FORBES ASIA
COMMODITIES16 | FORBES ASIA JULY 2016The world’s biggest source of
lithium, Greenbushes is an open-cut,
hard-rock mine, unlike most South
American sources, which are dry salt
lakes where lithium is “harvested.”
The end product of both forms of
mining is the same: lithium carbon-
ate or lithium hydroxide, which are
the basis of lithium-ion batteries
and are used in glass and high-tech
ceramics manufacturing, with small
amounts used medically to treat bi-
polar disorder (which may come in
handy for many investors in the com-
ing months).
In 2012 the world consumed
around 150,000 metric tons of lithi-
um a year. Today it consumes about
185,000 (that number is projected to
hit 400,000 by 2025), with annual
growth running at around 9% overall
and up to 30% a year in the hottest
sector: energy storage. “The energy-
storage market has three components
to it,” Mitchell says. “One is consum-
er electronics, which has provided
most of the growth over the past five
years and that is still growing at 6%
to 8%. Transport, including electric
cars, is starting to grow quickly. ThatH
ailed as “the new
petroleum,” lithium
is a key component
in the batteries used
in Teslas and other
electric cars. It is also the world’s
lightest metal, with peculiar prop-
erties that include a potential, in its
pure state, to catch fire upon expo-
sure to moist air.
And it certainly has caught fire
in commodity and stock markets,
with speculative demand pushing
the short-term price of the metal up
fourfold over the past two years. On
the Australian stock market lithium-
exposed stocks have risen sharply,
bringing back memories of the 2007
uranium boom. Galaxy Resources,
co-owner of a small mine, has risen
1,900% in nine months. Altura Min-
ing has done better, up 2,500%.
Longer-term players have joined
the rush, led by Albemarle of the U.S.,
which has seen its share price on the
New York Stock Exchange double over
the past nine months from $41 to a
recent $83 (before retreating a bit after
Brexit). Albemarle produces a range of
specialty chemicals, but investors arefocused on the company’s quest to be
the global lithium leader. In the March
quarter Albemarle’s lithium division
generated pretax earnings of $227 mil-
lion, a return of 43% on sales of $
million. It wasn’t the company’s most
profitable division, but it was comfort-
ably at the highest margin.
Last year Albemarle’s mines and
processing facilities in the U.S., South
America and Australia supplied some
35% of the world’s lithium. John
Mitchell, Albemarle’s president of
lithium and advanced materials,
is wary of what’s happening in the
market. From where he sits, “lithium
supply and demand are in balance.”
Mitchell’s statement, coming
after a recent strategy meeting at
the Greenbushes mine in Western
Australia, a joint venture that is 51%
owned by China’s Sichuan Tianqi
Lithium Industries and 49% by Al-
bemarle, challenges a view held by
some investors that the world is short
of lithium. “Our phone doesn’t ring
from a battery manufacturer saying
they don’t have access to lithium,”
Mitchell says. “If there’s anyone out
there in that position, give me a call.”THE TESLA EFFECT
Investors and speculators have had a burning desire for lithium.
BY TIM TREADGOLD