WEBVTT - Lithium Rush: The Key Metal Powering the EV Revolution 0:00:00.760 --> 0:00:03.400 This is Dana Perkins and you're listening to Switched on 0:00:03.640 --> 0:00:06.560 the b and EF podcast. On today's show, we're taking 0:00:06.559 --> 0:00:08.799 a look at a metal that is integral to the 0:00:08.800 --> 0:00:12.160 majority of electric vehicle battery chemistries and it is therefore 0:00:12.240 --> 0:00:15.920 one of the most in demand medals. That's lithium. Last 0:00:15.920 --> 0:00:19.720 week there were a couple of new discoveries of lithium deposits, 0:00:19.960 --> 0:00:22.360 both in the United States and in the Czech Republic. 0:00:22.760 --> 0:00:25.599 It's clear that countries around the world are looking to 0:00:25.640 --> 0:00:29.320 find this important metal, but what about refining well, Currently 0:00:29.360 --> 0:00:32.680 that part of lithium's supply chain is dominated by one country. 0:00:33.000 --> 0:00:35.080 And then what about the companies involved in this space. 0:00:35.360 --> 0:00:38.280 While there is a small list of dedicated mining companies 0:00:38.320 --> 0:00:41.200 that are on the case. On today's episode, I speak 0:00:41.240 --> 0:00:43.800 with two analysts from Benof's London office who know a 0:00:43.800 --> 0:00:46.199 thing or two about lithium. One is a metals and 0:00:46.240 --> 0:00:50.320 mining analyst, Elie Gomaskalis and the other from our batteries team, 0:00:50.440 --> 0:00:54.040 Andy Leach. Together we discuss where lithium is found, along 0:00:54.080 --> 0:00:56.440 with the different forms it takes, how it's mined, and 0:00:56.480 --> 0:00:59.840 the ecological impact of the different processes, as well as 0:01:00.120 --> 0:01:03.480 why the majority of major diversified miners might be avoiding 0:01:03.560 --> 0:01:08.520 this metal, and which nations are controlling the supply and refining. Lastly, 0:01:08.680 --> 0:01:11.479 we come to the relationship between lithium and different battery 0:01:11.560 --> 0:01:14.679 chemistries and whether or not sodium ion batteries could pose 0:01:14.680 --> 0:01:17.040 a threat to its dominance. If you'd like to learn 0:01:17.080 --> 0:01:20.360 more about lithium, BNIF subscribers are able to access the 0:01:20.400 --> 0:01:22.880 links that are included in the show notes, which relate 0:01:22.959 --> 0:01:25.520 to different b and EF research that's found on BNF 0:01:25.560 --> 0:01:28.679 dot com. As always, if you like this podcast, make 0:01:28.720 --> 0:01:31.560 sure to subscribe and you'll receive an update every time 0:01:31.560 --> 0:01:33.640 we publish a show. And if you want to spread 0:01:33.640 --> 0:01:35.920 the word to others, give us a review on Apple 0:01:35.959 --> 0:01:38.840 Podcasts or Spotify and will make us more discoverable. But 0:01:38.959 --> 0:01:41.440 right now, let's come to my conversation with Ellie and 0:01:41.440 --> 0:01:53.600 Andy about lithium. Ellie, thank you for joining today. 0:01:53.840 --> 0:01:55.360 Thank you for having me, Dana. 0:01:55.400 --> 0:01:56.920 And nice to see you as well. 0:01:56.960 --> 0:01:58.280 Andy, thank you for having me. 0:01:58.640 --> 0:02:00.760 All right, let's start with the history lesson part of this. 0:02:00.920 --> 0:02:04.360 So lithium, I want to know when did I mean? 0:02:04.360 --> 0:02:07.840 It's definitely something that many people who are listening today 0:02:07.960 --> 0:02:10.480 we are aware of this metal. We are aware that 0:02:10.600 --> 0:02:13.880 is critical for batteries, but when did the use case 0:02:13.880 --> 0:02:17.800 for lithium really take off and essentrally, are we competing 0:02:17.880 --> 0:02:21.080 with another incumbent industry or did batteries put lithium on 0:02:21.120 --> 0:02:21.440 the map. 0:02:21.880 --> 0:02:25.120 So lithium has had a number of uses over the years. 0:02:25.240 --> 0:02:27.120 It's been used in the past as a medicine for 0:02:27.480 --> 0:02:30.519 mental health issues, It's been used in glasses and ceramics. 