Lithium Costs

Lots of conflicting info has been circulating about lithium and the raw material shortage in the battery industry. We want to keep you apprised about what we know. Last week, I was invited to be on a call with over 20 leading experts in the lithium field. These included top level executives from mining companies, processors, scientists, researchers, builders, analysts, and sales execs representing companies from all over the world.

This brain-trust provided some much-needed accuracy and clarity for us and is better equipping us to plan. First, the shortage is real. It is not being made up or contrived to drive pricing up. The global demand for lithium in both metallic and salts, are far outpacing the ability of producers to keep up. Specifically, I want to address the raw material most widely used in smaller cells, lithium perchlorate.

This crystallized form of lithium is produced almost entirely by a method called solar evaporation. It is exactly what you think. Large shallow pools are created and filled with lithium rich brine. The water is slowly evaporated off by the sun leaving the raw unprocessed lithium salt that still requires additional processing.

The major producers of these are found in Argentina, Bolivia, Chile, China, and Australia. Many countries are entering the market including the US. The major issue is that solar separation takes time, up to 24 months, is weather dependent and the extraction efficacy of the method is only about 50%. This is the method that generates most of the lithium used in battery production.

The electronic vehicle market is becoming a huge user of lithium cells. Add this to the demand for consumer electronics nearly all powered by lithium cells, and it is easy to see major problems are on the horizon if new processes are not developed and new sources found.

Fortunately, that is exactly what is happening. New methods developed by SRI International, Tesla and others are cutting extraction time down to hours from months, and many new plans can utilize lesser quality elements going in and produce better quality product coming out. Further good news is these new methods do not rely on the suns’ power, and so provide the ability to utilize mineral deposits above 4000m altitudes. There you find an abundant supply of minerals that can now be used, opening new sources where the solar absorption processes made exploration unprofitable.
While this is a problem that will eventually self-correct, there will be some short-lived pain in availability and pricing. China’s leading producer of lithium perchlorate was forced to slow down production leaving small battery manufacturers scrambling for raw material, delaying order deliveries, and in some cases refusing orders. Powerhouse Two’s long standing factory relationships have helped keep the product flowing so far.

Here is what you can do to prevent issues.

  1. Order 6 – 12 months out.
  2. Try to anticipate a 6-month supply and order it.
  3. Where possible, provide us a blanket order for a 12-month period with release dates specified.
  4. If your product uses a singular certified cell, pack, or adapter, ask the Powerhouse Two team to develop multiple sources that can be approved in advance of product issues.