300 >700 250-350

-Volumetric (Wh/l) 500-650 350-450 600-900 500-600 700-1000 400-500

Temperature range (°C) -20 to 60 -55 to 70 -55 to 150 -20 to 60 -60 to 160 -40 to 60

Shelf-life (years) 5-10 10 15-20 15 15 10-15

Safety Yes No No Yes Yes Yes

Env. impact Mod. High High Mod. Mod. Mod.

Price/performance Fair Good Fair Fair Good V.Good Source: Contour Energy Systems

Lithium-manganese dioxide batteries are the most widely-used non-rechargeable

lithium batteries. They comprise a lithium foil anode, a manganese dioxide cathode and

a separator sheet impregnated with electrolytic salt. The cell voltage is 3V.

Lithium-sulphur dioxide batteries have cell voltages of 2.8V and are used almost

exclusively in military and aerospace applications. Their main advantage is the ability to


Roskill


deliver high current, especially in low temperatures. The electrolyte is kept in a liquid

state by maintaining two atmospheres of pressure within the cell, and cells are vented to

prevent over-pressurisation. As a result, service life and energy density are typically

less than half those shown by lithium-thionyl chloride cells.

Lithium-thionyl chloride batteries have the highest density of all commercial lithium

primary cells, at 3.6V, and a service life of up to 15 to 20 years. They are suitable for

applications requiring very low continuous current and/or moderate pulse currents.

Markets lie in life-saving equipment such as automatic external defibrillators which must

be ready for use at all times without risk of battery failure. The batteries are available as

bobbins or spirally wound.

Lithium-polycarbon monofluoride batteries have a cell voltage of 2.8V and moderate

energy density. Cylindrical types are manufactured with a spiral cathode for higher rate

capability. Though generally safe, under extreme temperature and humidity conditions

the seal can break, allowing the cell to fail due to loss of the low-vapour point electrolyte.

Lithium-iodine batteries have excellent stability and long life. They use only solid

components and the separator is self-sealing if cracks occur. High internal impedance

limits their use to low-drain applications, however. The largest market lies in implanted

cardiac pacemakers.

Lithium-iron disulphide batteries were designed as a drop-in replacement for zinc-

carbon or alkaline types. They are often called ‘voltage compatible’ lithium cells (at

1.5V) but have a higher energy density than zinc-carbon and alkaline types. The cells

comprise a lithium foil anode, an iron disulphide with aluminium cathode and a separator

sheet impregnated with electrolyte salts.

Lithium primary batteries currently offer greater energy density than both lithium-ion

rechargeable batteries and alkaline primary batteries (Figure 84). In addition, under load

conditions, such as when used in digital cameras, lithium primary batteries are superior

to alkaline primary batteries. The use of iron disulphide cathode material, which is

cheaper than manganese dioxide, has enabled them to compete with alkaline and zinc-

carbon alternatives.


Roskill


Figure 84: Primary and secondary battery gravimetric energy density

Source: www.batteryuniversity.com

Although this section strictly considers primary lithium batteries, versions are also

available that are rechargeable. Rechargeable lithium “primary” batteries (as opposed to

lithium-ion batteries, see Section 8) use lithium metal or a lithium alloy as the anode.

These have a variety of different sub-chemistries in the cathode, including

manganese/lithium, niobium/lithium, molybdenum-ozone/lithium-silicon, lithium/

magnesium, lithium/titanium, lithium/manganese oxide, lithium/silicon alloy,

lithium/titanium-cobalt and lithium/vanadium pentoxide. The batteries have very limited

capacity and therefore are suitable primarily for use as back-up power supplies in

devices that obtain their main power elsewhere, e.g. real time clocks in mobile phones

and digital cameras, as well as in certain other applications including digital watches,

laptops and keyless entry systems.

16.2 Production of lithium primary batteries

Lithium primary batteries were first commercialised in the early 1970s but did not come

into widespread use until 1981. Around 30 commercialised electrode couples and over

1,000 specific designs are now available. Commercial lithium primary batteries vary

widely in size and configuration. The largest batteries produced, giant lithium-thionyl

chloride systems, are used to provide remote power to missile silos. Tiny lithium-sulphur

dioxide button cells are among the smallest commercial systems and used in

implantable hearing aids. Microscopic prototype lithium primary battery semiconductors

can also be fabricated.

BCC Research estimated the primary lithium battery market in 2008 to have been worth

US$1.1Bn, although Frost & Sullivan estimated the value of the market in 2009 at

US$1.3Bn, up from US$820M in 2003. The market is now probably worth around

US$1.5Bn.

In volume-terms, total production of lithium primary batteries is estimated to have

increased from just over 1.9Bn cells in 1998 to 4.2Bn in 2008 (Figure 85), a CAGR of


Roskill


8.4%py. Production since 2005 is estimated to have increased by 9.5%py, as global

economic growth accelerated and as cylindrical lithium primary batteries began to take

further market share from alkaline and zinc-carbon types. Output fell in 2009 to just over

4Bn cells, but has since recovered with production estimated at 4.8Bn cells in 2012.

China and Indonesia are the largest producers, each accounting for around 25% of

global output. Japan, the largest producer until 2011, now accounts for only 19% while

Europe accounts for a further 12% and the USA 8%.

In Europe, the European Portable Battery Association estimated total portable lithium

primary battery production in 2009 at 465M cells. However, output in 2009 was probably

reduced from normal levels given the global economic recession of 2008/09, with output

in 2008 and 2011 probably closer to 550M cells.

Canadian sales of lithium primary batteries totalled 9.3M units in 2010, weighing 149t

(or 16g per cell), up from 6.1M in 2006, a CAGR of 11.4%.

Figure 85: World: Production of primary lithium batteries by country, 1998 to 2012

(M cells)


Production of primary batteries in Japan is estimated to have totalled 3.05Bn cells in

2012, down 40% from the peak year of 2000 when almost 5.2Bn cells were produced

(Table 215). Production of primary lithium batteries reached a high of 1.35Bn cells in

2007, but despite rising slightly in 2010 after the 2008/09 global economic downturn,

output in 2012 is forecast to drop to 15% to below 1998 levels. The reason for the

decline was roughly 50% of Japanese production in 2011 was for export, and Japanese

producers have lost market share as a strong Yen makes those primary batteries

produced elsewhere in Asia more competitive in the export market, even leading some

Japanese companies to move production off-shore.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Japan China Indonesia USA Europe Other


Roskill


Table 215: Japan: Production of primary batteries by type, 1998 to 2012 (M cells)

Year Zinc-carbon Alkaline Zinc-silver Lithium Others Total

1998 1,650 1,485 935 901 46 5,016

1999 1,536 1,631 877 966 50 5,060

2000 1,337 1,643 994 1,155 48 5,177

2001 1,195 1,501 952 1,000 49 4,697

2002 1,142 1,422 988 1,099 81 4,732

2003 943 1,434 1,008 1,132 67 4,584

2004 831 1,318 1,000 1,196 158 4,502

2005 700 1,319 955 1,195 256 4,425

2006 677 1,288 876 1,330 239 4,412

2007 506 1,362 874 1,348 227 4,317

2008 275 1,542 830 1,273 112 4,031

2009 174 1,367 724 1,073 47 3,386

2010 159 1,303 869 1,194 37 3,562

2011 -1

1,402 1,059 1,037 -1

3,498

20122

-

1,082 914 887 1663

3,049 Source: Battery Association of Japan, 2012 NoteS: 1-Recorded in “zinc-silver oxide” in 2011

2-Extrapolated from January-October 2012 data 3-Includes zinc-carbon from 2012

16.2.1 Producers of lithium primary batteries

Leading producers of lithium primary batteries include the following companies:

Company Location (headquarters only)

Guangzhou Markyn Batteries China

Wuhan Li Xing China

Wuhan HCB Technology China

Great Power Battery China

EVE Energy China

Saft (including Tadirian) China, France, Germany, Israel, UK,

USA

Varta France, Germany, Singapore, UK

Gold Peak (GP) Batteries Hong Kong, Singapore, China

New Leader Battery Hong Kong, China

Panasonic (including Sanyo) Japan, Indonesia

Hitachi Maxell Japan

Toshiba Battery Japan

Seiko Japan

Sony Japan, Indonesia

Vitzrocell South Korea

Xeno Energy South Korea

L&P Co. South Korea

Renata Switzerland

Synergy ScienTech Taiwan


Roskill


Ultralife Batteries/ABLE USA/China

Sprectrum Brands (Rayovac, Baowang) USA

Greatbatch USA & Mexico

Duracell (a Proctor & Gamble company) USA

Energizer (Eveready) USA, Indonesia

In 2013, Panasonic (which took over Sanyo in 2011) will move production of primary

lithium batteries from Osaka, Japan to a new factory in Indonesia in order to increase

production and reduce costs. The new factory, which will start operation in 2013, will

have an annual production capacity of 350M units. Panasonic’s primary lithium-

manganese dioxide battery (often referred to as CR series) production capacity will grow

by 70% to approximately 850M units after the completion of the Indonesian plant and the

company is targeting 40% global market share for these batteries. Although Panasonic

will maintain production sites in Japan and the USA, the Indonesian site will now be its

major plant. Panasonic is also the world’s largest producer of higher-value lithium-

carbon monofluoride cells, with a 50% market share.

Since its merger with Sanyo, Panasonic has become the leading supplier of

rechargeable lithium-manganese dioxide coin-type batteries with a 60-70% market

share; the other major producers of these batteries are Seiko and Hitachi Maxell. The

latter doubled its production capacity for coin-type lithium-manganese dioxide batteries

in Ono, Hyogo prefecture in 2005 to 4.5M cells a year. Hitachi Maxell also has capacity

to produce 30M other lithium primary batteries a year at two plants at Ibaraki, Osaka and

Ono, Hyogo in Japan.

Vitzrocell is the largest producer of lithium-thionyl chloride batteries in South Korea, with

a capacity of 40M cells per year, and claims to be the second largest supplier of lithium-

thionyl chloride batteries behind Saft/Tadiran. Other producers in South Korea include

Xeno Energy and L&P.

Saft is one of the leading producers of lithium primary batteries with operations

worldwide, and a reported 20% market share of the primary lithium battery market (by

value). A subsidiary company, Tadiran Batteries, has plants in Germany and Israel.

Saft produces lithium-thionyl chloride (LS, LST, LSX), lithium-sulphur dioxide (LSH, LO,

G) and lithium-manganese dioxide (LM) series. Other major European manufacturers

include Varta and Renata, the latter producing over 365M cells a year from its plant in

Switzerland. Varta also has a plant in Singapore which supplies the Asian market.

In 2008, China had 50 domestic producers of primary lithium batteries with five more due

to be added that year. Great Power Battery and EVE Energy between them had 170M

units per year of capacity in 2008, but have probably grown appreciably since.

Guangzhou Markyn Battery has production facilities in Guangzhou City and Wuhan

with a combined capacity of 1.5MAh (roughly 50M units per year). Wuhan Li Xing

(Lisun) has the capacity for 200M lithium-manganese primary batteries, which it claims

makes it the third largest producer worldwide.

In the USA, Energizer and Duracell are the volume leaders, with Energizer having a

monopoly on lithium-iron disulphide cells thanks to its development and patenting of


Roskill


these versions in the 1980s. Duracell are a major producer of lithium manganese

dioxide cell.

16.3 Trade in primary batteries

Imports of lithium primary batteries increased by 12.6%py between 2000 and 2008,

reaching 3.1Bn cells (Table 216). Trade data for primary batteries is however

complicated by re-exports of batteries manufactured in one country, for example China

or Japan, and finished, or packaged, in another country, for example Hong Kong or

Singapore.

Indonesia is the largest exporter of lithium primary batteries, with exports of 980M cells

in 2011. Indonesian exports go mainly to China and Hong Kong, together accounting for

60% of recorded exports in 2011. China and Hong Kong are the second and third

largest exporters of lithium primary batteries, with exports of 677M and 596M cells

respectively in 2011. China and Hong Kong also imported just under 1.9Bn cells in

2011, indicating that (especially for Hong Kong) most of the reported exports are

manufactured elsewhere (namely in Indonesia, Japan and China, which are major

exporters to Hong Kong). China also imported 325M cells seemingly from itself in 2011,

highlighting the complexity of trade in primary lithium batteries. The USA, Germany, the

Netherlands and Brazil all import more than 100M cells, but some German and Dutch

imports are probably re-exported as both countries are major centres for entrepôt trade

with the rest of Europe.

Table 216: World: Trade in lithium primary batteries, 2007 to 2011 (M cells)

2007 2008 2009 2010 2011

Exports:

Indonesia 717 734 703 935 980

China 409 443 508 566 677

Hong Kong 471 499 506 620 596

Japan 590 562 439 530 500

South Korea 24 122 198 227 182

Others 438 391 450 554 539

Total 2,649 2,751 2,804 3,432 3,474

Imports:

China 765 829 798 880 978

Hong Kong 855 820 762 933 886

USA 210 205 179 246 254

Germany 108 103 96 124 147

Netherlands 60 91 92 93 112

Brazil 98 83 72 102 99

Others 714 970 593 747 804

Total 2,810 3,101 2,592 3,125 3,280 Source: Global Trade Atlas


Roskill


16.4 Production of primary lithium battery materials

Primary lithium battery producers assemble cells from a variety of intermediate raw

materials. The lithium-containing parts, namely the anode and the electrolyte, are all

manufactured separately and later assembled into finished cells (Figure 86). The cells

are then packaged to produce a final saleable battery.

Figure 86: Primary lithium battery schematics

Cylindrical-type:

Coin-type:

Source: GP Batteries

Lithium metal is always used as the anode in lithium primary batteries, and rechargeable

versions too (or in an alloy form in the latter). The electrolyte is either a solid or a liquid,

sometimes containing lithium only. Various types are used depending on the battery

chemistry. Cathode materials include iodine, manganese dioxide, silver chromate, iron

disulphide and copper oxide, sulphur dioxide, thionyl chloride and sulphur chloride, and

give rise to the different battery names. Examples of lithium primary battery types, their

chemistries and the materials used are shown in Table 217.


Roskill


Table 217: Primary lithium batteries and their material compositions

Battery type Anode Electrolyte Cathode Voltage (V) Lithium-manganese dioxide

Lithium Lithium perchlorate in propylene carbonate and dimethoxyethane (solid)

Manganese dioxide 3.0

Lithium-thionyl chloride

Lithium Lithium tetrachloroaluminate in thionyl chloride (liquid)

Thionyl chloride 3.5

Lithium sulphur-chloride

Lithium Sulfuryl chloride (liquid) Carbon 3.7

Lithium-sulphur dioxide

Lithium Lithium bromide in sulfur dioxide with acetonitrile (liquid)

Sulphur dioxide 2.9

Lithium-carbon monofluoride

Lithium Lithium tetrafluoroborate in propylene carbonate, dimethoxyethane, and/or butyrolactone (liquid)

Carbon monofluoride 2.8

Lithium-iodide Lithium Lithium iodide (solid) Iodine in poly-2-vinylpyridine

2.8

Lithium-silver chromate

Lithium Lithium perchlorate (liquid)

Silver chromate 3.1

Lithium-silver-vanadium

Lithium Lithium hexafluorophosphate or hexafluoroarsenate in propylene carbonate with dimethoxyethane (solid)

Silver oxide and vanadium pentoxide

-

Lithium-copper oxide Lithium Lithium Perchlorate dissolved in dioxolane (solid)

Copper (II) oxide 1.5

Lithium-sulphide/disulphide

Lithium Propylene carbonate, dioxolane, dimethoxyethane

Iron sulphide/disulphide

1.2-1.6

Source: Wikipedia

16.4.1 Producers of lithium primary battery anodes

Lithium metal used in the anode of lithium primary batteries is of “battery-grade”, relating

to the high-purity of the product, typically >99.8% Li content and low impurities,

especially other alkali metals and chlorine (Table 218).

Table 218: Specifications for battery-grade lithium metal (% max.)

Component % Li (min) 99.90 Na 0.04 Fe 0.005 Al 0.003 K 0.005 Ca 0.03 Mg 0.02 SiO2 0.01 Mn 0.001 Source: Industrial Minerals HandyBook lV


Roskill


Crude lithium metal produced by electrolytic methods contains impurities which must be

removed by further refining to produce a battery-grade product. Lithium metal is typically

supplied in rod or foil, or shaped to consumer requirements.

Production capacity for battery-grade lithium metal is rarely reported, and capacity (even

where stated) is often not split from the other types of lithium metal produced (e.g.

catalyst-grade). Major suppliers include FMC, ROC and DuPont in the USA and several

Chinese manufacturers (Table 219). Total capacity for lithium metal production is

estimated at 2,950tpy Li (15,700tpy LCE) but battery-grade capacity is only around

1,000tpy Li (5,323tpy LCE).