0:02:30.639 --> 0:02:33.080 But since nineteen ninety one it's been used as a 0:02:33.080 --> 0:02:36.079 battery material. And nineteen ninety one was when Sony first 0:02:36.080 --> 0:02:39.799 commercialized lithiumine batteries, and they use lithium cobo oxide as 0:02:39.800 --> 0:02:43.079 their cathoide material. And since then batteries have grown their 0:02:43.120 --> 0:02:45.880 demand segment and as a consequence, they're now very much 0:02:45.960 --> 0:02:48.320 the main demand use for lithium. 0:02:48.400 --> 0:02:52.400 So consumer electronics really make lithium in some respects a 0:02:52.400 --> 0:02:55.720 household name or at least a piece of many household 0:02:55.720 --> 0:02:58.800 products that we're very aware of and interact with. But 0:02:58.880 --> 0:03:01.639 then now with it a part of batteries and really 0:03:01.680 --> 0:03:05.680 seeing the electric vehicle industry take off, and certainly the 0:03:05.720 --> 0:03:08.000 forecast that we see in our electric vehicle outlook, which 0:03:08.040 --> 0:03:10.440 we do on an annual basis shows that there will 0:03:10.520 --> 0:03:13.400 be increased demand. What sort of demand are we really 0:03:13.560 --> 0:03:16.800 forecasting for lithium ion batteries specifically? 0:03:17.080 --> 0:03:20.840 So you're right, as you mentioned, lithium started in consumer electronics, 0:03:20.880 --> 0:03:23.119 and it wasn't until the late twenty tens, at only 0:03:23.160 --> 0:03:27.119 twenty nineteen, where batteries are being used in electric vehicles 0:03:27.160 --> 0:03:30.360 became the main demand segment, and that's only expected to 0:03:30.400 --> 0:03:33.720 continue to grow. So between now and twenty thirty five, 0:03:34.000 --> 0:03:36.880 the lithium I'M battery demand in vehicles is expected to 0:03:36.960 --> 0:03:40.280 really drive demand globally, and that will see a ninefold 0:03:40.320 --> 0:03:42.920 increase from twenty twenty two levels to twenty thirty five. 0:03:43.200 --> 0:03:46.640 Now, battery chemistry seemed to constantly be changing, and honestly, 0:03:46.680 --> 0:03:48.760 I was speaking with my producer today and saying we 0:03:48.800 --> 0:03:51.880 should be doing a show specifically on battery chemistries. But 0:03:52.120 --> 0:03:55.360 for just the next couple of minutes, lithium ion batteries 0:03:55.560 --> 0:03:58.680 certainly make it clear that there is lithium in these batteries. 0:03:59.000 --> 0:04:03.000 Is lithium found in other battery chemistries just not as prevalent, 0:04:03.400 --> 0:04:06.000 or are lithium ion batteries the only ones that have 0:04:06.080 --> 0:04:07.200 lithium in them so. 0:04:07.240 --> 0:04:09.520 Yeah, as you say, lithium in the name of lithium 0:04:09.560 --> 0:04:12.520 ion batteries is the lithium is in all these batteries. 0:04:12.600 --> 0:04:15.400 There are other battery technologies which are emerging at the moment, 0:04:15.480 --> 0:04:18.440 but their uptake and commercial uses is very low at 0:04:18.440 --> 0:04:20.960 the moment. So sodium ion batteries is a key sort 0:04:20.960 --> 0:04:23.440 of disruptive technology that we expect to see come into 0:04:23.480 --> 0:04:25.680 the market over the next couple of years. But at 0:04:25.680 --> 0:04:28.360 the minute, there's not very many people manufacturing these batteries 0:04:28.360 --> 0:04:31.599 at a commercial scale within different battery chemistries, within the 0:04:31.600 --> 0:04:34.760 lithium ion battery family, as it were, Lithium use does 0:04:34.839 --> 0:04:37.960 vary between the chemistries for the amounts of energy that 0:04:38.000 --> 0:04:40.200 you can store, so per killer or tower of energy 0:04:40.200 --> 0:04:41.839 that you can store in the batteries, and we have 0:04:41.880 --> 0:04:44.360 some reports that discuss these different levels of lithium in 0:04:44.400 --> 0:04:45.120 different batteries. 