Lithium Industry: Outlook and Perspectives

info@signumbox.com
www.signumbox.com
Fidel Oteza 1921, ocina 1001 Providencia, SanDago, Chile
562-9460407

Lithium: A mineral that is in everyones life

Lithium reserves are abundant and spread over the world

o Currently produced in countries with stable economies and governments

Lithium is a green mineral:

o Production from brine is based on solar energy
o Lithium can be recycled from used batteries

Lithium in energy storage/ batteries is strategic: without lithium, there is no battery.

o However the cost of lithium in a battery is negligible: it represents less than 3% of
the total cost. Hence, minimal risk of being replaced.

Future perspectives are interesting: demand growing at 10%+ per year, with new
technologies and greener processes supporting this trend into the future.
2

Agenda
Demand growth drivers
Where can we find lithium?
Why is lithium unique?
Demand projections
Applications

Three demand growth drivers

#1: Oil Dependency
Iraq is the largest source of oil supply growth (IEA 2012)
Crude prices have remained high in historical terms
Rising transportation demand and upstream costs reconfirm the end of cheap oil
Big concern over security of supply Urgent need for new sources of energy such
as electricity (hybrid and electric vehicles)
UAE
2%

World Oil Production 2010

Nigeria
2%
Others
15%

Brazil
2% Iraq
2%
Venezuela
2%
Mexico
3%
Canada Iran
3%
3%
China
4%

Europe
4%

US
7%

Others
OPEC
33%

Russia
10%
Saudi
Arabia
8%

4
Source: InternaDonal Energy Agency, February 2012

Three demand growth drivers

#2: Global Warming

Transportation is the sector with the highest final energy consumption rate and
contributes to about 23% of world CO2 emissions.
o

China is the worlds largest energy consumer and is the world largest annual
emitter of energy-related CO2.

International Energy Agency (IEA) estimates that cumulative CO2 emissions over
the next 25 years will increase long-term average temperature by 3.5C.
World CO2 Emissions by Sector in 2009

World CO2 Emissions by Country in 2009

Others
10%
Residential
6%

Industry
20%

Electricity
and Heat
41%

China
24%
Others
49%

US
18%

Transport
23%
Japan India
5%
4%
Source: InternaDonal Energy Agency, 2011

Worldwide emissions must be reduced.

Electrifying transportation is one of the main factors.

6
Source: International Energy Agency, World Energy Outlook 2011

Oil Dependency and Global Warming are driving demand for

new low-carbon fuels electrifying transportation
India has proposed tax exemptions for lithium-ion batteries used in electric-hybrid vehicles.
(Bloomberg, March 2011)
China adopted a fuel economy target of 6.7 l/100 km for 2015, considering further
increasing to 4.5 l/100 km by 2025. (International Energy Agency, 2011)
China will have 150 million electric bikes by 2015, compared with 120 million in 2010.
(Bloomberg, December 2011)
Chinese government set an ambitious goal: by the end of 2011, the nation would be able to
produce at least 500,000 hybrid and/or electric buses a year. (New York Times, December
2011)
President Obama Launched the EV-Everywhere Challenge Program in order to enable
companies in the United States to be the first in the world to
produce a 5-passenger affordable American electric
vehicle with a payback time of less than 5 years by 2022.
(US Department of Energy, March 2012)
7

Three demand growth drivers:

#3: Mobility and Consumerisation

Mobility is a major new force in the world of consumer electronics

o

Growing markets: smartphones, tablets, laptops, among others

Gadgets are increasingly more affordable

Population effect in emerging economies such as China, India and Brazil

Almost 95% of the batteries used in electronic devices are based in lithium

q Demand for consumer technology will continue to advance in 2012 with record
numbers of smartphones and tablets likely to be sold and demand from emerging
markets, including the Middle East. (Deloitte, February 2012)
q By 2020 and within the course of one decade, real consumption in China will have
doubled to $4.8 trillion and China will then be the worlds second-biggest consumer
market after the United States. (Mc Kinsey&Company, October 2011)
8

Agenda
Demand growth drivers
Where can we nd lithium?
Why is lithium unique?
Demand projec;ons

Lithium is abundant and spread all over the world- more than 180
million tones of Lithium Carbonate Equivalent (LCE) are found in
Hard Rock Minerals (Pegmatite) and Brine (Salt Flats) deposits.

Rusia
Larritta,Finland

Manitoba,Canada

Quebec,Canada

Alberta,Canada
Ontario,Canada

Karalpa,Austria
Serbia

Nevada,US
California,US

NorthCarolina,US
Tibet,China

Texas,US

SichuanProvince,China

BajaCalifornia,Mexico

Manono,Zaire

Symbology

StatesofMinasGeraisandCear,Brazil
SalardeUyuni,Bolivia

Pegmatite

Salta,Argentina
Catamarca,Argentina
SalardeAtacama,Chile

Zimbabwe
Western/SouthAustralia

Continental Brine
Geothermal Brine

Jujuy,Argentina

Oilfield Brine
Jadarites

LCE: Lithium Carbonate Equivalent

*As of December 2011

10

The majority of lithium reserves are found and produced

in countries with stable economies and governments.

Even though 65% of lithium reserves concentrate in Bolivia and Chiles continental
brines, lithium is also abundant and economically viable in hard rock minerals.
o Australia, which only has hard rock deposits, has become the second largest
producer of lithium after Chile.

Largest lithium resources are contained in seawater but at low concentrations.