Table 219: World: Producers of battery-grade lithium metal, end-2012

Company Plant location Total

capacity

(tpy Li)

Battery-

grade

capacity

(tpy Li)

Specification

NCCP1

Novosibirsk, Russia 800e 400e2

>99.9% Li, <200ppm Na,

<30ppm K, <100ppm N,


DuPont Niagara Falls, NY, USA 700e 50 …

FMC Lithium Bessemer City, NC, USA 650e 250e >99.9% Li, <100ppm Na,

<100ppm K, <300ppm N,


Ganfeng Lithium Xinyu, Jiangxi, China 650 100e >99.9% Li, <200ppm Na,



Jianzhong Lithium3

Yibin, Sichuan, China 300 100 …

Xinjiang Haoxing Urumqi, Xinjiang, China 150 501

>99.9% Li, <200ppm Na,

<200ppm Ca

Jiangsu Hongwei Taizhou, Jiangsu, China 200

100e >99.9% Li, <200ppm Na,

<200ppm Ca

Kunming Yongnian

Lithium4

Kunming, Yunnan, China 50e 18 …

Baijerui Advanced

Materials

Wuhan, Hubei, China 50e 25 >99.9% Li, <200ppm Na,



Others 100 32 -

Total 3,650 1,150 Source: Company data; Roskill estimates (e); Materials Handbook Notes: 1-Novosibirsk Chemical Concentration Plant, a subsidiary of TVEL

2-Some output supplied to Rockwood Lithium under a tolling agreement 3-Subsidiary of Jianzhong Nuclear Fuel 4-Subsidiary of CHINALCO


Roskill


16.5 Consumption of lithium primary batteries

The superior performance of lithium primary batteries means they are found in a wide

range of applications. In consumer markets, lithium-polycarbon monofluoride and

lithium-manganese dioxide batteries are used in cameras, calculators and watches.

Consumer applications are estimated to account for 70% of primary battery

consumption. In the military sector, lithium-sulphur dioxide batteries are used in high-

power radios, while lithium-thionyl chloride and lithium-iodine products are used in

industrial and medical applications.

Saft splits the commercial primary lithium battery market into the following sectors:

Utility monitoring – smart meters; remote meter systems utility meter reading

systems

Tracking - automated identification systems (toll tags and RFID tags); GPS

tracking devices

Oil & gas – Geophysical surveys, down-hole drilling, well completion, monitoring

Medical – automatic external defibrillators; automated non-invasive blood

pressure monitors; infra-red ear thermometers; pulse oximeters; implantable

cardioverter defibrillators and pacemakers; hearing aids; implantable infusion

pumps

Security - security protection equipment

Automation & instrumentation – industrial electronics/instruments that require

memory back-up capabilities

Search, rescue & environmental - EPIRBs; GPS; life jacket lamps

Other examples of applications for lithium primary batteries are given below:

Automotive – tyre pressure monitoring systems; keyless entry systems;

telematic systems

Commercial - business and retail equipment such as cellular phones, facsimile

machines and communications devices

Consumer – cameras; watches; calculators; CD players; televisions; remote

controls; other audio and video equipment; security precaution devices; television

boxes

Military/aerospace/space – memory back-up for military communications

devices; stand-alone communications equipment such as soldier, aircraft and

shipboard radios; defence message systems and base communications.


Roskill


Demand for lithium primary batteries has been driven by higher demand for portable and

smaller electronic products such as digital cameras, and by the replacement of less

efficient battery systems, such as alkaline and zinc-carbon, by higher-density, low weight

lithium batteries. Smart metering has provided significant growth for primary lithium

batteries over the last few years, with Saft estimating the market at €125M (US$163M) in

2011 with that market accounting for almost half of Saft’s civil (i.e. non-military) sales in

2011.

16.5.1 Outlook for primary lithium battery consumption

According to Frost & Sullivan, military applications are likely to remain the primary driver

for primary lithium batteries, in value terms, because of their advantages of simple

logistics, long shelf life as well as rugged and robust construction. Even though primary

lithium batteries have many desirable features, some inherent features dampen the

demand for these batteries and the threat from other primary chemistries, including

rechargeable lithium-ion batteries. This could hinder the growth of primary lithium

batteries for certain applications. The market is nevertheless expected to continue

growing for the next four to five years before these batteries with alternate chemistries

are produced for the mass market.

Medical, industrial and military markets are expected to remain growth drivers in value

terms, but smart metering, replacement of alkaline and zinc-carbon cells, and consumer

electronics will provide the greatest boost to demand in volume-terms in the period to

2017. The smart metering market is expected to double in value-terms by 2015

according to Saft. In industrialising countries, especially China and India, large

populations and rising disposable incomes mean that consumer electronic products will

provide the main area of growth for lithium primary batteries.

Irrespective of the ascension of the smart meter market, continued industrialisation in

emerging economies with large populations, and demand from the high-value

commercial/military market, slower world global economic expansion compared to the

mid-2000s is likely to dampen growth in production of lithium primary batteries to 2017,

although the market is still forecast to record growth of 7%py (compared to 8.4%py

between 1998 and 2012) reaching 6.7Bn cells. If smart meter installation does not

proceed as fast as is forecast and emerging economy growth slows, consumption could

rise by only 5%py to 6.2Bn cells in a conservative scenario. Alternatively, if the opposite

is true, the market may grow by 9%py to 7.4Bn cells in an optimistic forecast.

16.6 Consumption of lithium in primary batteries

Lithium metal and lithium salts are used in the manufacture of primary lithium battery

anodes and electrolyte solutions respectively.

Primary lithium batteries come in a wide variety of shapes and sizes, from coin and

needle types weighing <1g with a capacity <50mAh, to the 10,000Ah lithium-


Roskill


thionylchloride batteries used to power the US “Minuteman” missile silos. Lithium

content per Ah is around 0.3g, meaning a 50mAh cell has 0.015g of lithium (0.08g LCE)

and a 10,000Ah cell 30kg (160kg LCE). A standard Energizer Lithium AA battery has

2,900mAh of capacity, equivalent to 0.9g lithium (4.6g LCE).

Japan, one of the largest producers of lithium primary batteries, is the only country to

publish data for lithium metal consumption in primary batteries (Table 220). Until 2009,

Japan was consuming around 100tpy of lithium metal (532tpy LCE) in primary batteries,

but in 2010 this jumped to 180t (960t LCE) (although it has since declined has output of

batteries has fallen). The reason for this is probably because output of cylindrical-type

batteries increased versus coin-type versions, as these cylindrical lithium primary

batteries started to replace primary alkaline batteries for portable consumer goods (3C)

applications (e.g. digital cameras, flashlights and portable back-up batteries for cell

phones).

Table 220: Japan: Consumption of lithium in primary lithium batteries, 2007 to 2012

2007 2008 2009 2010 2011 2012

Lithium metal (t Li) 100 100 90 180 153 125

Total (t LCE) 532 532 480 960 815 665 Source: Roskill’s Letter from Japan No. 381 and No. 434

Unit consumption of lithium metal per primary lithium battery in Japan almost doubled

between 2009 and 2010, and has averaged around 0.15g since (Table 221).

Table 221: Japan: Unit consumption of lithium in primary batteries, 2007 to 2012

2007 2008 2009 2010 2011 2012

No. cells

produced (M)

1,348 1,273 1,073 1,194 1,037 887

Lithium metal

consumption (t Li)

100 100 90 180 153 125

g Li / cell 0.07 0.08 0.08 0.15 0.15 0.14

g LCE / cell 0.37 0.43 0.43 0.80 0.80 0.75 Source: Roskill’s Letter from Japan No. 381 and No. 434

Lithium metal is not separated from other alkali metals (excluding sodium) in global trade

data, but trade in other alkali metals (potassium, rubidium, caesium and francium) is not

significant in volume-terms, thus imports of alkali metals can be used as a guide to

lithium metal consumption in some other countries. Other countries with large lithium

primary battery industries that report imports of lithium metal include Switzerland (around

100tpy), Singapore (increasing to 54t in 2012) and Indonesia (around 85tpy since 2010)

(Table 222).


Roskill


Table 222: World: Imports of battery-grade lithium metal, 2007 to 2012

2007 2008 2009 2010 2011 2012e

Germany1

83 29 17 65 45 83

Switzerland 94 109 70 91 110 99

Singapore 1 - 12 21 39 54

Indonesia2

… … 141 91 75 90

Total (t Li) 178 138 240 268 269 326

Total (t LCE) 947 735 1,278 1,427 1,432 1,735 Source: GTIS Notes: 2012e extrapolated from January to November data

1-Imports from Russia only, imports from other countries (namely the USA and China) probably include catalyst-grade material 2-Japan and Hong Kong only. Imports from China may include other products due to lower unit price compared to Switzerland and Singapore; there were no reported imports from these countries in 2007 or 2008 but nevertheless Indonesia was probably importing metal for battery manufacture.

Consumption of lithium metal per unit in other countries probably remains below that of

Japan and is estimated to average 0.09g/cell. On this basis, given production in 2012 of

4.8Bn lithium primary batteries, consumption of lithium metal was probably around 430t

(2,300t LCE). Consumption of lithium metal in lithium primary batteries has increased by

around 7%py since 2000 (Figure 87).

Figure 87: World: Demand for lithium metal in primary batteries, 2000 to 2012


In addition to lithium metal, a number of different lithium salts are used in the electrolytes

of primary lithium batteries. Consumption of lithium in these salts is estimated at 10% of

lithium metal consumption, or around 200t LCE. Total consumption of lithium in primary

batteries is therefore estimated at around 2,500t LCE.

0

50

100

150

200

250

300

350

400

450

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5,000

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Primary lithium battery production Lithium metal demand


Roskill


16.6.1 Outlook for demand for lithium in primary batteries

Demand for lithium metal and lithium salts is forecast to follow the trend in lithium

primary battery consumption, reaching just under 3,500t LCE by 2017 (Table 223). If

consumption of lithium primary batteries accelerates to 9%py, demand in a high-side

scenario could reach 3,825t LCE; but, if the opposite is true demand might reach only

3,180t LCE in a low-side scenario, although even at 5%py the market will still witness

relatively strong growth.

Table 223: World: Forecast demand for lithium in primary batteries, 2012 to 2017

2012 2017 CAGR (%)


Lithium metal (t Li) 430 550 600 660 5.0 7.0 9.0

Lithium salts (t LCE) 200 255 280 310 5.0 7.0 9.0

Total (t LCE) 2,500 3,180 3,475 3,825 5.0 7.0 9.0 Source: Roskill estimates


Roskill


17. Use of lithium in aluminium smelting

Lithium carbonate additions to the electrolyte during aluminium smelting increase the

electrical conductivity of the bath, reduce bath temperature, increase metal throughput

and reduce fluorine emissions. Aluminium smelting is estimated to account for 1% of

the lithium market, equivalent to 2,200t LCE in 2012.

17.1 Process of aluminium smelting

The basis for all modern aluminium smelting plants is the Hall-Héroult process. Alumina

is dissolved in an electrolytic bath of molten cryolite (sodium aluminium fluoride -

Na3AlF6) within a large carbon or graphite lined steel container known as a pot. An

electric current is passed through the electrolyte at low voltage but very high current,

typically 150,000A. The electric current flows between a carbon anode (positive) made

of petroleum coke and pitch, and a cathode (negative) formed by the thick carbon or

graphite pot lining.

Molten aluminium is deposited at the bottom of the pot and is siphoned off periodically,

taken to a holding furnace, often but not always blended to an alloy specification,

cleaned and then cast. A typical aluminium smelter ‘shop’ consists of around 300 pots,

producing approximately 125,000tpy of aluminium. However, some of the latest

generation smelters have several shops producing >500,000tpy.

Aluminium is formed at around 900ºC. Aluminium smelting is therefore energy intensive

(on average 15.7kWh of electricity is consumed in the production of 1kg aluminium) and

smelters are predominately located in areas which have access to abundant cheap

power resources (hydro-electric, natural gas, coal or nuclear). Many locations are

remote and electricity is often generated specifically for the aluminium plant.

The electrolyte used in aluminium smelting is cryolite, which is the best solvent for

alumina. Various other compounds can be added to improve the performance of the

cell. Aluminium fluoride and calcium fluoride are the most widely-used additives, to

reduce the freezing point of the electrolyte (Table 224).

As a result of the high temperature in the pot, some fluoride is released to the

atmosphere from the cryolite during smelting. In older “open-bath” (Söderberg)

smelters, fluoride emissions can be reduced by up to 60% with concentrations of up to

5% lithium fluoride in the bath. In modern “pre-baked” smelters, however, pot exhaust is

captured by advanced exhaust systems and treated with alumina which absorbs the

fluoride. The fluoride-enriched alumina is recovered and distributed to the electrolyte

pots. These systems remove over 99% of exhaust gases and do not require lithium

additions.

As a result, the use of lithium for reducing fluoride emissions is mainly restricted to older

Söderberg-type aluminium plants.


Roskill


Table 224: Effects of additives and temperatures on properties of molten cryolite

Variable Level

(wt %)

Al2O3

solubility

(wt %)

Liquidus

temp.

(C)

Metal

solubility

(wt %)

Electrical

conductivity

(-1 cm

-1)

Density

(g/cm3)

Vapour

pressure

(Pa)

Surface

tension

(MN/m)

Viscosity

(MPa)

Cryolite1 100 12.4 1,011 0.131 2.874 2.103 534 131.5 2.323

CaF2 4 -1.5 -12 -0.013 -0.057 0.018 -2 0.3 0.130

7 -2.5 -20 -0.022 -0.099 0.033 -3 -2.6 0.228

AlF3 4 -0.4 -1 -0.033 -0.171 -0.025 137 -4.0 -0.091

12 -1.4 -24 -0.078 -0.439 -0.060 596 -12.3 -0.399

LiF 1 -0.5 -9 -0.018 0.047 -0.005 -11 ... -0.123

3 -1.3 -27 -0.021 0.142 -0.014 -33 ... -0.399

MgF2 1 -0.5 -5 -0.004 -0.047 0.005 -10 ... 0.041

3 -1.4 -15 -0.012 -0.139 1.013 -11 ... 0.123

Al2O3 2.5 - -16 -0.003 -0.145 -0.022 -90 -18.7 0.029

5.0 - -28 -0.005 -0.282 -0.040 -130 -36.6 0.118

Temp.2 -25C -1.5 - -0.040 -0.090 0.023 -165 3.5 0.195

-50C -2.8 - -0.082 -0.182 0.047 -282 7.0 0.398

Source: “The influence of additives on Hall-Héroult bath properties”, Warren Haupin, Journal of Metals Notes: 1-The first line gives the properties of molten cryolite at 1,011°C; the other lines give the changes produced by

additives and temperature 2-Properties of liquid cryolite were extrapolated below melting point; additives lower the melting point allowing operation at these temperatures

Lithium is usually added in the form of lithium carbonate, which reacts with aluminium

fluoride to form lithium fluoride, alumina and carbon dioxide in the following reaction:

3Li2CO3 + 2AlF3 → 6LiF + Al2O3 + 3CO2

Lithium carbonate granules are generally used in preference to powder. Powdered

lithium carbonate reacts almost instantaneously, producing high concentrations of

lithium at the surface of the metal. Lithium carbonate granules require more time to

react and achieve a more even distribution through the electrolyte. The pellets do,

however, require a starch binder and are more expensive per unit of lithium content.

The two major suppliers of granular lithium carbonate into the aluminium industry are

SQM with its “QLithium Carbonate Granulated” product and Chemetall with its lithium

carbonate “Granules”.

Rio Tinto Alcan at its smelters in Canada uses a lithium addition of between 0% and 3%

LiF in the synthetic cryolite bath, or an average of 1.7kg lithium carbonate per tonne of

aluminium.

In addition to its use in reducing fluoride emissions, a modified lithium bath with a lithium

fluoride content of 2-4% and an aluminium fluoride content of 4-8% has the following

advantages:

lower melting point and a higher electrical conductivity

operating bath temperature reduced by 12-18ºC

current efficiency increased by 1.5-3.0%

specific power consumption decreased by 2.3-4.0%


Roskill


net carbon consumption decreased by 1-2%

reduced aluminium fluoride consumption

improved pot stability and less amplitude in the momentary variations in pot

resistance

increased production through a combination of improved current efficiency

and increased line current

The main disadvantage of adding lithium carbonate to the bath is traces of lithium report

to the pot metal. In a bath containing 3% lithium fluoride, the pot metal could contain

24ppm Li. During and after tapping, the lithium and sodium in the molten aluminium will

burn off, and by the time the crucible has reached the cast house, the lithium

concentration will be reduced to 8-10ppm.

17.2 Consumers of lithium in aluminium smelting

In the 1950’s, smelters in the former Soviet Union were probably the first to use a

modified lithium bath on a wide scale. Reynolds Metals (now Alcoa) was the first

aluminium company in the west to have all their smelters converted to a lithium modified

bath by 1972.

In the 1980s, all of the former Soviet Union smelters were using a lithium modified bath;

however these smelters were taken off lithium as a cost saving in the early 1990s at the

time of the break-up of the Soviet Union. Russian aluminium often contained trace

quantities of lithium and this, combined with the poor quality and appearance of their

primary products, meant the smelters had to sell the aluminium at a discount to the LME

market price. These smelters have not re-instated the use of lithium but have instead

invested in other technologies to reduce fluorine emissions and improve product quality.

Total primary aluminium production capacity at end-2011 is estimated at around 50Mt.

Of this, just over 6Mt, or 12%, of capacity was at plants operating Söderberg technology

(Table 225). With the exception of Russia and Brazil, most Söderberg smelters are

currently idled or are being converted to “pre-baked” or other smelting technology. This

is mainly from the requirement to meet ever increasingly stringent emissions legislation.