0:04:45.240 --> 0:04:47.240 But it would be safe to say that the forward 0:04:47.279 --> 0:04:50.520 outlook for lithium is increased demand. And then therefore we're 0:04:50.520 --> 0:04:53.760 here to talk about really how where who do we 0:04:53.800 --> 0:04:54.839 get the supply from? 0:04:55.240 --> 0:04:58.000 Yeap, So, as I said, sodium ion batteries are a 0:04:58.000 --> 0:05:01.000 disruptive technology which may come in to the market and 0:05:01.040 --> 0:05:04.560 take some market share. However, in the electric vehicle outlook 0:05:04.560 --> 0:05:06.080 we did earlier this year, we looked at a couple 0:05:06.080 --> 0:05:09.719 of different scenarios of sodium ion penetration into the market. 0:05:09.440 --> 0:05:12.120 At a scenario where there wasn't any a scenario with 0:05:12.160 --> 0:05:14.680 a sort of expected amount of sodium iin in the 0:05:14.720 --> 0:05:18.359 chemistry mix, and a very aggressive sodium ion uptake in 0:05:18.400 --> 0:05:22.159 the market. And even in the most unlikely and disruptive 0:05:22.200 --> 0:05:25.400 and aggressive sodium ion uptake, we still see a five 0:05:25.440 --> 0:05:28.120 fold increase in lithium demand out to twenty thirty five. 0:05:28.240 --> 0:05:30.640 And this is just a consequence of the whole lithium 0:05:30.680 --> 0:05:33.720 ion battery industry growing so much, as I previously mentioned. 0:05:33.880 --> 0:05:36.279 So even of the sort of market share of lithimum 0:05:36.320 --> 0:05:38.520 batteries drops a little bit, because the whole market is 0:05:38.560 --> 0:05:41.640 growing so much, lithium demand is expected to increase. 0:05:41.839 --> 0:05:44.840 So let's go then to where we find this supply. 0:05:45.160 --> 0:05:47.800 Where in the world is it located? And you know, 0:05:47.839 --> 0:05:49.960 can we find it everywhere? Are there a few countries 0:05:50.000 --> 0:05:52.120 that actually have the majority of the supply? 0:05:52.560 --> 0:05:56.240 So lithium deposits are sort of split into two different sections. 0:05:56.279 --> 0:05:58.920 The first is hard rock and predominantly the industry talks 0:05:58.920 --> 0:06:01.200 about spody mean, this is one of the higher grades 0:06:01.360 --> 0:06:04.600 of lithium ore and that is usually found in Australia. 0:06:04.800 --> 0:06:07.400 And there's different areas such as Africa that also have 0:06:07.560 --> 0:06:10.160 SPoD you mean, and hard rock mining there too. Then 0:06:10.240 --> 0:06:13.400 in lithium, there's also another deposit, which is lithium can 0:06:13.440 --> 0:06:16.480 be found in brine, and this is found in groundwater 0:06:16.720 --> 0:06:20.480 all around the world, but predominantly it's found in South America. 0:06:21.200 --> 0:06:25.000 I find it really interesting that you find lithium in brine. 0:06:25.040 --> 0:06:28.559 I mean, you think so much about mining in terms 0:06:28.600 --> 0:06:31.880 of it actually being extracted from somewhere deep within i 0:06:32.000 --> 0:06:35.080 rock as opposed to in some respects kind of quite 0:06:35.080 --> 0:06:37.240 close to the surface. Can we go into a little 0:06:37.279 --> 0:06:40.159 more detail on mining and then following that come to 0:06:40.279 --> 0:06:44.240 the refining process. How difficult is it for us to 0:06:44.440 --> 0:06:46.479 get this out of the ground. For the companies that 0:06:46.520 --> 0:06:49.280 are trying to extract it is a very costly endeavor. 0:06:49.480 --> 0:06:52.560 So, as I mentioned before, the two different types of 0:06:52.680 --> 0:06:56.160 posit require two different types of mining or extraction methods. 0:06:56.360 --> 0:06:59.719 And first you have the extraction from hard rock, and 0:06:59.760 --> 0:07:02.000 that is typical type of mining. You have the large 0:07:02.040 --> 0:07:03.320 rocks in the back of the big lorries and you 0:07:03.400 --> 0:07:05.799 have them running around at like twenty miles twenty miles 0:07:05.800 --> 0:07:09.039 per hour, or it's essentially dug up, crushed, ground and 0:07:09.160 --> 0:07:13.240 roasted at high temperatures before being filtered, purified and turned 0:07:13.240 --> 0:07:17.160 into lithium carbonate. And lithium carbonate is a battery gade product, 0:07:17.160 --> 0:07:20.960 so it goes directly into the manufacturing of these batteries. However, 0:07:21.280 --> 0:07:24.720 lithium carbonate can be further refined into lithium hydroxide and 0:07:24.760 --> 0:07:27.560 this is also another battery grade