Lithium Reserves by Country
Australia Others
5%
3%
Argentina
6%
US
8%

US Others
5%
China 3%
10%
Bolivia
34%

China
13%
Chile
31%

Source: signumBOX estimates, January 2012

Lithium Supply by Country 2001

Chile
38%

Argentina
13%

Australia
31%

11

Agenda
Demand growth drivers
Where can we nd lithium?
Why is lithium unique?
Demand projec;ons

Lithium: A metal with unique characteristics

Has the highest specific heat capacity among solids

Has a high electrochemical potential
Has a low atomic mass
Has a low density

Widely used in heat-resistant glass and ceramics, aluminum

alloys and lubricating greases, and energy storage / batteries.

13

Due to the unique combination of several favorable

properties, lithium is used in various applications:
Lithium in Glass and Ceramics: Lithium favors the melting process because it decreases
viscosity, thermal expansion and the melting point of glasses and ceramics.
Lithium in Batteries: Primary (non rechargeable) and secondary (rechargeable)

Almost 95% of the batteries used in electronic devices are based in lithium

Electrifying transportation: hybrid and electric vehicles, electric bicycles, electric

scooters, among others

New uses as grid storage energy

Lithium Consumption by Application (2011)
Aluminum
4%

Continuos
Casting Medical
3%
Powders
5%

Polymers
3%
Others
9%
Battteries
29%

Air
conditioning
4%
Lubricating
greases
14%

Glass
13%

Frits
16%

Lithium Consumption in Batteries (2011)

Hybrid and
Electric
bikes/
scooters
10%
Hybrid and
Electric cars
9%
Portable
devices non
rechargeable
8%

Grid storage
1%

Portable
devices
rechargeable
72%

14
Source: signumBOX estimates, January 2012

Since Sony introduced the first lithium-ion cell at the beginning

of the 1990s, manufacture of lithium ion batteries in Japan has
increased at rates above 30% per year (on average).

Manufacture of Rechargeable Batteries in Japan (Th. units)

2500000

2000000

Small sealed-type
batteries
Lead acid

1500000

Others
Other alkaline
1000000

Nickel Metal Hydride

Lithium ion

500000

0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Battery Association of Japan

15

Agenda
Demand growth drivers
Where can we nd lithium?
Why is lithium unique?
Demand projec;ons

16

Batteries for portable devices: A promising future

Mobile Phones:
-Lithium Content in the battery: 1 3 grams LCE
-Total lithium consumption 2011: 4,300 tones LCE
-Total lithium consumption 2025: 9,800 tones LCE
-CAGR 2011 2025: 6.1%

Smartphones:
-Lithium Content in the battery: 2 3 grams LCE
-Total lithium consumption 2011: 1,700 tones LCE
-Total lithium consumption 2025: 9,600 tones LCE
-CAGR 2011 2025: 13.2%

Laptops:
-Lithium Content in the battery: 30 40 grams LCE
-Total lithium consumption 2011: 14,000 tones LCE
-Total lithium consumption 2025: 44,000 tones LCE
-CAGR 2011 2025: 8.5%

Tablets:
-Lithium Content in the battery: 20 30 grams LCE
-Total lithium consumption 2011: 1,200 tones LCE
-Total lithium consumption 2025: 17,000 tones LCE
-CAGR 2011 2025: 20.8%

Powertools:
-Lithium Content in the battery: 40 60 grams LCE
-Total lithium consumption 2011: 1,100 tones LCE
-Total lithium consumption 2025: 8,000 tones LCE
-CAGR 2011 2025: 15.2%

LCE: Lithium Carbonate Equivalent

CAGR: Compound Annual Growth Rate
Source: signumBOX estimates, January 2012

17

Batteries for hybrid and electric vehicles:

Driving the future

In hybrid electric vehicles the amount of lithium varies between 0.8 to 2 Kg

In plug-in electric vehicles the amount of lithium ranges between 1 to 10 Kg

In pure electric vehicles the amount of lithium varies from 8 Kg to 40 Kg

Toyota Prius Plug-in Hybrid: 3.6 Kg LCE

Mitsubishi i-MiEV: 10 Kg LCE

Tesla Roadster: 40 Kg LCE

LCE: Lithium Carbonate Equivalent
Source: signumBOX estimates, January 2012

18

Batteries and other applications will drive lithium demand

growth to 10%+ per year for the next 13 years
Lithium Demand Forecast 2011 2025 (tones LCE)
600,000

500,000

Application / Tones LCE

Batteries for portable devices
Batteries for grid
Batteries for hybrid and electric
vehicles
Other lithium applications
Total Lithium Demand

400,000

2011
30,416
500

2025
111,176
7,500

CAGR 2011 - 2025

9.7%
21.3%

6,967

204,901

27.3%

91,400
129,282

174,994
498,571

4.7%
10.1%

Other lithium applications

Batteries for hybrid and electric vehicles
Batteries for grid

300,000

Batteries for portable devices

200,000

100,000

0
2011

2012

2013

2014

LCE: Lithium Carbonate Equivalent

CAGR: Compound Annual Growth Rate
Source: signumBOX estimates, January 2012.

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

The above graphs predictions of demand growth should not be considered reflective of the
Fund, which is subject to significant fluctuation and may lose value.

19

The upward trend in prices is expected to

continue into the future..

20

Lithium Industry: Outlook and Perspectives

Neither the fund nor SEI were involved in the preparation of the presentation and
they have not adopted the article as their own material.

info@signumbox.com
www.signumbox.com
Fidel Oteza 1921, oficina 1001 Providencia, Santiago, Chile
562-9460407