Even in China, the vast majority of Söderberg smelters were closed or converted to “pre-

baked” technology in the early- to mid- 2000s.

Rusal accounts for 53% of Söderberg smelter capacity, but as mentioned above none of

the aluminium smelters in Russia (or indeed Rusal’s plants in the wider CIS region)

currently use lithium bath additions. Alcoa has the second largest installed Söderberg

capacity, just over 0.8Mt. Alcoa is estimated to consume up to around 1,000tpy LCE of

lithium carbonate at full capacity, although 0.3Mt of capacity is currently idled and plants

in Spain and Italy may be closed completely. In addition, its largest Söderberg smelter,

Baie-Comeau, is currently being converted to “pre-baked” technology and there are

plans for similar modernisation at Messena.

CBA in Brazil is estimated to consume up to 500tpy LCE of lithium carbonate. Vedanta

could also consume a similar volume in India but, like Rusal, is not thought to use lithium


Roskill


bath additions. Alcan probably consumes up to 500tpy LCE in its two Canadian

smelters, but Shawinigan is expected to close by 2015 at which time the Kitimat

modernisation program is also expected to be complete.

If all Söderberg smelters listed in Table 225 were operating near capacity the total

requirement for lithium could be around 10,000tpy LCE. Other Söderberg smelters are

small or have been idled and many of these could be ultimately closed.

Table 225: World: Aluminium smelters using Söderberg technology, end-2012

Company Plant Country Total

Capacity

Idled

Capacity

Comments

Rusal Bratsk Russia 1,000,600 - All Söderberg cells

Bogoslovsk Russia 187,000 44,000 All Söderberg cells

Kandalaksha Russia 76,000 - Being modernised to PB

cells

Krasnoyarsk Russia 1,000,800 - Recently modernised to

“new” Söderberg cell

technology

Nadvoitsy Russia 81,000 - Some PB cells in use

Novokuznetsk Russia 322,000 - All Söderberg cells

Irkutsk Russia 529,000 - All Söderberg cells

Volgograd Russia 168,000 - All Söderberg cells

Zaporozhye Ukraine 114,000 30,000 All Söderberg cells

Sub-total Rusal 3,478,400 74,000

Alcoa Poços de

Caldas

Brazil 96,000 - All Söderberg cells

Baie-Comeau Canada 160,000 53,000 Being modernised to PB

cells

Portovesme Italy 150,000 150,000 All Söderberg cells

Lista Norway 96,000 - Purchased from ELKEM

in 2009

Massena (St.

Lawrence)

USA 125,000 - All Söderberg cells

Aviles Spain 93,000 46,500 All Söderberg cells

La Coruña Spain 87,000 43,500 All Söderberg cells

Sub-total Alcoa 807,000 293,000

Compania

Brasiliera do

Alumínio (CBA) Sorocaba Brazil 480,000 - All Söderberg cells

Vedanta Korba (BALCO) India 350,000 100,000 Being modernised to PB

cells; Söderberg cells

idled

Madras

(MALCO)

India 40,000 40,000 Plant idled

Sub-total Vedanta 390,000 140,000

Alcan Kitimat Canada 282,000 90,000 Being modernised to AP

cells

Table continued….


Roskill


….Table continues

Company Plant Country Total

Capacity

Idled

Capacity

Comments

Shawinigan

Falls

Canada 100,000 - All Söderberg cells

Sub-total Alcan 382,000 90,000

BHP Billiton Bayside South

Africa

195,000 120,000 Söderberg cells idled

Glencore Columbia Falls USA 185,000 185,000 Plant idled

Northwest

Aluminium

Goldendale USA 172,000 172,000 Idled, closing in 2011,

half of cells are PB

KUMZ Kamensk Russia 130,000 44,000 4/5ths

Söderberg cells

Novelis do Brazil Saramenha Brazil 51,000 5,000 All Söderberg cells

Aratu Brazil 60,000 10,000 All Söderberg cells

Sub-total Novelis 111,000 15,000

Azeral Sumgait Azerbaijan 61,000 - All Söderberg cells

Aluminium Konin Konin Poland 60,000 60,000 Idled, reported to be

closing in 2009

Eti Alűminyum Seydişehir Turkey 60,000 - All Söderberg cells

Nippon Light Metal Kambara Japan 20,000 - All Söderberg cells

Hindalco Alupuram India 14,000 14,000 Plant idled

Total 6,545,400 1,207,000

Total Söderberg ~6,060,000 1,040,000

Source: Light Metal Age; Company and Roskill data

In addition, some smelters using “pre-baked” anodes have, or could in the future, use

lithium bath additions for energy saving. One example is the Venalum smelter in

Venezuela. This smelter was designed to use lithium bath additions for energy saving

purposes when commissioned in 1978, but has not used lithium bath additions since

2009 following a short period on care-and-maintenance, due to reduced global demand

for aluminium.

17.3 Consumption of lithium in aluminium smelting

In 2000, around 50% of aluminium smelter capacity in the USA was thought to be using

a lithium-modified bath and some 20% worldwide. Modernisation and closure of

Söderberg-type smelters and expansion of “pre-baked” aluminium production capacity

over the last decade has reduced the worldwide total to an estimated 10%. Some of this

Söderberg capacity is idled, with plants awaiting modernisation or decommissioning.

Rusal remains the only advocate of Söderberg technology and continues to invest in its

development.

Output of aluminium from Söderberg-type smelters is estimated to have fallen from

almost 5Mt in 1998 to just under 4.1Mt in 2009; it recovered slightly to an estimated

4.6Mt in 2011 but fell to 4.3Mt in 2012. Output from Söderberg smelters has been

supported by increased output from Rusal, but as Rusal does not use lithium in its


Roskill


smelters, lithium consumption in aluminium smelting has fallen at a faster rate (-6.9%py

between 2000 and 2012) than overall Söderberg-type aluminium output (-1.2%py).

Lithium consumption in aluminium smelting in 2012 is estimated at 2,200t LCE, down

from 5,500t LCE in 1998.

Figure 88: World: Aluminium output by type and lithium consumption, 2000 to 2012e

Source: Aluminium output – WBMS, IAI and Roskill estimates; Lithium - Roskill estimates Note: 1-Pre-baked output includes other aluminium production methods

17.3.1 Outlook for lithium demand in aluminium smelting

Demand for lithium in aluminium smelting is forecast to decline further in the period to

2016, mainly due to the conversion of Alcoa’s and Alcan’s smelters in Canada to “pre-

baked” and AP Technology™ respectively, and the permanent closure of other smelters,

particularly those located in the USA and Europe where emissions legislation is very

strict and production costs are higher. In the base-case scenario, consumption is

forecast to decline to 1,500t LCE in 2017, a fall of 7.5%py (Table 222).

Should aluminium demand grow strongly, and prices recover, some of the smelters

currently idled and using lithium bath additions could be re-opened and this will slow the

rate of decline to -2.0%py and total 2,000t LCE in 2017. However, if the opposite is true,

for example from much lower global economic growth, the rate of decline in lithium

consumption in aluminium smelting could accelerate to -15%py and consumption might

be only 1,000t LCE by 2017.

0

1,000

2,000

3,000

4,000

5,000

6,000

0

10

20

30

40

50

Lit

hiu

m c

on

su

mp

tio

n (

t L

CE

)

Alu

min

ium

ou

tpu

t (M

t)

Söderburg output Pre-baked output (1) Lithium consumption (RHS)


Roskill


Table 226: World: Forecast demand for lithium in aluminium smelting, 2012 to 2017

(t LCE)

2012 2017 CAGR (%)


Lithium carbonate

2,200 1,000 1,500 2,000 -15.0 -7.5 -2.0

Total 2,200 1,000 1,500 2,000 -15.0 -7.5 -2.0 Source: Roskill estimates

Given that only a small number of aluminium smelters use a lithium modified bath, the

aluminium industry represents a potentially very large upside to future lithium demand.

A lithium modified bath helps smelters reduce energy consumption and fluoride

emissions, and increase output. Reducing energy consumption not only improves the

economics of the smelter but also potentially reduces the smelters CO2 emissions, which

could be an important factor to more widespread lithium adoption in aluminium smelting

going forward, given the efforts of governments and industry to combat global warming

and the introduction of carbon tax schemes.

However, the following major factors have to be evaluated prior to adoption of a lithium

modified bath:

Marketability of finished products: The market quality specifications have to be

met, including the maximum 1ppm lithium

Molten aluminium removal system: In order to meet the market quality

specifications and go after the profitability of the value added products, a smelter

on lithium modified bath needs a removal system. Otherwise such a smelter can

only produce and sell lower grade, and less profitable products


Roskill


18. Minor end-uses for lithium

Minor end-uses for lithium are estimated to account for 15,500t LCE, or 10% of total

lithium consumption, in 2012. Total consumption of lithium in other end-uses has grown

by 2%py since 2007, having dropped by 7% in 2009 before recovering in 2010. In the

period to 2017, other end-uses are forecast to grow at levels closer to global GDP,

3.5%py, but with new applications such as alloys outpacing traditional uses such as

sanitization.

Table 227: World: Consumption of lithium in other end-uses, 2007, 2012 and 2017

(t LCE)

2007 2012 CAGR (%) 2017 CAGR (%)

Sanitization 2,350 2,725 3.0 3,000 2.0

Organic synthesis 1,750 2,250 5.2 2,670 3.5

Construction 1,500 2,000 6.0 2,500 4.5

Alkyd resins 1,250 1,500 3.7 1,780 3.5

Alloys 170 550 27.0 2,500 35.5

Pharmaceuticals 200 230 3.0 250 3.0

Electronics 80 100 4.5 100 -

Other 6,700 6,145 -1.7 5,600 -1.8

Total 14,000 15,500 2.0 18,400 3.5 Source: Sections 18.1 to 18.14

18.1 Sanitization

The production of lithium metal (by the electrolysis of molten lithium chloride in a

potassium-lithium bath) results in a large volume of by-product chlorine gas, which is

hazardous to dispose of for environmental reasons. By bubbling this by-product chlorine

gas through a solution of lithium, sodium and potassium sulphates, however, lithium

hypochlorite (LiOCl) can be produced. With up to 35% available chlorine, lithium

hypochlorite is an alternative to other chlorine sources for sanitation purposes.

Lithium hypochlorite is calcium-free (does not harden water), dust-free, has a long shelf

life (loses 0.1% available chlorine a month), offers superior cold water solubility and pH

control and is particularly well suited for vinyl lined pools and spas. This product is

registered with the EPA in the USA for its intended use, but is also used in other regions

including Canada and Europe.

As it dissolves so rapidly, lithium hypochlorite cannot be used in a dry chlorine feeder. It

is pre-dissolved and dispensed in a liquid feeder. Cyanuric acid must be added

separately to prevent the chlorine in the pool being degraded by sunlight.

For other sanitation purposes, FMC Lithium produces lithium chlorine bleach, intended

for industrial bleaching. JSC Novosibirsk Chemical Concentrates Plant (NCCP) produce

a range of lithium hypochlorite disinfectants marketed under the LIDOS brand.

Disinfectant LIDOS can be used for furniture, floors and clothes; it is produced in 20%


Roskill


and 25% grades containing 15-20% and 20-25% active chlorine fractions. Domestic

LIDOS-20 and LIDOS-25 are bleaches with disinfectant effects available with 15-20% or

20-25% active chlorine fractions respectively. LIDOS-B is a disinfectant for swimming

pools and swimming pool facilities; LIDOS-B contains 15-25% active chlorine fractions.

Production of lithium hypochlorite in 2012 is estimated at 3,000t LCE. Output is

estimated to have grown by 5%py since 2007 commensurate with a similar rise in lithium

metal output.

The outlook for lithium hypochlorite use is uncertain, however, as despite a forecast rise

in lithium metal production providing the necessary by-product chlorine feedstock, it is

more expensive than competing chorine-producing products and hence under pressure

for market share. Growth in available output will therefore be tempered by demand,

resulting in growth of 2%py to 2017.

18.2 Organic synthesis

Alkyllithiums, aryllithiums, lithium amides, lithium alkoxides and lithium metal hydrides

are functionally used as strong hindered bases, nucleophiles and reducing agents in

organic synthesis in the following industries:

Pharmaceuticals

Flavors and fragrances

Agrochemicals

Electronics

Other organic intermediates

Organolithium compounds including butylltihium and hexyllithium serve as strong,

nucleophilic bases to generate carbanions by proton abstraction and lithium-halide

exchange, while other organolithium compounds are used in Grignard-type reactions

such as for the preparation of products such as vitamin A and steroids. Lithium

aluminium hydride (LAH) is a powerful reducing agent used to convert esters, carboxylic

acids, and ketones into the corresponding alcohols; and amide, nitro, nitrile, imine,

oxime, and azide compounds into the amines. Other examples of uses for lithium in

organic synthesis are shown in Table 228.


Roskill


Table 228: Examples of uses for lithium in organic synthesis

Lithium chemical Use

Lithium amide Synthesis of antihistamines and analgesics

Alkylation of nitriles, ketones, amines and formation of cycloprenes

Synthesis of antioxidants, acetyenic compounds and alcohols

Transesterification reactions

Generation of carbanions, including the initiation of anionic polymerization

Lithium formate Alcoholysis catalyst for alkyd resin manufacture

Lithium hydrides (e.g. LAH and

LBH)

Powerful reducing agent used to convert esters, carboxylic acids, and ketones

into the corresponding alcohols; and amide, nitro, nitrile, imine, oxime, and

azide compounds into the amines

Butyllithium Synthesis of antibiotics, antihistimines and anti-clotting agents

Deprotonation and metal–halogen exchange reactions

Methyllithium Synthesis of vitamin A and D, steroids and various analgesics

Methylation via 1,2 addition to carbonyl or nitrile compounds

Carbene-type reactions for formation of allenes and alkoxycyclopopanes

Metalation reactions

Phenyllithium Grignard-type reactions for analgesics and other chemotherapeutic agents

Preparation of alkyllithium compounds

Preparation of vitamins and hormones

Halide or alkoxide substitution/displacement reactions of inorganic compounds

Alkyllithium (n-butylithium, n-

hexalithium)

Nucleophile in organic synthesis

Alkylating or metalating reagent

Lithium alkoxides (LTA, LTB) Condensation and alkylation reactions

Organic synthesis

Modification of the reactivity and selectivity of organometallic

reagents/catalysts

Lithium amides (LDA, LHS) Aldol condensations, alkylations of heterocyclic amines, and formation of

cyclopropenes

Transesterification reactions

Generation of carbanions, including the initiation of anionic polymerization Source: Encyclopaedia of Chemical Technology, Kirk-Othmer, 1981; FMC Lithium; Rockwood Lithium

Production data for lithium in fine chemicals is not known because the major producers,

FMC Lithium and Rockwood Lithium, regard this information as proprietary. Rockwood

indicates that butyllithium and lithium aluminium hydride are the two principle products

used in the life science/specialities segment. The specialised and varied uses of lithium

fine chemicals mean calculating demand from first principles would not give a reliable

indication of demand. Fine chemicals for organic synthesis are a high value, but

relatively low volume, market for lithium. The market for lithium products in organic

synthesis was estimated at 1,850t LCE in 2008, and probably totalled around 2,500t

LCE in 2012.

Rockwood Lithium expanded production capacity for LAH at Langelsheim in Germany

by 50% in 2000 and again in 2008, indicating growth in demand in the pharmaceuticals

and fine chemicals sector. FMC Lithium has set-up lithium fine chemicals production in

India and China to support growth in these markets, which were previously satisfied by

imports from the USA and Germany.


Roskill


Production of life science products, which require synthesis using lithium fine chemicals,

is forecast to grow to 2017 as new products are released into the market. The specialist

applications for these products, such as new and evolving medicines, are difficult to

forecast so quantifying the exact growth rates is difficult; nevertheless, growth of 3.5%py

is envisaged, taking demand to 2,670t LCE by 2017. Growth could be higher if demand

for medicines, flavours and agrochemical products increases, particularly in emerging

markets.

18.3 Construction

Lithium carbonate can be used to adjust and accelerate the setting time of cementitious

systems such as high-alumina cements (HAC) and alumina-portland cement blends.

Common applications for HAC and HAC/PC blends include: refractory cements,

shotcrete / gunite, self-levelling floor systems, quickset adhesives, quickset mortars and

rapid-repair materials. Lithium carbonate is added when other additions to the cement

formulation have the disadvantage of retarding the hardening process below the

required properties. Depending upon the effect intended, 0.1–2.5% of lithium carbonate

is added. Lithium hydroxide and sulphate are also used in particular cement

applications.

Lithium nitrate and lithium hydroxide can be used to mitigate and treat alkali-silica

reactivity (ASR) in concrete. ASR occurs when silica in the aggregate reacts with alkali

in cement to produce a silica gel. The gel then absorbs water, causing expansion and

hydraulic pressure sufficient to crack the concrete. If left untreated, the reaction will

continue through the structure, resulting in cracking and leaving the concrete vulnerable

to deterioration through corrosion of rebar, freeze-thaw damage and sulphate attack.

Several national and local specifications in the USA now include lithium technology to

control and treat ASR. Lithium technology has also been tested and shown to be

applicable in Canada, the UK and Argentina.