product. Brine extraction is 0:07:27.560 --> 0:07:31.160 slightly different because here you have vast areas of saline 0:07:31.160 --> 0:07:33.640 ground water that are pumped to the surface by project 0:07:33.720 --> 0:07:37.160 developers and these are left to evaporate in a series 0:07:37.200 --> 0:07:40.720 of ponds, which leaves a concentrated brian remaining, and once 0:07:40.760 --> 0:07:44.280 this remains is then filtered purified into lithium carbonate, which 0:07:44.320 --> 0:07:47.440 may then be turned into lithium hydroxide. In terms of cost, 0:07:47.800 --> 0:07:50.840 our estimates show that spodamine extraction is at least double 0:07:50.880 --> 0:07:54.120 the price of brine extraction, with prices starting at around 0:07:54.320 --> 0:07:56.200 four thousand dollars per ton. 0:07:56.280 --> 0:07:59.840 And spojamine extraction spodamine being the rock that the lithium 0:07:59.880 --> 0:08:01.800 is literally found in yes. 0:08:01.800 --> 0:08:03.760 So it's a type of lithium or and at the 0:08:03.760 --> 0:08:06.600 moment it's the industry's preferred or type because it has 0:08:06.680 --> 0:08:08.480 some of the higher grades of lithium in it. 0:08:08.800 --> 0:08:13.000 In the process to make battery grade lithium, where in 0:08:13.400 --> 0:08:16.680 refining does it actually change hands and change countries from 0:08:16.680 --> 0:08:19.560 where it was extracted to those who are actually refining it. 0:08:19.960 --> 0:08:23.280 So with brine, because of the process and the inherent 0:08:23.360 --> 0:08:26.440 characteristics of the process, it means that a lot of 0:08:26.480 --> 0:08:29.160 the refining happens at the same site at which the 0:08:29.280 --> 0:08:32.480 brian and the evaporation pools are because it's difficult to 0:08:32.640 --> 0:08:35.800 transport a concentrated Brian solution in liquid from one place 0:08:35.800 --> 0:08:39.040 to another. It just doesn't really seem feasible. So a 0:08:39.080 --> 0:08:42.280 lot of the refining happens at the same site. However, 0:08:42.559 --> 0:08:45.079 where it changes is that a lot of a lithium 0:08:45.080 --> 0:08:47.200 carbonate may be shipped to another country to then be 0:08:47.240 --> 0:08:50.080 turned into hydroxide. It wouldn't necessarily happen in the same 0:08:50.120 --> 0:08:51.160 location as. 0:08:51.080 --> 0:08:51.960 The brine extraction. 0:08:52.320 --> 0:08:54.359 On the hard rock, you have a bit more flexibility 0:08:54.520 --> 0:08:58.280 because it's a lot easier to deliver rock or ground 0:08:58.360 --> 0:09:01.920 up rock to another location rather than a concentrated Brian's 0:09:01.960 --> 0:09:05.040 what we see is once it's got past the crushing 0:09:05.040 --> 0:09:07.920 and the grinding and the roasting, it's sent overseas, usually 0:09:08.000 --> 0:09:09.640 to China to do some more refining. 0:09:09.840 --> 0:09:13.000 Now you say usually China, how much of refining actually 0:09:13.080 --> 0:09:14.240 takes place in China? 0:09:14.320 --> 0:09:19.560 So according to our BNFD risked Supply database, around seventy 0:09:19.600 --> 0:09:22.839 two percent of lithium was refined in China in twenty 0:09:22.880 --> 0:09:23.400 twenty two. 0:09:23.640 --> 0:09:26.360 That's a huge part of the market. And in terms 0:09:26.400 --> 0:09:29.440 of looking into the future of that, does that seem 0:09:29.480 --> 0:09:32.520 to hold for the next five plus years. 0:09:32.720 --> 0:09:36.040 Yeah, for sure. We see that China continues to dominate 0:09:36.360 --> 0:09:37.760 up to at least twenty thirty. 0:09:38.160 --> 0:09:42.520 And how much of the lithium that's actually extracted and 0:09:42.559 --> 0:09:45.280 making its way to China is coming from external sources 0:09:45.360 --> 0:09:48.680 versus being well, I guess domestically produced. 