Covid-19 hits Argentinian lithium industry hard but long-term outlook still positive
The economic fallout from the Covid-19 global health crisis is badly affecting the lithium industry in the metal-rich country of Argentina, leaving producers and junior miners facing short-term challenges despite a rosy long-term outlook with the shift to greener mobility gaining pace.
Lithium is a key ingredient in the manufacturing of batteries for electric vehicles (EVs) and energy storage systems (ESSs), and lithium demand for both uses is expected to soar in the coming years.
“Demand for lithium-ion batteries for EVs and ESSs is only going one way, and different battery chemistries will be more suited to different applications, so we expect continued strong growth in LFP [lithium ferro-phosphate], NCM [nickel-cobalt-manganese] and NCA [nickel-cobalt-aluminium] batteries, and other chemistries will emerge as well,” Fastmarkets head of research Will Adams said on Tuesday August 18.
“We have already seen a second generation of LFP win market share from NCM/NCA, with [US-based EV manufacturer] Tesla opting to start using LFP batteries in most of its Model 3s built in China, starting in the fourth quarter [of 2020],” he added.
“But while LFP will be cheaper, we expect demand for the higher-nickel NCM batteries to be used increasingly in Europe and North America, and in the higher-specification vehicles in China,” he said.
Lithium Americas to restart Argentinian project
Canadian miner Lithium Americas will restart operations at its Caucharí-Olaroz lithium project in Argentina in the coming weeks after being forced to temporarily halt onsite operations to limit the spread of Covid-19 among its workforce in early July, the company has announced.
The company is continuing to evaluate the effects of the project’s temporary suspension on its timeline and budget, and will provide an update once these assessments have been completed, it said.
As of June 30, the Caucharí-Olaroz project was 47% complete, with 75% of the planned capital expenditures committed and $304 million already spent, it said while presenting its second-quarter financial results on August 14.
Lithium Americas is developing the project in a 50:50 joint venture partnership with Ganfeng Lithium.
Following the completion of the approval process, Ganfeng Lithium will increase its interest in the Caucharí-Olaroz to 51% with Lithium Americas holding the remaining 49%.
Once operational, Caucharí-Olaroz is expected to deliver 40,000 tonnes per year of battery-grade lithium carbonate, Lithium Americas said.
In addition, Lithium Americas is developing the 100%-owned Thacker Pass lithium project in the US state of Nevada.
Livent Q2 2020 earnings decline
US lithium producer Livent reported a drop in revenues for the second quarter of 2020 because of weakness in the lithium market and disruptions in the automotive sector supply chain resulting from the Covid-19 pandemic, it said while presenting its second-quarter results on August 6.
The company has production facilities in Argentina and has been operating normally since resuming activities in early April, following a shutdown mandated by the Argentinian government.
The company reported a 6% quarter-on-quarter drop in revenues for the April-June period, to $65 million.
“Lithium demand was very weak in the second quarter, particularly in electric vehicle applications, because Covid-19 caused serious disruption and uncertainty throughout the supply chains,” president and chief executive officer Paul Graves said.
“While our other end-markets fared better, they also were affected by the broader macroeconomic weakness caused by the pandemic,” he added. “Amid the uncertainty, we had certain customers delay planned orders until later in the year.”
Despite the short-term challenges that the lithium market was experiencing, the company expected significant demand growth in EVs in the coming years.
On the supply side, although sustained weakness in lithium prices and the consequences of Covid-19 have had an effect on global markets, and have led to reduced near-term investment in lithium upstream projects, Livent expected that this would trigger a shortage of battery-grade lithium compounds in the next few years.
Lithium prices have been under increasing downward pressure since the beginning of 2020, due to disruptions and the uncertainty caused by the pandemic in an already low-priced environment.
Fastmarkets’ most recent assessment of the price of lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery grade, spot price, cif China, Japan & Korea, was $8.80-10.00 per kg on August 13, down from $12-14 on August 15 last year.