Consumption of lithium salts in construction applications is estimated at less than 2,000t

LCE in 2012. FMC Lithium and Rockwood Lithium are the two major suppliers of lithium

salts to the construction industry. Growth in consumption is forecast at 4.5%py through

2017.

18.4 Alkyd resins

Oil-based paint uses a binder that is derived from a vegetable oil (such as that obtained

from linseed or soya). In alkyd paint, the binder is a synthetic resin, which is called an

alkyd resin. The term alkyd was coined in the early days and originates from the “al” in

polyhydric alcohols and the “cid” (modified to “kyd”) in polybasic acids. In a chemical

sense the terms alkyd and polyester are synonymous. Commonly, the term “alkyd” is

limited to polyesters modified with oils or fatty acids.


Roskill


Two processes can be used for the production of alkyd resins: direct esterification

(fusion cooking) or solvent esterification (azeotropic cooking). Both processes remove

water during esterification. When alkyds are produced using fatty acids as the modifier

(a one-step process) all the ingredients are charged and esterification is undertaken via

the direct or solvent method. However, when oil (such as soybean, castor and linseed)

is used as a modifier, it is first reacted with polyol in the presence of a catalyst consisting of lithium hydroxide, lithium napthanate or lithium ricinoleate, at 220-230°C in a process

called alcoholysis. The alcoholysis product is then reacted with the remaining

ingredients during esterification.

Alkyd resins are useful as film forming agents in paint, varnish and enamels, and as

thermosetting plastics that can be moulded into solid objects. As such, alkyd resins are

one of the important ingredients in the synthetic paint industry.

Alkyd resins were the primary resin used in the paint and coatings industries until water-

based DIY products were introduced in the 1950s for architectural use. The consumer

friendly nature of water-based paints expanded their use considerably. In 1970, the

Clean Air Act added encouragement to the development of other resin systems that

could replace traditional alkyd resin solvent systems. The driving force behind the Clean

Air act was the need to reduce volatile organic content (VOC) emissions from the

workplace and the environment in general. Although alkyd resin paints were well proven

and acceptable, they were replaced with lower VOC higher performing new resin

systems including epoxies, polyesters, urethanes, acrylics and others. As a result, in

North America, Western Europe and Japan, consumption of alkyds has diminished over

the last thirty years.

Nevertheless, alkyd paints and coatings are still popular today, and used in a variety of

applications. It can still be difficult to duplicate the high gloss, adhesion to metal and

plastic and stain blocking abilities of alkyd paints. More recently, some companies have

developed solvent-free alkyd resins to combine the advantage of a low VOC system with

the performance of the typical solvent borne coatings. Alkyds still remain a sizable

factor in the coatings industry. In the USA, for example, alkyd resins are used in 20% of

architectural paint systems and slightly under 20% of the industrial coatings market.

China and other Asian countries represent the largest market for alkyd paints and

coatings (Figure 89). Eastern Europe is also a large market, suggesting that alkyd

paints and coatings are more prevalent in emerging economies because of less

stringent environmental regulations on high VOC products.


Roskill


Figure 89: World: Consumption of alkyd-based paints and coatings, 2010

Source: IHS Chemical

According to IHS Chemical, Western European consumption of alkyd coatings dropped

considerably during 2006–2009 because of the downturn in the economy, replacement

with more environmentally and worker-friendly coatings, and use of non-wooden

materials in housing. Overall demand for alkyd surface coatings in Western Europe is

expected to decrease at a rate of about 2.5%py in the period 2010-2015.

Japanese consumption of alkyd coatings has declined significantly in recent years, and

is now less than half that of the peak year in 1990. The declining trend for alkyd surface

coatings will likely stabilize over the next five years, as most high performance

alternatives have already replaced alkyd surface coating applications by now; also, a

slight recovery of the economy with an increase in construction is forecast.

China is the fastest-growing region in the world, and some Western producers of resins

and coatings have established production facilities there. In particular, the use of alkyd

coatings for construction applications and use of polyester-epoxy hybrid powder

coatings on metal parts has grown rapidly.

European output of alkyd resins in 2010 was estimated at just under 0.5Mt, suggesting

total alkyd paint and coatings consumption in Europe of 1.65Mt, assuming a 30% resin

loading. The total world market for alkyd paints and coatings would therefore have been

7.6Mt, consuming 2.3Mt of alkyd resin. Arkema forecasts growth in coating resin

demand at 3%py, suggesting a 2.8Mt market by 2017.

The paint and coatings industry has undergone considerable rationalisation in the last

three decades through mergers and acquisitions. In 1980, the ten leading producers

controlled around 20% of the global market but by 2011 this market share had risen to

>50%. AkzoNobel of the Netherlands and PPG of the USA are the largest coatings

China 28%

Other Asia/Oceania 26%

Western Europe 12%

Eastern Europe

10%

USA 8%

Brazil 6%

Mexico 2%

Japan 2%

Canada 2%

Other 4%


Roskill


producers, each having annual sales of >US$10Bn, and together account for around

20% of the market. A further 20 companies, including Henkel, Sherwin-Williams,

DuPont and BASF, have annual sales of US$1-10Bn and combined control around 45%

of the market. The remaining 35% of the market is divided between smaller companies

that operate on a regional or national level. The potential for further consolidation within

the paint industry is high. The Chinese market, which is growing rapidly, is divided

between >4,000 companies of which Carpoly and AkzoNobel are the largest.

Depending on the resin required, and the alcoholysis process utilised, anhydrous lithium

hydroxide is added in concentrations of between 0.004 and 0.008%. Assuming an

average of 0.006%, consumption of anhydrous lithium hydroxide in alkyd resin

manufacture would total 14,400t (or 22,300t LCE). However, a catalyst is not required

for alkyd formulations generated using fatty acids instead of oils. In addition, lithium is

not the only compound that can be used as an alcoholysis catalyst, with calcium

hydroxide (lime) and a number of other compounds also widely used. For that reason,

consumption of anhydrous lithium hydroxide is estimated at 1,250t LCE and is forecast

to grow by 3.5%py through 2017, this is based largely on increased output of alkyd-

based paints in emerging markets.

18.5 Alloys

The mid- to late- 2010s, are likely to see the growth in consumption of aluminium-lithium

(Al-Li) alloys forecast some 20-30 years ago. In addition, the development of

magnesium-lithium (Mg-Li) alloys is now progressing and could result in a generation of

even lighter fabricated parts for consumer (3C products such as tablet and netbook

computers), automotive and aerospace use.

18.5.1 Aluminium-lithium alloy

A 1% lithium addition to aluminium has the following transformational effects:

reduces density by 3%

increases the elastic modulus by around 6%

enables the formation of potent hardening precipitates

imparts higher fatigue crack growth resistance

The first Al-Li alloy, 2024 (Scleron), was produced in Germany in the 1920s (Figure 90).

Alloy 2020 was developed in the late 1950s and was used on the RA5C Vigilante

aircraft. Al-Li alloys 1420 and 1421 were developed in the Soviet Union in the 1960s,

although they did not gain wide acceptance outside of the Soviet Union. These pre- and

post- WW2 alloys are referred to as “first generation”.


Roskill


Figure 90: Development of Al-Li alloys

Source: Pechiney Aerospace

Major development work on Al-Li alloys began in the 1970-1980s, when North American

and European aluminium producers accelerated the development of “second-

generation” 2xxx Al-Li alloys as replacements for conventional airframe alloys. These

second-generation lower-density Al-Li alloys were expected to reduce the weight and

improve the performance of aircraft, particularly in response to the oil shock of the early

1970s. In general, second generation Al-Li alloys contained >2% Li, but although

density reduction was attractive, these products exhibited several characteristics that

were considered undesirable by airframe designers. The shortcomings in these alloys,

developments of other aluminium alloys, such as 7075 and 7150, and costs, ultimately

delayed their introduction.

The first Al-Li alloys to gain much acceptance in the West were alloys 8090, 8091, 2090

and 2091, which were introduced in the mid-1980s. Al-Li alloys 8090 and 8091 were

developed as a replacement for some of the longest serving of the commercial first

generation Al-Li alloys, namely 2014 and 2024. Alloy 8090 has 10% lower density and

11% higher modulus than these conventional counterparts, and exhibits superior

mechanical properties at cryogenic temperatures. Physical properties of these second

generation Al-Li alloys are shown in Table 229.

Table 229: Physical properties of Al-Li alloys

Alloy

Property 2090 2091 8090

Density (g/cm3) 2.59 2.58 2.55

Melting range (ºC) 560-650 560-670 600-655

Elastic modulus (GPa) 76 75 77

Thermal conductivity at 25ºC (W/m-k) 84-94.3 84 93.5

Specific heat at 100ºC (J/kg-k) 1,203 860 930 Source: ‘Lithium Aluminium Alloy – The New Generation Aerospace Alloys’, Amit Joshi, Indian Institute of Technology


Roskill


The development of “third-generation” Al-Li alloys, such as Weldtite 049 and CP276,

were undertaken towards the end of the 1980s and in the 1990s. The disadvantages of

first and second generation Al-Li alloys (reduced ductility and fracture toughness in short

transverse direction, and reduced thermal stability) have been overcome by

improvements in the chemical composition of the alloys and optimisation of thermo-

mechanical treatments. These third-generation Al-Li alloys employ less lithium and

more copper (0.75.0-1.8% Li, 2.6-5.4% Cu) than second generation Al-Li alloys (2.0-

4.0% Li, 1.3-2.7% Cu). The chemical constitution of certain Al-Li alloys is shown in

Table 230.

Table 230: Chemical composition of Al-Li alloys (% wt)

Li Cu Mg Zr Other Density

(g/cm3)

Introduction

First generation:

2020 1.1 4.5 - - 0.5 Mn 2.71 Alcoa 1958

01420 2.1 - 5.2 0.11 … … FSU 1965

01421 2.1 - 5.2 0.11 0.17 Sc … FSU 1965

Second generation:

2090 2.3 2.7 - 0.12 0.12 Fe, 0.1 Si 2.60 Alcoa 1984

2091 2.0 2.2 1.5 0.10 0.04 Fe, 0.03 Si 2.58 Alcan 1985

8024 3.8 … … 0.17 0.12 Fe, 0.1 Si … …

8090 2.5 1.3 0.8 0.12 0.10 Fe, 0.05 Si, 0.17

Sc

2.53 EAA 1984

8091 2.6 1.8 0.9 0.12 0.10 Fe, 0.05 Si 2.54 …

01430 1.7 1.6 2.7 0.11 … … FSU 1980s

01440 2.4 1.5 0.8 0.11 … … FSU 1980s

01450 2.1 2.9 - 0.11 … … FSU 1980s

01460 2.25 2.9 - 0.11 0.09 Sc … FSU 1980s

Third generation:

2095 1.3 4.2 0.5 0.12 0.5 Ag 2.71 …

Weldatite 049 1.3 5.4 0.4 0.14 … … Lockheed

2195 1.0 4.0 0.5 0.12 0.15 Fe, 0.12 Si, 0.4

Ag

… Alcoa 1992

2397 1.4 2.8 0.25 0.11 0.3 Mn, 0.1 Zn … Alcoa 1993

2297 1.4 2.8 0.25 0.11 0.3 Mn, 0.5 Zn 2.65 Alcoa 1997

2196 1.75 2.9 0.5 0.11 0.35 Zn, 0.35 Mn, 0.4

Ag

… Alcoa 2000

2099 1.8 2.7 0.3 0.09 0.007 Fe, 0.05 Si, 0.3

Mn, 0.7 Zn

… Alcoa 2003

2050 1.0 3.6 0.4 0.11 0.4 Ag, 0.35 Mn, 0.25

Zn

Alcan 2004

2198 1.0 3.2 0.5 0.11 0.4 Ag 0.5 Mn, 0.35

Zn

Alcoa 2005

2199 1.6 2.6 0.2 0.09 0.007 Fe, 0.05 Si, 0.3

Mn, 0.6 Zn

… Alcoa 2005

2060 0.75 3.95 0.85 0.11 0.25 Ag, 0.3 Mn, 0.4

Zn

… Alcoa 2011

2055 1.15 3.7 0.4 0.11 0.4 Ag, 0.3 Mn, 0.5

Zn

Alcoa 2012

Source: Metals & Materials; Roberto Rioja & John Liu, 2012; Company data Note: Balance is aluminium & impurities


Roskill


18.5.1.1 Producers of aluminium-lithium alloys

There are believed to be only three commercial producers of Al-Li alloy, Alcoa in the

USA, Alcan in Canada and Europe and SUAL in Russia. These three companies have

strong ties to the North American, European and Russian space, and commercial and

military aerospace, markets. From 2013, these companies will be joined by Aleris, which

is scheduled to open a new plant in Germany. China is also developing Al-Li alloys, with

Chinalco reported in 2012 to have developed and produced an alloy variant of its own.

Alloy 2195 and 2197 were produced by McCook Metals of the USA until 2002 when

McCook Metals filed for bankruptcy. The Al-Li plant in Chicago was subsequently

purchased by Pechiney Rolled Products and, when Pechiney Rolled Products was

bought by Alcan in 2003, the Al-Li plant was transferred to the Dubuc Works in

Saguenay, Canada. In 2011, Alcan invested US$3M in expanding the capacity of the

Dubuc Works’ Al-Li line by 50%.

Alcan also produces Al-Li alloys at Ravenswood, West Virginia. Pechiney in France and

British Aluminium in the UK both produced alloy 8090 until their purchase by Alcan in the

early 2000s. Al-Li alloys are still produced at Issoire, France, but no Al-Li alloy

production is thought to take place in the UK. The plant at Issoire supplies aluminium

products to the European aerospace industry. It is not clear whether Alcan still produces

alloy 8090 as it is not listed amongst its products, however it may be cast by Alcan and

extruded by other companies, such as Mitsubishi.

Alcan developed innovative welding technologies such as laser welding and friction stir

welding which has enabled greater use of Al-Li alloy in commercial aerospace

applications. Alcan is the exclusive supplier of AIRWARE, Alcan’s Al-Li alloy

technology, for the Bombardier C-Series aircraft. The C-Series contains 20% Al-Li alloy

by weight. The company also supply AIRWARE for the Airbus XWB.

Alcoa manufactures Al-Li alloy at the Alcoa Technical Center in Pittsburgh, USA, before

it is shipped to the Davenport Works to be rolled into plate. The company is also

constructing a new plant to produce Al-Li alloy at its existing Lafayette aluminium plant,

which will have the capacity to produce 20,000tpy of round and rectangular Al-Li ingots

when it opens in 2014. The Kitts Green plant in the UK was also upgraded during 2012

to create additional casting capacity for Al-Li alloys.

Facing increasing competition from composite materials, Alcoa launched its Aerospace

20-20 Initiative in 2002, aiming to cut the cost and weight of aerospace metallics by 20%

in two decades, through the development of new alloys and manufacturing technologies.

In practice, the aim was achieved in just three years, partly due to the commercialisation

of Al-Li alloys by Airbus in the A350. Alcoa produces a 2198 Al-Li alloy developed for

the Airbus A350 fuselage.

In the early 2000s, a major effort was made by Alcoa towards establishing a production

capability for C458 plate under Air Force Research Laboratory and NASA's Space

Launch Initiative (SLI) sponsorship. C458 and L277 alloys with less than 2.0% Li are

being developed for future space use. In 2007, NASA awarded Alcoa a US$18.5M

contract to develop the manufacturing capability and to supply the initial requirements of


Roskill


high performance Al-Li plate and ingot to which will be used for the Ares 1 crew launch

vehicle upper stage. In November 2008, Alcoa announced that NASA had certified its

Davenport, Iowa, facility as the only supplier in the USA to produce Al-Li alloy 2195 thin

plate for the Ares 1 crew launch vehicle, the rocket that will enable astronauts to explore

space beyond low earth orbit with the goal of reaching the moon by 2020. Alcoa will

initially produce around 450t of Al-Li alloy for the Ares programme.

In late 2011, Aleris announced it was to start construction on a specialised casting

facility for Al-Li plate and sheet at Koblenz, Germany. The company expected

production to start in early 2013.

In Russia, Al-Li alloy is produced by SUAL (now part of Rusal), possibly at the

Kamensk-Uralsky Metallurgical Plant. In February 2006, Corus Aluminium Rolled

Products of Germany, SUAL Holdings of Russia and Alu Menziken Aerospace/UAC of

the USA, formed an alliance to research, develop and produce extruded and rolled Al-Li

alloys for aerospace markets.

Aluminium Corporation of China (Chinalco) announced in 2012 that the company

had successfully developed the capacity to produce new third generation 540mm Al-Li

alloy round ingots, used in large airplanes. The material will likely be used in China’s

growing commercial and military aerospace sector.

New alloys containing lithium and zirconium additions beyond those achievable in

directionally cast materials, have been developed using spray forming by Cospray of the

UK in collaboration with Lockheed and GKN-Westland Helicopters. High lithium levels

impart high strength and elastic modulus and low density, while high zirconium levels

result in a high volume fraction of dispersoid particles which control the grain and sub-

grain structures. Potential applications have been identified in spacecraft and

helicopters, where weight savings are of paramount importance. Two new alloys have

been developed, UL30 (3.0% Li, 1.0% Cu and 0.7% Mg) and UL40 (4.0% Li and 0.2%

Zr), the latter having the lowest density of any commercial aluminium alloy. Cospray has

also used sprayforming to produce alloys 8090 and 8091 with superior properties to cast

versions.