0:09:49.040 --> 0:09:51.600 So if we look at the MIND supply again, looking 0:09:51.640 --> 0:09:54.800 at figures for twenty twenty two, Australia was the world's 0:09:54.800 --> 0:09:58.079 top producer of mind lithium with forty two percent of 0:09:58.120 --> 0:10:00.720 the market share, followed by Chile with thirty percent of 0:10:00.760 --> 0:10:03.199 the market share, and then China finally with twenty percent 0:10:03.200 --> 0:10:05.559 of the market share, so it only had a fifth 0:10:05.640 --> 0:10:08.320 of total mind supply in twenty twenty two. 0:10:08.960 --> 0:10:12.240 So does that mean that ultimately China is buying that 0:10:12.280 --> 0:10:15.040 lithium from elsewhere and then selling it on or are 0:10:15.040 --> 0:10:19.120 the companies essentially that are making the batteries buying the 0:10:19.120 --> 0:10:21.959 lithium but then sending it to China for refining who 0:10:22.000 --> 0:10:26.080 owns the lithium? And essentially is China acquiring a large 0:10:26.080 --> 0:10:29.040 amount of the world's existing lithium supply in order to 0:10:29.200 --> 0:10:30.840 refine it and then sell it on. 0:10:31.320 --> 0:10:34.120 So the answers question goes quite a long way back, 0:10:34.200 --> 0:10:37.120 and it starts back in the late noughties where China 0:10:37.160 --> 0:10:40.880 decided to give all these political commitments to green technologies 0:10:40.960 --> 0:10:43.440 because they saw the energy transition as an opportunity and 0:10:43.480 --> 0:10:46.359 the country had ambitions to become a midstream and downstream 0:10:46.520 --> 0:10:48.920 manufacturing base, and it had what it needed to do that, 0:10:49.120 --> 0:10:52.320 but it was missing the key ingredients, which is critical minerals. 0:10:52.400 --> 0:10:55.120 So what it did is it started to invest early 0:10:55.400 --> 0:10:58.680 in some of these upstream projects overseas to ensure that 0:10:58.720 --> 0:11:03.000 they had that constant stream of material and lithium coming 0:11:03.000 --> 0:11:05.640 in to meet their battery manufacturing capacity. 0:11:05.960 --> 0:11:09.120 And when you say invest early, you mean early two thousands, 0:11:09.200 --> 0:11:11.679 so literally twenty years ago or did they buy up 0:11:11.920 --> 0:11:13.840 these assets quite a long time ago? 0:11:14.120 --> 0:11:16.200 Is where they sort of had the vision and then 0:11:17.080 --> 0:11:20.520 lithium only started really becoming big in terms of demand 0:11:20.600 --> 0:11:23.600 and seeing it as an opportunity mid to late teens. 0:11:23.640 --> 0:11:27.920 This is really useful context because I think oftentimes when 0:11:28.000 --> 0:11:31.319 we talk about being in an industry early, we're not 0:11:31.440 --> 0:11:35.080 talking about ten years ago. We're talking about so much 0:11:35.120 --> 0:11:37.520 further back. But the stuff that we're looking at here, 0:11:37.600 --> 0:11:40.440 the change is happening so fast. That's really fascinating that 0:11:40.480 --> 0:11:43.160 we're dealing with these very short periods of time, but 0:11:43.240 --> 0:11:46.559 really do ultimately make all the differences to whether or 0:11:46.600 --> 0:11:49.440 not you're an incumbent player. And you certainly see that 0:11:49.559 --> 0:11:52.319 when it comes to charging networks, which is the topic 0:11:52.360 --> 0:11:55.360 of last week's show. So when it comes to China 0:11:55.600 --> 0:11:58.760 and their role in this space, they saw in advance 0:11:58.880 --> 0:12:01.199 that there was going to be the transition, and I 0:12:01.240 --> 0:12:04.160 guess we're a bit of conjecture here as to what 0:12:04.320 --> 0:12:07.400 was happening, but we certainly do see policies and decisions 0:12:07.440 --> 0:12:10.880 being made in terms of being involved in the lithium 0:12:10.880 --> 0:12:15.160 industry before it was the lithium industry that we know today. 0:12:15.360 --> 0:12:17.800 Can you give me a couple of examples of things 0:12:17.800 --> 0:12:19.800 that China did to make sure that they would be 0:12:19.840 --> 0:12:22.800 one of the established players in this space that now 0:12:22.880 --> 0:12:25.079 has over seventy percent of refining capacity. 0:12:25.400 --> 0:12:29.120 The two big lithium players in China are Gang Feng 0:12:29.440 --> 0:12:32.680 and Tian Schi. If you first take Gunfeng, they have 0:12:32.760 --> 0:12:35.720 a fifty percent ownership in the Mount Marion mine in 0:12:35.800 --> 0:12:39.600 Australia and this started production back in twenty seventeen and 0:12:39.640 --> 0:12:42.120 it's now the second largest lithium mine in the world. 