I'm often asked if I think that the current interest and investment in lithium and other battery materials is a huge opportunity, or just a bubble.
Many of us remember, and participated in, the excitement around rare earths in 2011 to 2014. There was much activity, much invested, but at the end of the day, not much changed. Of the 300 or more rare earths prospects seeking investment during that period, only the handful that existed before 2011 remain as quality projects today.
I’m asked: "are we seeing the same thing now?" And, the answer is no.
The key difference is that interest in rare earths was created by an artificial shortage in a slow-growing market that could have been filled by a handful of new projects coming on stream. Whereas the current battery surge is being driven largely by an almost entirely new industry for lithium-ion batteries undergoing rapid growth.
Long-term projected growth in battery metals
Typical predictions are that the electric vehicle (EV) market will grow 10-fold by 2025 and at least 50-fold by 2030. EVs are of course not the only use of lithium, and the energy storage market demand is expected to well exceed what is required for EVs.
Current total world lithium production (on a carbonate basis) is approximately 500,000 tonnes per annum. By 2025, the EV market alone is predicted to consume 2.7 million tonnes per year, and potentially 15 million tonnes per year by 2030.
In context, the new lithium refining capacity planned in Australia over the next two to five years will only double world supply to about one million annual tonnes. Other lithium projects around the world may add another million or so tonnes.
It's safe to say that lithium extraction and refining are anything but a bubble, and are set for a long period of growth to meet predicted demand.
Meeting battery grade a major technical challenge
Lithium-ion batteries also contain other metals. Popular formulations include cobalt, nickel, graphite and manganese, and indeed, there are also lithium-free chemistries, as well as lithium chemistries that do not rely on these metals.
There are many new mining projects being established to produce the gamut of battery materials in demand.
But, what differentiates a "battery mining project" from any other mining project?
Nothing, except for the technology to remove most of the last few thousand parts per million of impurities.
The difficulties in achieving this economically shouldn't be underestimated and it is crucial to project success.
There are a range of technical challenges, often unique to a project, that need to be overcome in order to make them commercially viable and competitive.
Australian producers embracing process innovation
Australian companies are, however, showing themselves to be innovative in this space and already we are seeing successes from companies such as BHP, Kibaran Resources, TNG and a host of others.
But, Australia isn't alone in recognising the upcoming opportunity and there is plenty of competition.
Embracing more efficient processing technology is one of the factors giving imaginative Australian producers the edge.
As a world-leading mining nation, Australia is fortunate to have the wealth of mineral resources, industry track record, and innovation know-how to capitalise on and capture growth in the expanding battery metals market.
The challenge now is for Australia to attract sufficient investment in battery metals projects – from mining through to processing and battery-grade product – and the required innovation to make them economically viable and competitive on the world stage.
Let's hope that we can develop our industries fast enough, and with the edge that they need, to position Australia as a major supplier of battery metals.