18.5.1.2 Applications for aluminium-lithium alloys

Applications for Al-Li alloys lie mainly in space, military aerospace and commercial

aerospace uses.

Space

The greatest use of Al-Li alloy to date has been the inclusion of alloy 2195 in the Space

Shuttle external fuel tank, where weldability, high strength, cryogenic fracture toughness

and lower density were beneficial. The Space Shuttle was retired in 2010, however. In

2005, Boeing began preparing a range of Delta IV Heavy Launcher options for NASA’s

Crew Exploration Vehicle (CEV) developed for the Mars programme. One of the options

considered by Boeing is the use of Al-Li alloys to save weight and enhance the


Roskill


performance of the Delta IV’s RS-68 engines. Alcoa will also supply alloy 2090 for the

Ares 1 spacecraft, which is due to fly in 2020. The Ares 1 rocket is NASA’s replacement

for the scrapped Space Shuttle program.

Military aircraft

The second largest use of Al-Li alloy to date has been in the Augusta-Westland EH101

helicopter produced in Europe, where 90% of the aluminium used is alloy 8090, resulting

in a weight saving of 180kg. Alloys 2097 and 2197 have been retrospectively fitted in

the bulkheads of the US Air-Force F16 fighter jet to reduce weight and increase that

aircraft’s range. Examples of other military applications for Al-Li alloys include the Atlas

Centaur payload adapter (Alcoa 2090), the Titan IV payload adapter (Alcan 8090) and

the McDonnell Douglas C17 aft and fuselage, cargo door and deck (Alcoa 2090),

although Al-Li alloy was later removed from the C17 because of material deficiencies.

The Eurofighter, developed by the EADS consortium, contains 5% by weight of Al-Li

alloys in the leading edges and tips of the wings.

Russia has been using Al-Li alloys in operational fighter aircraft, cargo aircraft,

helicopters and missiles since the early 1980s. Al-Li alloy 1420 was used in MIG-29

welded fuselage-tank structures and was able to achieve 24% weight savings with this

approach. In 1985, Al-Li alloy 1420 was applied to passenger aircraft, although it is not

known to which models. However, the strength and fatigue durability of alloy 1420 did

not meet the increasing demands of modern aircraft and a new generation of Russian

Al-Li alloys were developed, including 1430, 1441, 1450, 1451, and 1470.

Commercial aircraft

Attempts to introduce Al-Li alloys into commercial aircraft in the 1980s were delayed

because of material deficiencies in the available second generation alloys. The poor

short-transverse properties of alloy 2090 caused cracking when integrally stiffened

panels are formed in the fabrication of propellant tanks for example. Al-Li alloy was

going to be used extensively in Boeing’s 777 series aircraft, but material deficiency

problems caused Boeing to go back to cheaper, but slightly heavier, aluminium alloys.

However, initial problems with Al-Li alloys have been overcome in the third-generation

alloys and they have now begun to be more widely introduced in the commercial

aerospace industry as a means of reducing structural weight and increasing fuel

efficiency. In current aircraft, Mitsubishi extrudes alloy 8090 sheet for the Boeing 777

aircraft while the Airbus A330 and A340 leading edges use Alcoa 2090 and Alcan 8090

Al-Li alloys.

The recently launched Airbus A380 uses Al-Li alloy C460/2196 for the floor beams, seat

rails and as part of the wing box. The Airbus A380-F freighter, which was due to fly in

2012 but has been suspended, will feature a higher content of advanced materials,

mainly due to the replacement of aluminium by Al-Li alloy, especially in the wing box.

The A380-F will comprise 22% composites, 10% titanium and steel alloys, 9% Al-Li alloy

and 3% laminated composites. The incorporation of Al-Li alloys has resulted in a weight

saving of 350kg in the A380-F freighter and 200kg in the A380 passenger version.


Roskill


Table 231 shows those aircraft where Al-Li alloys are, or will be, used and estimates of

the quantity of Al-Li alloy required.

Table 231: Use of Al-Li alloys in selected aircraft

Company Aircraft Alloy Al-Li

(%)

Operating

weight (t)

Al-Li (t) Areas utilised Introduced/

due

Airbus A330 2090/8090 … 109-120 … Leading edges 1987

A340 2090/8090 … 129-177 … Leading edges 1987

A350 2198 23 175 40.3 Fuselage skin, floor

structure

2014

A380 2xxx 5 267 13.4 Seat tracks, floor

beams, wing

structure

2008

A380-F 2xxx 9 252 22.7 Floor beams Suspended

Boeing 777 8090 … 139-167 … Soundproof bonding 1995

Boeing

(McDonnell

Douglas)

C-17 2090 … 150 … Aft and fuselage,

cargo door and

deck

19911

EADS Eurofighter 2xxx 5 11 0.55 Wing tips, leading

edges

2006

Bombardier C-Series 2xxx 23 40-50 10.4 Fuselage 2014

Lockheed

Martin

F-16 2197 3 8.8 0.26 Bulkhead 19762

Source: Company and press data Notes: 1-Al-Li alloy later removed 2-Al-Li alloy retrofitted to bulkhead from 2004 onwards

The Airbus A350 twin-engine aircraft will provide the largest market for Al-Li alloys in the

future. Airbus is now incorporating an Al-Li alloy for the fuselage and floor structure in its

new A350 aircraft; the alloy is produced using laser beam and friction stir welding

techniques. Use of Al-Li alloy reduces weight by 5-6%, while increasing strength,

tolerance, malleability, corrosion and fatigue resistance, and reducing repair costs. Al-Li

alloys will comprise 23% of the structural weight of the A350, generating weight savings

of 700kg. Bombardier has followed Airbus’s lead by designing the fuselage of its

proposed C-Series regional jet with Al-Li alloy. Al-Li alloy will comprise 23% of the C-

Series materials by weight, but this aircraft will be slightly lighter (40-50t) than the A350

(175t).

Development work on the A380 began in the early 1990s, when “third-generation” Al-Li

alloys were not available for testing and couldn’t be included in the original design.

Instead, Airbus later re-designed some internal structures to use Al-Li alloy, including the

floor beams. Meanwhile during the design of the A350, which was started in the mid-

2000s, engineers were able to increase the use of Al-Li alloys including in the fuselage

skin.


Roskill


18.5.1.3 Consumption of lithium in aluminium-lithium alloys

Lithium is consumed in Al-Li alloys in metallic form, as additions of lithium compounds

would result in evaporation from the melt during casting. The average “third generation”

Al-Li alloy contains 1.35% Li, which means an addition of 13.5kg of lithium metal is

required per tonne of Al-Li produced.

Consumption of lithium metal in Al-Li alloys in 2007 was estimated at 30t Li (160t LCE,

or roughly 2,250t Al-Li alloy). Consumption is likely to have increased slightly in the mid-

2000s with increased use in the Airbus A380, F-16 and Eurofighter, but this probably

added only an additional 5-10 tonnes of lithium metal as deliveries of the A380 only

started ramping up from 2008.

In 2012, Airbus delivered 30 A380s, containing around 400t Al-Li alloy, equivalent to 5.4t

of lithium metal (29t LCE). However, given the production timescale for this aircraft, the

Al-Li alloy could have been cast as far back as 2010. Production of Al-Li alloy in 2012

therefore more likely reflects scheduled deliveries of aircraft containing Al-Li alloy in

2014 (260 units). In addition, the typical buy-to-fly ratio for aircraft materials is between

2:1 to 4:1, which even at the lower end would double output of Al-Li alloy in 2012.

Therefore, consumption of lithium in Al-Li alloys for the commercial market alone in 2012

is estimated at 67t Li (355t LCE). Total consumption, including space and military use,

is considered closer to 100t Li (530t LCE).

18.5.1.4 Outlook for demand for lithium in aluminium-lithium alloys

The revival of the use of Al-Li alloys in Airbus’s new commercial aircraft should ensure

strong growth in lithium metal consumption in this market through to 2017, albeit from a

low base in volume terms. In addition, the start of Bombardier C-Series production from

2014 will add further to demand. A new generation of single aisle Boeing and Airbus

planes, such as the Airbus Neo series, are also forecast to enter the market in the mid-

2000s, which could add further to demand assuming they use Al-Li alloy (although the

specifications have not yet been revealed in enough detail to quantify this fully).

Airbus plan to deliver 215 A380 aircraft and 580 A350 aircraft by 2019 (Figure 91),

meanwhile deliveries of the new Neo series are expected from 2015 and will quickly

grow. Meanwhile deliveries of Bombardier’s C-Series start in 2014 and will ramp to 50

units per year by 2016. Legacy aircraft, such as the Airbus A330 and A340 and the

Boeing 777 will start to decline over the coming years. The Airbus A380 is the main

driver for Al-Li alloy demand, given the 40t Al-Li alloy content, therefore trends in its

output will have the greatest impact on consumption, with the A350 taking over from

mid-decade.

In the military sector, continued deliveries of Eurofighter jets and retrofitting of the F-16

bulkhead with Al-Li alloy will also provide some growth in demand for lithium metal in Al-

Li alloy applications. New Augusta-Westland EH101 (now called AW101) helicopters

are also likely to be built in the period to 2017.


Roskill


Given the two-year production lag in aircraft deliveries to material purchasing, a 3:1 buy-

to-fly weight factor, and military and space consumption, the Al-Li alloy market is

forecast to reach 51,650t by 2017, requiring around 400t Li (2,350t LCE).

Figure 91: World: Deliveries of commercial aircraft and lithium consumption,

2007 to 2019 (No. units and t Li)

Source: Aircraft deliveries = Airline Monitor; Lithium consumption = Roskill estimate

Increased production of the A380 or early roll-out of the Airbus A350, although unlikely,

could increase lithium metal demand in Al-Li alloys to 600t in 2013 in an upside

scenario. However, a downturn in the commercial aerospace industry, delays to the roll-

out of the C-Series, A350 or A380, and lower production of military aircraft, such as the

Eurofighter, could see demand for lithium in Al-Li alloys grow by only 15%py to 200t Li in

2017 (Table 232).

Table 232: World: Forecast demand for lithium in aluminium-lithium alloys, 2012 to

2017

2012 2017 CAGR (%py)


Lithium metal (t Li) 100 200 400 600 15 32 43

Total (t LCE) 530 1,065 2,350 3,195 15 32 43 Source: Roskill estimates

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f 2018f 2019f

A330 A340 A350

A380 Neo 777

C-Series Lithium consumption


Roskill


18.5.2 Magnesium-lithium alloy

Magnesium-lithium (Mg-Li) alloy is the lightest workable metal material available

commercially. It was originally developed by NASA in the 1960s for research and

military purposes.

Nippon Kinzoku of Japan has the capacity to produce 60tpy of magnesium alloy,

including LZ91, which contains 9% lithium.

Santoku of Japan developed a Mg-Li alloy with 20% lighter weight than magnesium and

commercialised it in 2011. The company can produce 50tpm from its Miki factory in

Hyogo prefecture, but volumes will have to increase substantially before costs fall;

currently the material is being evaluated for use in 3C and automotive applications.

In 2012, Sifang Ultra-lightweight Material of China opened a 100tpy Mg-Li alloy plant

at Xi’an Yanliang National Aerospace High-Tech Industrial Base.

Consumption of lithium metal in Mg-Li alloys is likely to be minor at present, perhaps

only a few tens of tonnes per year, but could grow should the benefits of Mg-Li alloy get

increased focus and hence use.

18.6 Electronics

Lithium niobate (LiNbO3 / LNB) and lithium tantalate (LiTaO3 / LTA) provide a very small

but very high-value market for lithium, estimated at 100t LCE in 2012.

LNB is produced by melting high-purity (4N) lithium carbonate and niobium oxide.

Single crystals of LNB are produced by the Czochralski (CZ) vertical-pulling process, in

which a monocrystalline seed is placed in the bath of molten LNB. A single-crystal boule

slowly grows around the seed crystal as it is rotated and slowly pulled upwards while the

temperature is lowered. The electronic properties of single-crystals may be controlled by

the addition of selected doping agents to the melt before crystal growth begins. The

completed crystal is sliced into wafers. LTA crystals are grown along the x-axis, fully

poled, with diameters and lengths up to 60mm. Properties of LNB and LTA are shown in

Table 233.


Roskill


Table 233: Properties of lithium niobate and lithium tantalite

Material LNB LTA

Transparency range, µm 0.4-5 0.4-5

Point group 3m 3m

Space group R3c R3c

Lattice parameters (hexagonal), Å a = 5.148, c = 13.863 a = 5.154, c = 13.784

Density, g/cm3 4.64 7.45

Moh’s hardness 5 5.5

Refractive indices no = 2.2865, ne = 2.2024 (at 0.633 µm) no = 2.183, ne = 2.188 (at 0.6 µm)

no = 2.2273, ne = 2.1515 (at 1.1523 µm) no = 2.131, ne = 2.134 (at 1.2 µm)

Non-linear coefficient at 1.06 µm, pm/V d22 = 5.6, d31 = -11.6, d33 = 8.6 d22 = 2, d31 = -1, d33 = 21

Electro-optical coefficient at 0.63 µm,

pm/V

r31 = 8.6, r22 = 3.4 r33 = 30.8, r51 = 28 r13 = 8, r22 = -0.2, r33 = 30

Source: MolTech

LNB and LTA possess a unique combination of electro-optic, acoustic, piezoelectric,

pyroelectric and non-linear properties. Surface acoustic wave (SAW) filters are the

largest market for LNB. The main applications for SAW filters are listed below.

Table 234: Applications for SAW components

End-use Applications

Telecommunications Cellular phones and base stations for cellular networks, cordless

telephones, and wireless LAN applications

Consumer electronics Television sets, video and video disk recorders, and digital set-top

boxes

Automotive electronics Keyless entry devices, and tyre pressure monitoring systems Source: EPCOS

Leading producers of SAW components are Fujitsu, Murata and Matsushita of Japan

and EPCOS of Germany. EPCOS sources LNB crystals from its subsidiary, Crystal

Technology in Palo Alto, California, which is believed to be the world’s largest producer.

Production and consumption of LNB and LTA are concentrated in Japan and the USA.

In Japan, the number of SAW filters produced for cellular phones has risen but unit

consumption of LTA continues to fall. Demands for higher performance electronics

devices, particularly in mobile telephones, prompted a move away from lithium niobate

to alternative materials such as langasite (La2Ga5SiO14).

Japanese consumption of lithium carbonate in SAW filters has been estimated at 20-

30tpy since 2009. Total demand for lithium carbonate in LNB and LTA is estimated at

less than 100tpy LCE. LNB and LTA are unlikely to show any significant changes in

demand for lithium to 2017 because of substitution by other products and minimisation

of electronic components offsetting volume growth in output of electronic components.


Roskill


18.7 Analytical agents

Both pure and doped (with beryllium or strontium) lithium tetraborate and metaborate are

used as fluxing agents for the quality control of cements and ores functioning as internal

standards in X-ray spectroscopy or optical emission analysis.

18.8 Dyestuffs

Lithium acetate and lithium acetate dihydrate are used as an additive in dyestuffs for

polymers, textiles and speciality applications to improve viscosity, smoothness and

dyeability, while decreasing lustre and breaks. Lithium hydroxide finds application as an

additive for dyestuffs as well as increasing the brilliance for specific pigments.

18.9 Metallurgy

Lithium is used in copper smelting to reduce the porosity of copper and copper alloys,

because of lithium metal’s affinity for oxygen. The addition of lithium metal, sealed in

copper cartridges, to the melt reduces the free oxygen content to very low levels and

prevents the formation of steam during cooling, thereby reducing porosity. This

increases the density of the cast metal, reduces inclusions, refines the grain and gives

greater fluidity to the alloy.

Lithium chloride and lithium fluoride can be used as additives to salt baths for dip

brazing and open furnace soldering.

18.10 Photographic industry

Several lithium salts, including lithium chloride, lithium sulphate and lithium sulphite, are

used as photographic developers.

18.11 Welding fluxes

When heated, welding fluxes dissolve surface oxides and protect cleaned surfaces from

re-oxidation, they transfer heat from the heat source to joints and remove oxidation

products, allowing filler metal to contact and wet the base materials.

Brazing fluxes – pastes or powders – fuse at temperatures below those needed to melt

filler metals. Because fluxes must be in close contact with the joint surfaces, they are

liquid or gaseous at brazing temperatures. They remove only surface oxides and


Roskill


tarnish; other contaminants – oil, grease, lubricants, lacquer and paint – must be

removed either mechanically or chemically before brazing.

Fluxes for aluminium and magnesium contain alkaline chlorides or fluorides. Lithium

salts give these fluxes low melting points of 1,000-1,140ºF and high chemical activity,

enabling the fluxes to dissolve stubborn metal oxides.

18.12 Electrochromic glass

Antimony, base metal or lithium alloys can be used to create eletrochromic glass, a

glass that transitions from clear to tinted upon exposure to an electrical charge.

Electrochromic glass can be used in buildings and vehicles to control glare and heat

transmission. The main electrochromic glass producers are View (previously Soladigm)

in the USA, SAGE Electrochromics in the USA (50% owned by Saint Gobain) and

EControl-Glas in Europe. Saint-Gobain already produces switchable electrochromic

sunroofs. As lithium alloys are only one choice for electrochromic glass it is unclear if

lithium consumption will grow with any future expansion of glass output. The use of

lithium in this end-use is considered very small at present, but could grow over time.