0:12:42.320 --> 0:12:44.719 So having a fifty percent ownership in that obviously gives 0:12:44.760 --> 0:12:47.719 some access to this really really valuable and high in 0:12:47.800 --> 0:12:50.400 demand material. But then if we look at Tian Schi, 0:12:50.600 --> 0:12:53.800 they took a slightly more delayed approach and they bought 0:12:53.840 --> 0:12:56.680 twenty five percent stake in SQM, which is based in 0:12:56.760 --> 0:12:59.800 Chile back in twenty nineteen, and SQM and now of 0:12:59.800 --> 0:13:03.760 the world's second largest lithium producer. So these two examples 0:13:03.760 --> 0:13:07.040 show you how China, moving before the crowd, has given 0:13:07.120 --> 0:13:10.560 them a secure and stable supply of a metal that's 0:13:10.640 --> 0:13:12.959 high in demand and It's important to remember that these 0:13:12.960 --> 0:13:15.400 are only two examples. China has done this over and 0:13:15.480 --> 0:13:18.080 over again around and around the world, and having this 0:13:18.200 --> 0:13:21.760 upstream presence paired with their downstream presence at home means 0:13:21.760 --> 0:13:24.320 that they have ranked number one on all three editions 0:13:24.360 --> 0:13:27.240 of BNF Global Battery Supply Chain Ranking. 0:13:27.800 --> 0:13:30.560 So, if I am in the finance industry, I care 0:13:30.679 --> 0:13:34.080 a lot about environmental, social and governance. If I'm looking 0:13:34.120 --> 0:13:36.480 at these ESG factors and I'm looking at batteries and 0:13:36.480 --> 0:13:39.240 trying to assess my supply chain, what are some of 0:13:39.280 --> 0:13:42.560 the things that really someone would look at in regard 0:13:42.600 --> 0:13:46.320 to lithium and assess whether or not they are fitting 0:13:46.360 --> 0:13:50.120 into that profile of companies that they actually can invest in. 0:13:50.440 --> 0:13:52.800 So I'd say there's three main things to consider when 0:13:52.840 --> 0:13:57.160 looking at lithium extraction, the first being carbon emissions. So 0:13:57.400 --> 0:13:59.920 if you take hard rocked mining, for example, this is 0:14:00.240 --> 0:14:03.800 very energy intensive. It uses lots of large machines, a 0:14:03.800 --> 0:14:07.080 lot of energy to crush, to grind, and to transport 0:14:07.240 --> 0:14:10.720 all around. If we move to brine extraction, it's a 0:14:10.720 --> 0:14:14.360 slightly different problem. Lots of brine extraction happens in very 0:14:14.400 --> 0:14:17.720 arid conditions and the process uses up a lot of 0:14:17.760 --> 0:14:21.120 water and can disrupt fragile ecosystems. 0:14:20.520 --> 0:14:23.640 So the ecosystem and then also it's competing for water 0:14:23.760 --> 0:14:28.080 use potentially with I'm thinking agriculture and other uses for 0:14:28.320 --> 0:14:29.760 drinking water exactly. 0:14:30.040 --> 0:14:32.920 Research has shown that the amount of water used by 0:14:32.920 --> 0:14:38.040 the lithium industry can actually feed and sustain small communities 0:14:38.040 --> 0:14:39.720 of up to tens and thousands of people. 0:14:40.000 --> 0:14:42.960 So it's competitive with other things that may be a 0:14:43.640 --> 0:14:46.520 more important priority in that region. So then the other 0:14:46.600 --> 0:14:49.840 question I actually have is around the hard rock and 0:14:50.000 --> 0:14:54.080 this other form because when you mention energy intensity, immediately, 0:14:54.400 --> 0:14:57.520 at least working here, I immediately think, oh, okay, well, 0:14:57.560 --> 0:14:59.800 then what is there such a thing as green lithium 0:15:00.080 --> 0:15:02.120 And has that been something that has started to come 0:15:02.160 --> 0:15:03.920 on the map? And what I mean by green lithium 0:15:04.080 --> 0:15:07.840 is essentially energy that has come from renewable sources in 0:15:07.960 --> 0:15:11.080 order to facilitate this breaking of rocks. 