18.13 Pharmaceuticals

Lithium carbonate has been a mainstay of treatment for bipolar disorder and an

augmentation treatment for unipolar depression since the 1970s. In the USA, the

National Institutes of Health estimates that bipolar disorder affects about 2.3 million

people domestically and about 1.2% of the population worldwide. Meta-analyses have

shown an 8 to 13-fold difference in the annual risk of suicide between patients with

affective disorder (primarily bipolar disorder) who were and were not treated with lithium.

Scotia Pharmaceuticals of the UK markets a seborrheic dermatitis ointment, which

contains lithium succinate and zinc sulphate as active ingredients, under the trade-name

Efalith.

Lithium gamma-linolenic acid is in chemical studies for the treatment of certain cancers.

There are also suggestions that lithium might be a useful supplement in the treatment of

alcoholism or immune disorders. The Central Drug Research Institute in Lucknow, India

has found a bis-glycosylated diamino alcohol produced by reduction with lithium

aluminium hydride, is active against multi-drug resistant Mycobacterium tuberculosis.

Lithium metal and organic compounds are used in the production of protease inhibitors

used in the treatment of HIV-AIDS.


Roskill


18.13.1 Producers of lithium-based pharmaceuticals

In the USA, the brand names of lithium carbonate drugs commonly associated with

treatment of bipolar disorder are Lithobid and Eskalith. Licab, Lithane, Lithonate,

Lithotabs, Lithosun, Carbolith, Duralith, Lithizine, Camcolit, Liskonum Li-liquid and

Priadel are also lithium carbonate drug trade names used in various countries.

Generic versions of Lithobid are now available, because Solvay’s original patent has

expired, and producers include: Noven Therapeutics, Glenmark Generics, Barr

Laboratories, Roxane Laboratories, Sun Pharmaceuticals and UDL Laboratories.

Lithobid and its generic versions contain 300 or 400mg of Li2CO3 per tablet.

Eskalith and Eskalith CR were produced by GlaxoSmithKline, however the company

has ceased manufacture of these products. Eskalith and Eskalith CR are however

available as generic versions and producers include the following companies: Apotex,

Major Pharmaceuticals, Roxane Laboratories, UDL Laboratories and West Ward

Pharmaceuticals. Eskalith and its generic versions contain 300 or 400mg of Li2CO3 per

tablet, similar to Lithobid. Eskalith CR contains 450mg of Li2CO3 per tablet.

Cibalith-S is a lithium citrate (C6H5Li3O7) drug marketed in the USA while Litarex,

produced by Alphapharm in Denmark and marketed in some European countries, and

Demalit are other common lithium citrate-based drugs.

Lithium orotate (LiC5H3N2O4H2O) has been marketed as a dietary supplement used in

small doses to treat conditions including stress, manic depression, alcoholism, ADHD

and ADD, aggression, PTSD, Alzheimer's and to improve memory. However, it has not

been approved by the FDA for general prescription in the USA and is only available from

alternative health practitioners.

18.13.2 Production and consumption of lithium-based pharmaceuticals

The market for psychotherapeutic drugs, i.e. those used to treat bipolar disorder and

unipolar depression, is confined mostly to the USA, Canada, Europe, Japan and

Australia. In other countries the use of psychotherapeutic drugs is not as extensively

practiced. Decision Resources estimates that the bipolar disorder drug market is

dominated by sales of therapies in the USA. In 2011, the USA accounted for nearly 90

percent of major-market sales for bipolar disorder. The total market value of

psychotherapeutic drugs was estimated at US$6.3Bn.

In 2002, lithium accounted for 16% of prescriptions for treatment of bipolar disorder in

the USA, and its market share was roughly similar in 2005 according to

GlaxoSmithKline. Assuming lithium retains a similar market share in 2012, lithium is

probably prescribed to around 350,000 people in the USA alone.

Noven Therapeutics, producer of Lithobid lithium carbonate, estimated the annual

market for lithium therapies to exceed US$400M (calculated at branded prices) in the


Roskill


USA in 2007. Net sales of Lithobid reported by JDS in 2006 (prior to the takeover by

Noven) were approximately US$9M.

The expiry of patents for lithium-based psychotherapeutic drugs held by companies such

as Solvay Pharmaceuticals and GlaxoSmithKline, and the introduction of cheaper

generic versions, has prompted the major pharmaceutical companies to invest in

research and development of alternative non-lithium based psychotherapeutic drugs.

Examples include Lamictal and Depakote, which GlaxoSmithKline estimate account for a

quarter of the market, as well as Carbamazepine, Lamotrigine and Valproate, which are

well established as alternatives to lithium and are licensed for this use. However,

because the use of lithium is well documented and has been practised for over 40 years

it remains one of the major long-term treatments of bi-polar disorder, and will continue to

be prescribed.

18.13.3 Consumption of lithium in pharmaceuticals

For acute episodes of mania the dosage of lithium prescribed is 1,800mg per day of

LCE, while for long-term bipolar disorder control, 900-1,200mg per day is prescribed.

Assuming an average of 900mg LCE per day, total consumption of lithium in the USA

would have been around 115t LCE based on 350,000 prescriptions. Assuming similar

levels of lithium prescriptions in other major centres of use, i.e. Europe, Australia and

Japan, total world demand for lithium carbonate worldwide would be around 230t LCE.

The continual search for effective treatment of bipolar disorder and the expiration of

patents means pharmaceutical companies often bring alternatives to the market.

Lithium has shown some resolve, however, and therefore consumption in this end-use is

likely to remain relatively stagnant to 2017.

FMC Lithium and Rockwood Lithium are the major suppliers of United States

pharmaceutical-grade (USP) lithium carbonate and other FDA-approved lithium

chemicals. Several producers in China report production of China pharmacopoeia-

grade lithium carbonate including Xinjiang Lithium Salts Plant, Wuhan Baijierui

Advanced Material and Sichuan Guorun (300tpy capacity).

18.14 Speciality lithium inorganics

Speciality inorganic lithium compounds, together with their end-uses, are listed in Table

235.


Roskill


Table 235: Applications for speciality inorganic lithium compounds

Compound Application

Lithium 2-hydroxyethoxide slurry Polymer films

Lithium acetate dihydrate/Lithium

acetate solution

Ester interchange catalyst in polyester production

Anti-corrosion agent in moulding polyphenylene sulphide

resins

Catalyst in alkyd resin and acrylic polymer production

Lithium benzoate anhydrous Alkaline catalyst in organic synthesis, especially in curing

polyepoxide resins

Crystal nucleating agent for polypropylene, to improve

clarity of the polymer

Lithium bromide anhydrous Reconstitution of brines

Swelling agent for proteins

Humectant and fungicide in medicines

Electrolyte component in lithium batteries

Catalyst and dehydrohalogenating agent in organic

reactions and in O-demethylation

Lithium carbonate ACS grade Additive in speciality glass and low expansion ceramics

Analytical agent

Lithium chloride ACS grade/Lithium

chloride anhydrous, purified

Electrolyte for dry cells used at low temperatures

Catalyst in oxidation reactions

Solubiliser for polyamides and cellulose when used with

amide solvents

Chlorinating agent for steroid substrates

Lithium chloride anhydrous, technical

grade/Lithium chloride, industrial grade

Molten salt chemistry and metallurgy

Brazing fluxes

Catalyst for organic oxidation reactions

Electrolyte in dry cells used in low temperatures

Stabiliser in textile fibre spinning solutions

Solubiliser for polyamides and cellulose when used with

amide solvents

Chlorinating agent for steroid agents

Tracer in wastewater

Lithium chloride solution De-icing solutions

Low-freezing solutions for fire extinguishers

Catalyst

Dehumidifying systems

Photosensitive developer compositions

Tracer in wastewater

Lithium citrate tetrahydrate Curing agent in concrete

Lithium fluoride, technical grade Flux in enamels, glasses and glazes

Brazing and welding fluxes

Molten salt chemistry and metallurgy

Heat sink material

Table continued….


Roskill


….Table continues

Compound Application

Lithium hydroxide anhydrous Intermediates generator in organic synthesis

Catalyst in alkyd resin manufacture and esterification reactions

Stabiliser in photographic developers

Heat sink material

Carbon dioxide absorption from sealed environments

Lithium metaborate anhydrous Laboratory analysis of different materials including building

cements and concretes

Additive to lithium soap in lubricating greases

Flux in speciality glass and ceramics

Flux in preparing samples for X-ray fluorescence analysis

Lithium metaborate dihydrate Flux in speciality glass and ceramics

Lithium nitrate anhydrous Molten salt chemistry and metallurgy

Anti-static agent for non-woven fabrics

Oxidising agent

Flame colourant in flares and fireworks

Etchant in glass manufacture

Lithium nitrate solution Ammonia absorber in wastewater

Lithium orthophosphate, tertiary/Lithium

phosphate

Low-expansion porcelain glazes

Polymer intermediates

Lithium sulphate anhydrous/Lithium

sulphate monohydrate

Source of lithia in ceramic compositions

Solubiliser in photographic developing solutions

Tracer in chemical products

Additive to speciality Portland cements

Lithium tetraborate anhydrous Flux in X-ray fluorescence analysis

Additive in polycarbonate windows, especially in spacecraft

Lithium greases Source: FMC Lithium company literature


Roskill


19. Prices of lithium

The concentration of lithium production among a small number of producers means

pricing is very competitive. Producers negotiate prices with individual consumers and

price information is rarely reported, particularly for downstream lithium chemicals. The

main trends over the past two decades have been:

stable supply and pricing environment in the early 1990s (Figure 92)

a large fall in lithium carbonate prices following the entry of SQM into the market

in the late-1990s

a sharp recovery in prices in the mid-2000s due to the higher cost of converting

lithium minerals to lithium compounds in China

a softening during the 2008/09 global economic downturn and partial recovery

following it

In real terms (using constant 2012 US dollars), prices for lithium carbonate have fallen

from US$6,300/t in 1992 to US$5,300/t in 2012, an CAGR of -0.8%. The main driver for

falling prices in real terms has been the introduction of lower cost production methods

(i.e. brine extraction) in the 1990s.

Figure 92: Price history of lithium carbonate, 1990 to 2012

Source: Supply/demand 1990-1999 = USGS; 2000-2012 = Roskill data; Prices 1990-1999 = USGS, US domestic

price; 2000-2012 = Average values of imports of technical-grade lithium carbonate Note: Real prices adjusted to constant US dollars using World GDP deflator data from the International Monetary Fund's


0

20

40

60

80

100

120

140

160

180

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Lit

hiu

m s

up

ply

(000t

LC

E)

Lit

hiu

m c

arb

on

ate

pri

ce (

US

$/t

)

Price (constant 2012 dollars) Price (nominal) Supply

Stable mineral-based supply and demand growth

New low-cost brine supply (SQM) enters market

Asian economic crisis, 9/11 and US recession

Strong demand growth, return of Chinese mineral converters

Global economic downturn and recovery


Roskill


19.1 Technical-grade lithium mineral prices

Prices of lithium minerals have historically changed very infrequently. Table 236 and

Figure 93 show prices quoted by Industrial Minerals for petalite free-on-board (FOB)

Durban and spodumene concentrate cost-insurance-freight (CIF) Europe, CIF USA and

CIF Asia. The petalite price is understood to be sourced from Bikita Minerals in

Zimbabwe and spodumene prices from Talison Lithium in Australia. The higher price of

high-grade spodumene concentrate (>7.5% Li2O), over glass-grade spodumene (5.0%

Li2O), reflects the processing costs required to upgrade the product to a higher lithia,

and lower impurity, content.

Petalite prices fell between 2000 and 2005 and have since remained at US$165-260/t

FOB Durban.

Spodumene prices remained steady between 2000 and 2006, then >7.25% Li2O grade

concentrate rose by 45% CIF Europe. This was followed by rises in the CIF USA price

of both 5.0% Li2O and 7.25% Li2O grade spodumene concentrate in April 2006, but

5.0% Li2O grade prices did not move upwards until January 2007. These moves were

likely triggered by the sharp rise in technical-grade lithium carbonate prices that occurred

between 2005 and 2007 (Section 19.3).

Prices for all grades of spodumene increased by between 14% and 37% in early 2009,

despite the weakness in the global economy at the time (and when prices for most other

commodities were falling). Prices for spodumene CIF USA increased by a further

US$100/t for 5.0% Li2O grade and US$33/t for 7.25% Li2O grade in July 2009, despite

no similar rise in prices CIF Europe. CIF USA prices then rose by a further 5-7% in

January 2011; they have since remained static. Increases in CIF Europe prices

occurred a few months later in April 2011, rising by 23-25% for 5.0% Li2O grade and 7-

10% for 7.5% Li2O grade; they have also since remained steady.

Quoted prices for glass-grade 5.0% Li2O and >7.5% Li2O spodumene CIF Asia have

remained at US$430-480/t and US$720-770/t respectively since they were first

published in April 2011.

In January 2013, Talison Lithium announced it had secured price rises of 10% for

technical-grade minerals. This does not appear to have been factored into the quoted

prices from Industrial Minerals.

The premium in quoted CIF USA versus CIF Europe prices probably reflects increased

shipping costs from Australia to the USA, likewise in the small premium between CIF

Asia and CIF Europe prices.


Roskill


Table 236: Prices of lithium minerals, 2000-2013 (US$/t)

Petalite Spodumene

Date of change

4.2% Li2O

FOB

Durban

5.0% Li2O

CIF USA1

>7.5% Li2O

CIF USA1

5.0% Li2O

CIF

Europe2

>7.5% Li2O

CIF

Europe3

5.0% Li2O

CIF Asia4

>7.5% Li2O

CIF Asia

2000 January 250 215-221 364-386 200-210 385-395 - -

2000 July 180-270 215-221 364-386 200-210 385-395 - -

2005 July 165-260 215-221 364-386 200-210 385-395 - -

2006 January 165-260 215-221 364-386 200-210 530-600 - -

2006 April 165-260 298-342 507-540 200-210 530-600 - -

2007 January 165-260 298-342 507-540 280-320 530-600 - -

2009 January 165-260 375-429 684-750 350-400 680-750 - -

2009 July 165-260 474-529 717-771 350-400 680-750 - -

2011 January 165-260 507-562 794-849 350-400 680-750 - -

2011 April 165-260 507-562 794-849 440-490 750-800 430-480 720-770

2013 April 165-260 507-562 794-849 440-490 750-800 430-480 720-770

CAGR ’00-‘12 -1.4% 7.8% 6.8% 7.1% 5.9% N/A N/A

Source: Prices copyright of Industrial Minerals and reproduced with its permission Note: Bold prices indicate price change

1-Converted from short tons; specification changed to 7.5% Li2O from 7.25% Li2O and CIF USA from FOB West Virginia in January 2011 2-Specification changed to CIF Europe from FOT Amsterdam in April 2011 3-Specification changed to 7.5% Li2O from 7.25% Li2O and CIF Europe from FOT Amsterdam in April 2011 4-Glass-grade

Lithium minerals were almost exclusively used as a source of lithia in glass, ceramics

and glass-ceramics in the 1980s and early 1990s, until SQM began marketing low-priced

lithium carbonate as a substitute. In 2004, prices of spodumene, petalite and lithium

carbonate were all within US$1,100/t of one another based on their lithia content (Table

237). Between 2004 and 2007, the price of lithium carbonate rose almost three-fold, but

prices for spodumene only increased by around 50%; petalite prices remained

unchanged. Lithium carbonate prices then fell through to 2010, but spodumene

continued rising, such that by 2011 the price of 7.5% Li2O spodumene was within about

US$200/t of lithium carbonate; glass-grade 5.0% Li2O spodumene was within

US$1,200/t.

As lithium minerals did not increase in price as much as lithium carbonate in the mid-

2000s, consumers of lithium carbonate in the glass, glass-ceramic and ceramics sectors

may have started to use a greater proportion of minerals again, but since 2011 this trend

has slowed and it appears consumption of lithium carbonate in these end-uses is

growing faster than that for lithium minerals (Sections 9, 10 and 12).