0:15:11.600 --> 0:15:14.120 Yeah, the short answer is yes. There have been companies 0:15:14.160 --> 0:15:16.840 that have been aware of the scrutiny that the industry 0:15:16.840 --> 0:15:19.160 has been under and are trying to prepare themselves for 0:15:19.200 --> 0:15:22.520 the transition towards net zero and towards a lower carbon world, 0:15:22.680 --> 0:15:25.560 and switching to renewables is a really easy and quick 0:15:25.600 --> 0:15:29.160 way of doing this. However, it doesn't solve the whole problem, 0:15:29.360 --> 0:15:31.720 and the industry can make sure that they are actually 0:15:31.880 --> 0:15:34.760 combating and trying to prevent these problems as much as 0:15:34.800 --> 0:15:35.360 they can. 0:15:35.840 --> 0:15:38.680 So it isn't just investors that are looking at trying 0:15:38.720 --> 0:15:41.880 to make sure the production of batteries and their supply 0:15:42.000 --> 0:15:44.760 chains are the best possible that they can be from 0:15:44.880 --> 0:15:49.120 environmental standards standpoint. There are also policy makers various parts 0:15:49.120 --> 0:15:51.040 of the world that certainly must be looking at this. 0:15:51.560 --> 0:15:53.680 Yeah, for sure, Dana, and at the end of twenty 0:15:53.720 --> 0:15:57.000 twenty two, the EU agreed the battery part of the 0:15:57.000 --> 0:16:00.520 Green New Deal, which forces in fact batteries old in 0:16:00.560 --> 0:16:03.280 the European Union to meet certain requirements. One of the 0:16:03.320 --> 0:16:05.880 key requirements is a carbon footprint target. Now we're still 0:16:05.880 --> 0:16:08.800 waiting for the European Union Commission and other members of 0:16:08.840 --> 0:16:11.560 European policymakers to give exact numbers on what these targets 0:16:11.560 --> 0:16:13.440 will be, but we know that over the next few 0:16:13.520 --> 0:16:16.040 years these targets will be coming in and forcing batteries 0:16:16.080 --> 0:16:18.240 sold within the EU to meet these targets. 0:16:18.400 --> 0:16:20.800 And it might also be worth mentioning on top of 0:16:20.840 --> 0:16:24.960 that that the EU announced the Critical Raw Materials Act 0:16:25.120 --> 0:16:28.480 back in March twenty twenty three, and within that these 0:16:28.640 --> 0:16:33.120 sustainability ambitions also went upstream. So they are looking to 0:16:33.400 --> 0:16:36.800 try and create a benchmark where industry has to meet 0:16:36.840 --> 0:16:40.200 a certain level of sustainability of the materials they produce 0:16:40.320 --> 0:16:42.240 and they can be ranked against each other. 0:16:42.880 --> 0:16:45.120 Give me an idea for the types of companies that 0:16:45.160 --> 0:16:48.520 are actually involved in this space. Is lithium just part 0:16:48.560 --> 0:16:52.640 of a portfolio of many other medals that company might 0:16:52.680 --> 0:16:56.240 be mining, or are these quite specific pure play miners 0:16:56.240 --> 0:16:59.880 that are really looking at this in a more exclusive capacity. 0:17:00.200 --> 0:17:02.080 So what we see is that the majority of the 0:17:02.160 --> 0:17:06.640 top ten lithium producers are exclusively into lithium. So the 0:17:06.640 --> 0:17:09.359 top two that I mentioned already, the first being album 0:17:09.400 --> 0:17:12.520 Mar which is American based, and the second being SQM, 0:17:12.520 --> 0:17:14.440 which is based in Chile. Then you also have the 0:17:14.520 --> 0:17:18.840 Chinese players Gamfeng and Tianchi, as well as Pilbra in Australia. 0:17:18.920 --> 0:17:21.199 So they're scattered all around the world. But what is 0:17:21.240 --> 0:17:23.800 quite unique about lithium is there's lots of smaller players 0:17:23.880 --> 0:17:25.679 that are looking to get involved, and I think this 0:17:25.720 --> 0:17:28.199 is because the market is just finding its feet, so 0:17:28.240 --> 0:17:30.800 it's establishing itself and with this is coming lots of 0:17:30.840 --> 0:17:34.480 smaller players that are contributing positively to the demand and 0:17:34.560 --> 0:17:35.760 supply of lithium. 