Roskill


Figure 93: Compound annual prices of lithium minerals, 2000 to 2013 (US$/t)

Source: Prices copyright of Industrial Minerals and reproduced with its permission

Table 237: Comparison of prices for lithium minerals and carbonate, 2004 to 2012

2004 2005 2006 2007 2008 2009 2010 2011 2012

Glass-grade spodumene (5.0% Li2O)1:

US$/t 205 205 205 300 300 375 375 465 465

US$/t Li2O 4,100 4,100 4,100 6,000 6,000 7,500 7,500 9,300 9,300

Glass-grade petalite (4.2% Li2O)2:

US$/t 213 213 213 213 213 213 213 213 213

US$/t Li2O 5,071 5,071 5,071 5,071 5,071 5,071 5,071 5,071 5,071

Spodumene (7.5% Li2O)3

US$/t 390 565 565 610 715 715 715 775 775

US$/t Li2O 5,200 7,533 7,533 8,133 9,533 9,533 9,533 10,333 10,333

Lithium carbonate (40.4% Li2O eqv.)4

US$/t 2,187 2,998 4,236 6,513 5,916 5,663 4,595 4,640 5,323

US$/t Li2O 4,970 6,814 9,627 14,802 13,445 12,870 10,443 10,545 12,098 Source: Table 236 and Figure 94 Notes: 1-CIF Europe 2-FOB Durban 3-CIF Europe 4-CIF Average based on imports by Spain, France, Italy, Turkey and Thailand from Chile

0

100

200

300

400

500

600

700

800

900

Petalite (4.2% Li2O) FOB Durban Spodumene (5.0% Li2O) CIF Europe

Spodumene (>7.5% Li2O) CIF Europe Spodumene (5.0% Li2O) CIF USA

Spodumene (>7.5% Li2O) CIF USA Spodumene (5.0% Li2O) CIF Asia

Spodumene (>7.5% Li2O) CIF Asia


Roskill


19.2 Chemical-grade spodumene prices

CIF Asia prices for 6.0% Li2O chemical-grade spodumene started to be reported by

Industrial Minerals in April 2011; prices are understood to be sourced from Talison

Lithium in Australia. Initially, prices were quoted at US$430-480/t CIF Asia, but dropped

to US$300-400/t in April 2012.

Average values of imports of chemical-grade spodumene concentrate give a more

accurate view of contract prices between Talison Lithium and its Chinese customers,

and can be determined from bill-of-ladings data for China. In 2011, CIF prices ranged

between US$215-280/t and averaged US$242/t. In 2012, CIF prices averaged

US$287/t, suggesting an 18.5% increase year-on-year.

In July 2012, Talison Lithium announced it had secured a 10% increase in chemical-

grade spodumene sales prices with its customers for the second half of 2012. This was

on top of a 15% increase achieved in the first half of 2012. The increase in prices

appears consistent with average values of imports. Average values of imports in the

latter half of 2012 appear to have risen, but are still at the low end of the range (US$300-

400/t) quoted by Industrial Minerals. In January 2013, Talison Lithium reported it had

secured further price increases of 15% for chemical-grade concentrates.

The price of chemical-grade spodumene concentrate tracks the price of lithium

carbonate. Prices are estimated to have increased from around US$120/t CIF China in

2004 to US$250/t in 2008 (Table 238). They then fell by US$60/t in 2009. There was a

lag in the rise of chemical-grade spodumene prices compared to technical-grade lithium

carbonate up to 2008, as the latter increased quickly, but since 2010 they have more

had a closer link with chemical-grade spodumene concentrate priced at a 41-43%

discount. This discount reflects the economics of spodumene conversion; in that

process spodumene is estimated to account for 50-55% of total operating costs (Section

3.6).

Table 238: Comparison of prices for chemical-grade spodumene concentrate and

lithium carbonate, 2004 to 2012

2004 2005 2006 2007 2008 2009 2010 2011 2012

Chemical-grade spodumene (14.8% LCE)1:

US$/t 120 140 160 200 250 190 235 242 287

US$/t LCE2

960 1,120 1,280 1,600 2,000 1,520 1,880 1,920 2,280

Lithium carbonate (LCE basis)3:

US$/t 2,187 2,998 4,236 6,513 5,916 5,663 4,595 4,640 5,323

Difference:

US$/t 1,227 1,778 2,956 4.913 3,916 4,143 2,715 2,720 3,043

% 44 37 30 25 34 27 41 41 43 Source: China Customs, Roskill estimates and Figure 94 Notes: 1-CIF China

2-Assumes requirement of 8t of minerals containing 6% Li2O (14.8% LCE) required per 1t of lithium carbonate and accounting for 85% losses (= 12.6% LCE equivalent)

3-CIF Average based on imports by Spain, France, Italy, Turkey and Thailand from Chile


Roskill


19.3 Technical-grade lithium carbonate prices

The average value of imports (CIF) of lithium carbonate into key industrial (i.e. non-

battery-grade) markets from Chile can be used as a guide to changes in yearly average

contract prices for technical-grade lithium carbonate from SQM and Rockwood Lithium.

Key industrial markets include Spain, France, Italy, Turkey and Thailand, where lithium

carbonate is used in glass, ceramics, glass-ceramic and metallurgical end-uses.

In addition, Industrial Minerals lists average monthly prices for lithium carbonate

(technical-grade, large contracts) delivered duty paid (DDP) USA. Industrial Minerals’

prices are understood to be sourced from SQM. Asian Metal, a China-based trade

publication, also lists average weekly prices for technical-grade lithium carbonate DDP

China, although these are considered to represent spot transactions.

With world production concentrated in the hands of just two producers – FMC Lithium

and Foote Mineral (now Rockwood Lithium) of the USA – lithium carbonate prices in the

USA increased steadily from US$3,800/t DDP in 1990 to US$4,300/t DDP in 1995,

according to the USGS. The entry of SQM of Chile into the market in late 1996

subsequently resulted in a restructuring of the lithium carbonate industry. Shipment of

an additional 11,739t of lithium carbonate in 1997 and SQM’s aggressive pricing policy

to secure market share resulted in a sharp drop in prices. Average prices fell to

US$1,700/t DDP in 1999, the lowest historical level.

Average values of imports of technical-grade lithium carbonate from Chile were below

US$2,200/t CIF in the early 2000s. During this time FMC Lithium suspended lithium

carbonate production in Argentina because of competition from Rockwood Lithium and

SQM in Chile, who both had a cost advantage over FMC (Section 3.6).

SQM raised lithium carbonate prices by 10% in January 2004, citing high demand and

freight costs and the strengthening of the Chilean peso against the US dollar. The

increase in demand and prices prompted FMC Lithium to re-enter the market and

production of lithium carbonate in Argentina was restarted. FMC Lithium raised prices

by 9% from October 2004, reporting that between 2002 and 2004 natural gas costs had

increased by nearly 300% and freight costs by 15%.

In 2005, strong growth in demand resulted in a tightening in supply as the South

America brine producers could not increase production quickly enough. The conversion

of lithium minerals to lithium compounds in China, which had become uneconomic

following the entry of SQM to the market in 1997, started to reappear to meet surging

domestic, but also export, demand. The higher costs involved in converting lithium

minerals to lithium carbonate compared to brine production meant prices had to move

back to pre-1997 levels (>US$4,000/t), to make the process economic for producers,

and did so relatively quickly.

By 2007 prices had peaked at around US$6,500/t CIF. In 2008, however, average

values of imports fell by almost 10% to US$5,900/t CIF, as the global economic

downturn started to reduce demand meaning supply no longer was under pressure.

Average values of imports continued to fall in 2009 and bottomed out at US$4,600/t CIF


Roskill


in 2010, an almost 25% decline, after SQM reduced 2010 contract prices by 20% at end-

2009. Average values of imports stabilised in 2011.

The price of Chilean-produced technical-grade lithium carbonate DDP USA, as reported

by Industrial Minerals, has followed a similar trend but, with the exception of 2007, it has

maintained a US$450/t premium to average values of imports into Europe. Note: US

imports from Chile are not subject to import duty but are subject to sales tax (VAT) at 5-

10% depending on the state, thus the DDP price should be 5-10% higher than the CIF

price, which is reflected in the average premium of US$450/t.

The price of domestically-produced technical-grade lithium carbonate DDP China, as

reported by Asian Metal, followed a similar trend to average values of imports and DDP

USA prices, bottoming at US$4,620/t (US$3,950 excl. VAT) in May 2011, after which it

has started to climb rapidly, plateauing at US$6,500/t (US$5,555/t excl. VAT) since July

2012. Average values of imports taken from Chinese bill-of-ladings data, were

US$4,500/t CIF in Q4 2011 and climbed to around US$5,000/t CIF in 2012.

Rockwood Lithium announced price increases of up to US$1,000/t for lithium carbonate

in July 2012. This followed an announcement of a 20% rise in prices for new contracts

for a number of lithium products, including lithium carbonate, from July 2011. However,

this cumulative 42% rise in contract prices does not seem to have held short-term with

average values of imports rising by only 14% year-on-year, to US$5,300/t CIF in 2012,

although average monthly import values from mid-2012 have been closer to US$5,500/t

CIF, a 19% rise.

Figure 94: Prices for technical-grade lithium carbonate, 1999 to 2012 (US$/t CIF)

Source: Global Trade Atlas; Industrial Minerals; Asian Metal Notes: CIF Average based on imports by Spain, France, Italy, Turkey and Thailand from Chile DDP USA and DDP China prices adjusted to CIF equivalent by removing import duty and VAT

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CIF Average USA less import duty & VAT China less import duty & VAT


Roskill


19.4 Battery-grade lithium carbonate

The average value of imports (CIF) of lithium carbonate into key battery-grade markets

from Chile and Argentina can be used as a guide to yearly average contract prices for

battery-grade lithium carbonate from SQM, Rockwood Lithium and FMC Lithium.

Specifically, the average values of imports into China, Japan, South Korea and Taiwan

are key indicators, as these are the major producers of lithium-ion cathode materials

using battery-grade lithium carbonate.

Asian Metal also lists average weekly prices for battery-grade lithium carbonate DDP

domestic Chinese market. Imports of lithium carbonate by China comprise both

technical and battery -grade and it is not possible to distinguish the difference from the

trade data.

Consistent with technical-grade lithium carbonate, average values of imports of battery-

grade lithium carbonate increased three-fold between 2004 and 2007, but continued

rising into 2008, peaking at around US$6,400/t CIF Japan and Taiwan. Average values

of imports then fell sharply to around US$5,100/t in 2010 and were US$4,850/t in 2011.

Average value of imports have risen through 2012, to US$5,025/t CIF Korea, US$5,150/t

CIF Japan and US$5,500/t CIF Taiwan.

Asian Metal started reporting prices for battery-grade lithium carbonate in June 2009,

with prices falling to around US$4,530/t DDP (US$3,870/t excl. VAT) in early 2011 but

averaging US$4,750/t DDP (US$4,060/t excl. VAT) for 2011 as a whole. Prices started

rising thereafter and have stabilised at around US$6,800/t DDP (US$5,900/t excl. VAT)

since July 2012.

Figure 95: Prices for battery-grade lithium carbonate, 1999 to 2012 (US$/t)

Source: Global Trade Atlas; Asian Metal Notes: CIF Korea and CIF Japan based on average value of imports from Chile; CIF Taiwan based on average value of

imports from Argentina

0

1000

2000

3000

4000

5000

6000

7000

CIF Korea CIF Japan CIF Taiwan Delivered China


Roskill


Prices for battery-grade lithium carbonate (>99.5% Li2CO3) DDP China, as reported by

Asian Metal, appear to command a premium to technical-grade (>99.0% Li2CO3). In

2012 this premium stood at US$320/t, but was as high as US$1,350/t in 2009 (Table

239).

Comparing average values of imports of battery-grade lithium carbonate to average

values of imports of technical-grade, the latter appear to have risen faster and peaked

sooner (2007) versus the former (peaking in 2008). In addition, average values of

imports of technical-grade lithium carbonate have risen faster in 2012 versus battery-

grade. This likely reflects differences in the structure of contracts between producers and

consumers for different grades; it could also suggest increased competition in the key

Asian market, especially as new producers enter the market (Galaxy Resources in 2012

for example).

Nevertheless, assuming the period 2009 to 2010 and the quoted prices for spot material

by Asian Metal are an accurate reflection of the market, the premium for battery-grade

lithium carbonate is considered to “normally” be around US$500/t.

Table 239: Comparison of technical- and battery- grade lithium carbonate prices,

2004 to 2012 (US$/t)

2004 2005 2006 2007 2008 2009 2010 2011 2012

DDP Spot China:

Technical-grade - - - - - 5,350 5,259 5,086 6,212

Battery-grade - - - - - 6,693 6,061 5,651 6,532

Difference - - - - - +1343 +802 +565 +320

CIF China:

Technical-grade - - - - - - - 4,500 4,960

Battery-grade - - - - - - - 4,725 4,985

Difference - - - - - - - +225 -25

CIF (excl. China):

Technical-grade 2,187 2,998 4,235 6,512 5,916 5,662 4,595 4,639 5,288

Battery-grade 2,304 2,898 4,054 5,717 6,261 6,167 5,118 4,837 5,123

Difference 117 -100 -181 -796 +344 +505 +523 +198 -165 Source: Asian Metal; Global Trade Atlas

19.5 Technical-grade lithium hydroxide prices

Average values of exports of lithium hydroxide from the leading producing countries:

China, Chile, Russia and the USA, give a useful indication of lithium hydroxide contract

prices (Table 240). Prices free-on-board (FOB) the USA declined by almost 50%

between 2000 and 2004, whilst those from China and Russia remained steady at around

US$3,500/t FOB and US$2,850/t FOB respectively over the same period. In 2004,

prices FOB China, Chile and the USA were all around US$3,500/t.


Roskill


FMC Lithium raised prices for lithium hydroxide by 7% in September 2004 and by a

further 15-20% in August 2005. This increase reflected both higher production costs

and rising demand for lithium hydroxide in lubricating greases. SQM reported that

lithium hydroxide prices had risen to US$4,000/t FOB in spring 2005 and the company’s

first exports from a new plant in Chile in December 2005 had an average value of

US$4,416/t FOB.

By 2007, prices FOB China, Chile, Russia and the USA had all converged around

US$6,700/t. In 2008, prices FOB the USA and Chile were similar to 2007, while those

from China decreased by 13% and exports from Russia increased by 13%.

Prices FOB China fell by almost US$800/t between 2007 and 2008 while those from

Chile fell by almost US$850/t as demand subsided during the global economic downturn

US$850/t between 2008 and 2009. However, exports from Russia and the USA rose

over the same period. In 2010, prices ranged from US$4,948/t FOB Chile to US$6,366/t

FOB Russia, and had fallen sharply with the exception of China where prices were

already low in comparison. Increasing volumes of battery-grade lithium hydroxide have

been shipped from the USA and China since 2010 (Section 8.6), distorting the overall

pricing picture, with Chile and Russia now left as the benchmark for FOB pricing. Prices

FOB Chile and China were at US$5,209-5,279/t in 2011, rising slightly in 2012.

Average values of imports by major importing countries can also be used as a guide to

CIF pricing of lithium hydroxide pricing. CIF prices have followed a similar trend;

however, there are differences because of the sources (countries and companies) of

material. CIF prices are most closely aligned with FOB Chile prices, but maintaining

around a US$500/t premium since 2006.

Table 240: Average values of exports/imports of lithium oxides and hydroxides by

leading exporting/importing country, 2004 to 2012 (US$/t)

2004 2005 2006 2007 2008 2009 2010 2011 2012

Producers (FOB):

China 3,675 4,964 6,114 6,610 5,800 5,749 5,964 6,079 6,901

Chile 3,501 4,421 4,929 6,554 6,784 5,940 4,948 5,279 5,368

Russia 2,865 2,906 4,381 6,896 7,805 8,061 6,366 5,209 5,622

USA 3,466 3,575 5,021 6,919 6,963 7,167 6,257 6,596 7,793

Average 3,377 3,967 5,111 6,745 6,838 6,729 5,884 5,790 6,421

Major importers (CIF):

India 2,601 4,439 5,793 7,287 6,407 6,273 5,456 5,674 6,233

Spain 3,134 3,971 5,372 7,370 7,469 6,901 5,540 6,257 5,983

South Africa 2,860 4,766 5,693 6,385 7,313 6,602 5,034 5,200 5,463

Average 2,865 4,392 5,619 7,014 7,063 6,592 5,343 5,711 5,893 Source: Global Trade Atlas

In the USA, Chile and Russia, lithium hydroxide is produced from lithium carbonate;

therefore, average values of exports of lithium hydroxide from Chile, Russia and the

USA have closely followed the trend in price increases for lithium carbonate (Figure 96).

In China, lithium hydroxide is produced either from conversion of lithium carbonate or

directly from lithium minerals. The ability of Chinese mineral conversion plants to


Roskill


produce lithium hydroxide directly means they can be competitive in the export market

when lithium carbonate prices are high.

Lithium hydroxide prices have maintained a premium of around US$880/t CIF to lithium

carbonate since 2000. The premium reflects costs of the lithium carbonate, energy and

reagents required during the conversion process.

Figure 96: Comparison of lithium hydroxide and lithium carbonate prices,

2000 to 2012 (US$/t)

Source: Global Trade Atlas Note: Lithium hydroxide prices are average CIF India, Spain and South Africa Lithium carbonate prices are average CIF Spain, France, Italy, Turkey and Thailand from Chile

19.6 Battery-grade lithium hydroxide prices

The unit value of imports into Japan from the USA can be used to give a good indication

of battery-grade lithium hydroxide prices, reflecting shipments from the major producer,

FMC Lithium, to the Japanese battery cathode industry. In 2012, Japanese

consumption of battery-grade lithium was estimated at 2,640t LCE versus 650t LCE of

technical-grade lithium hydroxide. Exports from the USA to South Korea are believed to

contain a much greater proportion of technical grade; meanwhile, China, the other major

battery cathode manufacturer, does not import very large quantities of lithium hydroxide

as demand is met from domestic production.

Estimated prices CIF Japan for battery-grade lithium hydroxide have fluctuated but

generally stayed within a US$8,000-10,000/t range, averaging US$9,160/t since 2008

(Figure 97).