0:17:36.080 --> 0:17:39.040 So that would mean that these are predominantly fairly new 0:17:39.080 --> 0:17:41.600 companies that may not have existed or at least not 0:17:41.640 --> 0:17:44.200 existed in their current form twenty plus years ago. 0:17:44.400 --> 0:17:46.960 In some cases yes, but in cases of the big 0:17:46.960 --> 0:17:50.280 players such as Albama and SQM, historically there were actually 0:17:50.440 --> 0:17:53.040 chemicals companies and what we've seen them do is we've 0:17:53.040 --> 0:17:56.600 seen them tailor their expertise towards an emerging demand. 0:17:56.840 --> 0:17:58.879 So this has been a pivot for these companies. And 0:17:58.880 --> 0:18:00.520 then I guess that begs the quest and if we're 0:18:00.560 --> 0:18:04.040 seeing increased demand going forward, are there other companies that 0:18:04.080 --> 0:18:06.160 look to be pivoting into that space right now? 0:18:06.560 --> 0:18:06.679 Well? 0:18:06.720 --> 0:18:09.600 I think about that question as metals and minor analysts, 0:18:09.600 --> 0:18:13.080 I will automatically think of the major diversified miners, so 0:18:13.160 --> 0:18:16.840 the glen cores, the bhps, the valleys, the Anglo Americans, 0:18:17.160 --> 0:18:20.160 and surprisingly we haven't actually seen a lot of these 0:18:20.200 --> 0:18:24.360 companies pivot towards lithium apart from one Rio Tinto, who 0:18:24.359 --> 0:18:27.560 back in twenty twenty one purchased the Ricon mine in 0:18:27.640 --> 0:18:31.080 Argentina and recently reinforced their position as the only diversified 0:18:31.119 --> 0:18:34.600 miner to be interested in lithium earlier in August by 0:18:34.760 --> 0:18:37.560 investing into Rwanda. So I think the main reason that 0:18:37.640 --> 0:18:41.080 these other big miners aren't that interested in lithium is 0:18:41.119 --> 0:18:44.040 because firstly, they have other battery metals in their portfolio. 0:18:44.240 --> 0:18:49.359 So a lot of these companies have copper, aluminium, nickel, cobalt, manganese, 0:18:49.520 --> 0:18:52.159 which will all benefit and grow in demand thanks to 0:18:52.240 --> 0:18:55.920 the lithium iron battery boom. I think because lithium's only 0:18:55.960 --> 0:18:58.760 sort of gotten big over the past five six years, 0:18:59.040 --> 0:19:02.560 it means that it's still quite a high risk area. 0:19:02.640 --> 0:19:05.399 And though high risk can equal high reward, some of 0:19:05.440 --> 0:19:07.679 these big miners have too much on their plate and 0:19:07.760 --> 0:19:09.879 have too much on the line to sort of just 0:19:10.160 --> 0:19:14.080 take these dramatic steps and venture into a space where 0:19:14.240 --> 0:19:15.840 it is still a bit of the unknown. 0:19:16.200 --> 0:19:19.120 And is it high risk because of pricing volatility? 0:19:19.480 --> 0:19:21.879 Put simply, I would say yes. If we look at 0:19:21.920 --> 0:19:24.360 the prices over the past two years, we've seen them 0:19:24.359 --> 0:19:27.920 go from around fifteen sixteen thousand dollars per ton in 0:19:27.960 --> 0:19:31.440 twenty twenty one, to over seventy thousand dollars per ton 0:19:31.520 --> 0:19:34.520 in twenty twenty two, and now in twenty twenty three. 0:19:34.640 --> 0:19:36.840 As of a few weeks ago, it was at twenty 0:19:36.880 --> 0:19:40.000 six thousand per ton. So this constant up and down, 0:19:40.080 --> 0:19:44.320 unpredictability and volatility does equate to high risk in the 0:19:44.359 --> 0:19:44.960 mining world. 0:19:45.160 --> 0:19:47.000 I could certainly see how this would be something that 0:19:47.040 --> 0:19:49.800 traders would be watching closely, but then the volatility for 0:19:49.840 --> 0:19:54.360 the companies is maybe less appealing. When it comes to lithium, 0:19:54.600 --> 0:19:57.280 there does seem to be, though this four trajectory, that 0:19:57.359 --> 0:19:59.359 demand is going to increase, and we've brought that up 0:19:59.400 --> 0:20:01.960 a few times on this show. So it seems like, okay, 0:20:02.080 --> 0:20:05.320 let's look at the future for lithium. It seems reasonably sunny. 0:20:05.320 --> 0:20:08.359 But early on in the show, Andy, you reference that 0:20:08.400 --> 0:20:10.639 there might be other technologies that could be nipping on 0:20:10.720 --> 0:20:13.840