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Lithium hydroxide Lithium Carbonate


Roskill


The Chinese domestic price for battery grade lithium hydroxide in 2011 was reported to

be RMB47,000-RMB48,000/t (US$7,390-US$7,540/t) by Sichuan Tianqi, the major

producer, which is below that indicated for Japan (US$8,480-8,935/t).

The unit value of Japanese imports between Q4 2011 and Q2 2012 increased by just

over 10%, a result of FMC Lithium implementing planned price increases across its

lithium product line, however the price has once again softened, perhaps because of

rising competition from China (which now also exports battery-grade lithium hydroxide to

Japan) and Rockwood Lithium bringing on a new plant during 2013.

Figure 97: Japan: Quarterly average import value of lithium hydroxide from the USA,

2008 to 2012 (US$/t CIF)

Source: Global Trade Atlas Note: Prices adjusted to reflect proportion of technical-grade hydroxide imported

19.7 Lithium chloride prices

Argentina, Chile and China are the three largest producers of lithium chloride from

domestic raw materials, and are the only three countries (with the exception of Brazil

which hasn’t imported or exported any chloride since 2007) to report shipments

separately from other metal chlorides. However, the vast majority of shipments from

Argentina and Chile are destined for the production of lithium metal or other downstream

lithium compounds, and generally reflect the transfer price between FMC Lithium’s

operations in Argentina and the USA and Rockwood Lithium’s operations in Chile and

the toll-converter of its metal products (DuPont) in the USA. In contrast, most exports

from China are understood to reflect lithium chloride products traded on the open

market; therefore, prices FOB China represent the best reflection of actual contract

prices for lithium chloride.

6,000

7,000

8,000

9,000

10,000

11,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009 2010 2011 2012


Roskill


Average values of exports of lithium chloride, FOB China, increased from US$2,976/t in

2004 to US$7,649/t in 2007 (Table 241), tracking increases in the price of lithium

carbonate (which rose from US$2,187/t CIF to US$6,513/t CIF over the same period).

Average values then fell steadily down to US$4,733/t FOB in 2010, again following the

lithium carbonate price, but have since improved, rising to US$5,461/t FOB in 2012.

Table 241: Average values of exports of lithium chloride by leading producing

country, 2004 to 2012 (US$/t FOB)

2004 2005 2006 2007 2008 2009 2010 2011 2012

Argentina1

4,387 4,376 4,377 3,900 4,025 3,547 3,260 3,647 3,901

Chile1

- 3,197 3,193 2,467 2,337 2,190 2,178 2,452 3,344

China 2,976 3,748 5,461 7,649 6,437 5,635 4,733 5,187 5,461 Source: Global Trade Atlas Note: 1-Reflects transfer pricing

19.8 Lithium metal prices

The majority of lithium metal produced is catalyst-grade, which is used for the production

of butylithium and other organic lithium products. Battery-grade lithium metal is shipped

in a number of forms, including as ingot and foil. Lithium metal does not carry a

separate HS code and is grouped with similar alkali metals (rubidium and caesium),

therefore distinguishing prices from trade data is complex. Nevertheless, certain trade

flows can be used as a guide to lithium metal pricing.

Russian shipments of alkali metals to Germany are thought to comprise predominantly

battery-grade lithium metal ingot tolled by CHMP on behalf of Rockwood Lithium. Prices

rose by 62% between 2004 and 2008 before falling and then recovering to around

US$44,900/t FOB Russia (Table 242).

Chinese shipments to Japan and Hong Kong and German shipments to Switzerland are

though to represent trade in lithium metal foil for primary battery production. Prices have

shown a similar trend to the above, rising to US$59,457/t FOB in 2007 before falling and

recovering to US$66,944/t FOB in 2012. Chinese prices of battery-grade lithium metal

(99.9% Li) were reported at RMB460-500,000/t (US$56,800-61,700/t) at the beginning of

2006 and were RMB400-460,000/t (US$58,400-67,200/t) at the beginning of 2008. This

is not too dissimilar to the average value of exports from China, suggesting the latter are

a reasonable assessment of pricing.

Catalyst-grade lithium metal shipments are represented by China to USA and India trade

flows, the average values of which increased from under US$20,000/t FOB in 2004 to

US$38,689/t FOB in 2008. Average values then fell, before recovering to US$34,406/t

FOB in 2012. The difference in price between battery-grade ingot and catalyst-grade

has averaged around US$20,000/t FOB since 2004.


Roskill


Average values of shipments from the USA to the UK and Germany probably represent

transfer pricing between FMC Lithium and Rockwood Lithium operations (metal being

produced in the USA, lithium organics in the UK and Germany).

Table 242: Average values of exports of lithium metal by leading producing country,

2004 to 2012 (US$/t FOB)

2004 2005 2006 2007 2008 2009 2010 2011 2012

Battery-grade ingot:

Russia-Germany 26,787 28,591 28,047 32,637 43,385 41,689 40,037 42,281 44,904

Battery-grade foil:

China-Japan

45,956 33,428 55,369 49,464 54,512 56,221 56,195 55,698 65,566

China-HK

41,020 58,186 58,549 79,078 74,529 64,279 53,972 - -

Germany-Swiss - 65,545 60,543 49,829 43,549 57,636 54,199 64,407 68,321

Average 43,488 52,386 58,154 59,457 57,530 59,379 54,789 60,053 66,944

Catalyst-grade:

China-USA 23,428 9,198 17,721 24,392 32,920 35,946 30,016 29,621 36,010

China-India 16,089 20,786 29,219 35,991 44,457 17,866 34,146 32,048 32,802

Average 19,759 14,992 23,470 30,192 38,689 26,906 32,081 30,835 34,406

Catalyst-grade1:

USA-UK 48,161 16,074 7,871 12,576 13,689 22,458 21,990 20,564 29,293

USA-Germany

12,696 12,859 13,721 15,344 12,776 13,191 11,822 14,477 13,564 Source: Global Trade Atlas Note: 1-Potentially transfer pricing between FMC Lithium operations in USA and UK and DuPont in the USA and

Rockwood Lithium in Germany

19.9 Outlook for lithium prices

Lithium carbonate is the main product produced (116,080t LCE out of 152,400t LCE in

2012) and consumed (75,600t out of 150,200t LCE) in the lithium market. Therefore,

lithium carbonate is the best indicator of changes in supply and demand, and the

benchmark by which most other lithium products are priced.

19.9.1 Technical-grade lithium carbonate prices

Installed capacity for lithium production at end-2012 (279,000t LCE) is sufficient to meet

forecast demand by 2017 in the base-case demand scenario (238,940t LCE). Installed

capacity for lithium compound production, however, is only 190,650t LCE (comprising

122,150t LCE of brine and 68,500t LCE of mineral conversion capacity).

New or expanded capacity is therefore required to satisfy future demand in the base-

case demand scenario. In addition to the start-up of Galaxy Resources’ Jiangsu plant in

late-2012 (capacity of 17,500tpy LCE), two new projects (Canada Lithium, 19,000tpy

LCE and Orocobre, 17,000tpy LCE) are expected to be commissioned in 2013 and 2014


Roskill


respectively. Combined, this additional capacity is more than enough to meet

requirements to 2017.

In addition to these new projects, however, FMC Lithium in Argentina is ramping up its

7,000tpy LCE expansion in mid-2013 and Rockwood Lithium is expanding its operations

in Chile by 20,000tpy LCE by late-2013; SQM has also stated its intention to increase

capacity to 60,000tpy LCE. On top of this, Chinese mineral converters have recently

expanded their plants (Sichuan Tianqi by 5,000tpy LCE and Ganfeng Lithium by

10,000tpy LCE), utilising increased availability of spodumene from Talison Lithium’s

newly (2012) expanded chemical-grade spodumene capacity in Australia.

From a situation of relative market balance in 2011/12, following re-stocking in 2010

after the global economic downturn, 2013 and 2014 are likely to witness supply-side

pressure on pricing. Nevertheless, there is insufficient low-cost capacity entering the

market to displace all of the high-cost mineral conversion capacity. The lithium market

will therefore continue to be reliant on supplies of lithium compounds from higher-cost

producers in China through to 2017, and this effectively puts a floor under pricing.

Retaining some higher-cost production in the supply chain is also advantageous for

lower-cost producers, because despite potentially losing some market share, its means

low-cost producers can operate at very healthy margins on commodity lithium products

(carbonate and hydroxide in particular).

Lithium carbonate prices appear to have reached a floor of US$4,600/t CIF for technical-

grade and US$4,830/t CIF for battery-grade in 2011. Cost inflation for both brine-based

and mineral-based producers is forecast at 4.5%py and will be the main underlying

driver for increased prices in the long-term. Assuming a 4.5%py rise in operating costs,

the floor price in 2017 would be US$6,000/t CIF (Table 241). This forms the basis for

the low-case scenario for pricing.

Rockwood Lithium announced a US$1,000/t price rise for lithium compounds in mid-

2012. This followed similar announcements by the company, and FMC Lithium, in 2011

stipulating a 20-25% price increase for new contracts. Ultimately prices only rose by

15% for technical-grade and 6% for battery-grade between 2011 and 2012. If the

US$1,000/t increase is achieved for 2013 contracts, base-case prices for technical-

grade lithium carbonate might be expected to rise to around US$6,300/t CIF during

2013, although the average for the year would be lower as not all contracts are based on

a full-year, or, start in January. However, a US$250-500/t CIF (~10%) increase is

considered more prudent given the 20% increase already pushed through for 2012

contracts and increased supply entering the market during 2013, and in that scenario

average prices for technical-grade lithium carbonate would rise to US$5,800/t CIF in

2013. Assuming a similar 4.5%py inflationary rise in prices, in a stable supply/demand

scenario the average price would be expected to rise to around US$6,900/t CIF in 2017.

This outlook forms the base-case scenario for pricing.

With current and forecast capacity more than sufficient to meet demand, it is unlikely

prices will test 2007 highs of US$6,500/t CIF, but if demand was to accelerate as per the

optimistic growth forecast (15.8%py, to 312,725t LCE by 2017) then prices would likely

rise on tightening capacity, and the slow response time of brine producers to increase


Roskill


production. In this scenario, prices are likely to trend around US$800-900/t above the

base-case to reach US$7,800/t by 2017.

Table 243: World: Forecast nominal and real prices for technical-grade lithium carbonate, 2012 to 2017 (US$/t CIF)

Nominal Prices Constant 2012 Prices


2012 5,800 5,300 4,800 5,800 5,300 4,810

2013f 6,575 5,800 5,025 6,516 5,748 4,980

2014f 6,850 6,050 5,250 6,730 5,944 5,158

2015f 7,100 6,300 5,500 6,897 6,120 5,343

2016f 7,450 6,600 5,750 7,158 6,342 5,525

2017f 7,800 6,900 6,000 7,413 6,558 5,702 Source: Roskill forecast Note: Real prices adjusted to constant US dollars using World GDP deflator data from the International Monetary


In reality, prices are likely to move within the low-high range over the forecast period,

rather than follow the base-case, as year-on-year growth in demand and supply is rarely

consistent. Given a projected large rise in capacity being commissioned and supply

ramped up in 2013, prices in 2014 are forecast to trend towards the low-case pricing

point (Figure 98) on increased competition between producers. This could result in

some high-cost capacity being idled during 2014. The impact of this on 2015 should be

a return to a more balanced market, but prices may take a couple of years to recover

again, gradually rising back to the base-case by 2016.

Figure 98: World: Forecast nominal prices for technical-grade lithium carbonate,

2012 to 2017 (US$/t CIF)

Source: Table 243, Roskill estimates

In real-terms (inflation adjusted), prices in the base-case scenario would increase to around US$6,560/t CIF in 2017 (Table 243 and Figure 99).

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

2012 2013f 2014f 2015f 2016f 2017f

High-case Base-case Low-case Forecast trend


Roskill



2012 to 2017 (US$/t CIF)

Source: Table 243, Roskill estimates Note: Real prices adjusted to constant US dollars using World GDP deflator data from the International Monetary


19.9.2 Battery-grade lithium carbonate prices

The common view in the market is that battery-grade lithium carbonate commands a

slightly higher price to technical-grade, typically around US$500/t CIF. This is apparent

in quoted prices for lithium carbonate published by Asian Metal, for example, but in the

analysis of historical contract pricing based on trade flows (Section 19.4) it is not as clear

cut, with battery-grade seemingly cheaper than technical-grade between 2005 and 2007,

the trend reversing to a US$390/t CIF average premium between 2008 and 2011 before

switching back to a discount in 2012 of US$165/t CIF.

It is possible that the structure of contracts made in 2011 (or previous years) appears to

have benefitted battery-grade consumers in 2012, possibly as battery-grade end-users

now account for a significant proportion of lithium carbonate sales by the “big-three”

(SQM, Rockwood Lithium and FMC Lithium), meaning that contract prices for battery-

grade material in 2012 appear to have been similar to, or lower than, for technical-grade.

It may take a few years for this situation to correct itself, but ultimately a premium of

around US$500/t CIF should return to the market over the next few years. That said,

expanded and new capacity is aimed at battery-grade consumers, and the resulting

increased competition in the market forecast for 2013 and 2014 is likely to be for battery-

grade material, therefore any premium might take longer to reappear, if it reappears at

all.

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

2012 2013f 2014f 2015f 2016f 2017f

High-case Base-case Low-case Forecast


Roskill


19.9.3 Technical-grade lithium mineral prices

Prices of lithium minerals for use in the glass, glass-ceramic, ceramics and metallurgical

powders markets are unlikely to rise significantly through to 2017, and will likely follow

the 5.5%py increase (in nominal terms) of technical-grade lithium carbonate. Any

increase in demand for these end-uses is likely to be met by existing capacity in

Australia and elsewhere. Prices will increase in-line with rising costs for materials,

energy and transport. Any large rises in prices should be capped by prices for lithium

carbonate, which can be used as a substitute in most of the major end-uses for lithium

minerals.

19.9.4 Chemical-grade spodumene prices

Chemical-grade spodumene prices appear to track the price of lithium carbonate even

more closely than technical-grade lithium minerals, as 50-55% of the mineral conversion

cost is spodumene concentrate raw material. Since 2010, chemical-grade spodumene

concentrate has been priced at a 41-43% discount (on a LCE contained basis) to

technical-grade lithium carbonate and this is likely to continue to 2017. There does not

appear to be any new large supply of chemical-grade spodumene concentrate likely to

enter the market in the period to 2017, which might have had the potential to apply

downside pressure to prices through increased competition with the current major

supplier, Talison Lithium. At a 42% discount to the lithium carbonate price, chemical-

grade spodumene concentrate prices are forecast to rise to US$373/t CIF China by

2017 (Table 244). In real-terms (inflation adjusted), prices for chemical-grade

spodumene concentrate would reach US$354/t CIF by 2017. Talison Lithium announced that it had secured a 15% rise in contract prices for spodumene concentrate in early 2013, therefore prices may rise quicker than the base-case scenario in 2013 (to US$329/t CIF). This rise may be short-lived, however, if prices for lithium carbonate fall towards the low-case scenario in 2014 as forecast.

Table 244: World: Forecast nominal prices for technical-grade lithium carbonate and

chemical-grade lithium minerals, 2012 to 2017 (US$/t CIF)

Technical-grade lithium carbonate Chemical-grade spodumene


2012 5,800 5,300 4,800 313 286 259

2013f 6,575 5,800 5,025 355 313 271

2014f 6,850 6,050 5,250 370 327 284

2015f 7,100 6,300 5,500 383 340 297

2016f 7,450 6,600 5,750 402 356 311

2017f 7,800 6,900 6,000 421 373 324 Source: Roskill forecast


Roskill


19.9.5 Lithium hydroxide prices

Technical-grade lithium hydroxide prices are forecast to maintain their premium of

around US$900/t CIF to technical-grade lithium carbonate. The premium reflects costs

of the lithium carbonate, energy and reagents required during the conversion process.

Prices for technical-grade lithium hydroxide would therefore reach US$7,800/t CIF by

2017 in the base-case scenario (or US$7,410/t CIF in real-terms).

Table 245: World: Forecast nominal prices for technical-grade lithium carbonate and

technical-grade lithium hydroxide, 2012 to 2017 (US$/t CIF)

Technical-grade lithium carbonate Technical-grade lithium hydroxide


2012 5,800 5,300 4,800 6,700 6,200 5,700

2013f 6,575 5,800 5,025 7,475 6,700 5,925

2014f 6,850 6,050 5,250 7,750 6,950 6,150

2015f 7,100 6,300 5,500 8,000 7,200 6,400

2016f 7,450 6,600 5,750 8,350 7,500 6,650

2017f 7,800 6,900 6,000 8,700 7,800 6,900 Source: Roskill forecast

Battery-grade lithium hydroxide consumption has grown relatively quickly over the last five years, with supply limited to FMC Lithium initially but with a couple of Chinese producers entering the market in 2011/12 and Rockwood Lithium installing new capacity which is expected to be commissioned during 2013. Battery-grade hydroxide has carried an even larger premium to lithium carbonate than technical-grade, at around US$2,000/t CIF Japan and this is expected to remain the case in the period to 2017 based on the additional costs to produce it versus technical-grade. Prices for battery-grade lithium hydroxide would therefore reach almost US$10,000/t CIF (US$9,500/t in real-terms).

Documents

Lithium: Market Outlook to 2017 - Land Matrix