
The Lithium Mine Buildup Is Outpacing the Electric-Car Boom - situational87
https://www.bloomberg.com/news/articles/2019-07-28/the-lithium-mine-buildup-is-outpacing-the-electric-car-boom
======
sjwright
The electric car industry hasn't _remotely_ boomed. Electric cars are still
deeply strangled by two key factors: industry inertia and the cost/supply of
lithium batteries. Once those two factors are solved (and a build-up of
lithium mines is key to that) electric cars will go from being a niche within
a niche to utterly dominating the market very, very quickly.

Within the next decade we might see companies like Hyundai/Kia, Toyota and
Honda selling more EVs than ICE. Take the Kia Niro EV as an example: if the
cost of batteries halved and the supply was unconstrained, there is little
stopping that kind of product from dominating the market—starting with two-car
households with off-street parking.

With their lithium cell investments, Telsa are well positioned to benefit from
this boom, but they need to think carefully about their positioning. Right now
they're a luxury brand with no serious competitors; when Telsa's drivetrain
advantage is substantially neutralised, their mind share is likely to
stagnate.

In my opinion Tesla needs to prepare to be in the budget space. They need to
partner with an external manufacturer to sell a product with normal door
handles that competes with Hyundai and Toyota. Because once the cost of
batteries falls, I predict a substantial slice of their market will simply
disappear to the economy manufacturers. I suspect that many people who love
Telsa really just love the idea of electric vehicles and they'll be buying
something more like the Kia Niro EV.

~~~
ianai
People HATE the maintenance requirements of cars. If Tesla can establish their
cars as almost never needing service with a usable life of something closer to
1 million miles and decades of use then suddenly paying a premium for their
models can be spread over much greater periods of time.

Personally, I wish they would decouple the platform from the comfort center.
Have chassis form factors for various purposes (single person/roadster,
crossover, truck, utility, etc) and branded “comfort centers” housing the
human interface stuff. Make it so the comfort center can be changed out when
ever and keeping the same underlying platform.

~~~
intrasight
>If Tesla can establish their cars as almost never needing service...

I drive a 15 year old Volvo wagon that almost never needs service :)

Of course I exaggerate - I probably average $150/month in maintenance. Sorry,
but the chances of Tesla doing the same over 15 years is zero.

~~~
WorldMaker
Biggest long term maintenance expense in an EV is battery replacement, which
best estimates right now put the industry at roughly a 15-30 year replacement
rate. Depending on how you finance it, a battery replacement should be doable
for <= $150/month average, and that's assuming a full replacement. (Depending
on one's range needs/usage patterns some people might be able to make 20-50
years on the capacity degradation curve of a vehicle's original battery before
needing a replacement, given current evidence.)

Electric motors have way fewer moving parts and fluids and currently are
generally expected to outlast any car frame they are put in.

Most EVs advantage regenerative braking so break maintenance cycles are also
longer to comparably sized ICE vehicles.

The other maintenance risks are the exact same between an EV and any other
car, things like: HVAC, plastic degradation, rust, and accident damage.

The one unique Tesla risk on a 15-year horizon is their software updates.
Their penchant for over-the-air software updates is handy in the short term,
but possibly a risk in the long term lifespan of a vehicle. Though that's a
risk Tesla would hopefully be incentivized to avoid (for bad PR at least), and
possibly a mitigatable risk.

------
mabbo
This seems like a bit of hype over very little.

Look at the graph in the article. Lithium cost $5000/ton 4 years ago. Now it
costs more than $11,000/ton. The only difference is the period in between
where the price of lithium was almost $21,000/ton.

Presumably the mines operation 4 years ago were profitable. Now there's all
these additional mines, and demand still has the price doubled in 4 years. And
yet somehow the story is that EVs aren't succeeding? I see just the opposite-
EVs are succeeding so much that the industry supporting them is growing and
profiting very nicely.

~~~
eigenvalue
Note that this is the spot price of lithium, which no large consumer of
lithium pays. All the big users of lithium (like Panasonic) buy it based on
long term contracts with companies like Albemarle (which bought Rockwood
Lithium just before the recent boom). Thus it's very misleading to look at
spot prices for reaching any determinations about the prospective returns from
lithium mine investments.

~~~
duckymcduckface
Fun fact, there is no spot market for lithium. Lithium is sold on a contract
by contract basis and there isn't an equivalent of the London Metal Exchange
price.

~~~
intrasight
Any idea why that is?

~~~
rtkwe
Probably because most uses of lithium are heavily processed and it's not
particularly useful or safe in it's raw form, so if you're going to use it
you're more likely to need an oxide or something instead of the raw metal.

------
rmm
This was so evident 2-3 years ago it’s ridiculous.

I worked on a bunch of projects in 16/17 and what I told all my clients is get
to production and lock down offtake agreements ASAP as the amount of projects
coming online was huge for the short term (with regards to hard rock lithium)
and even worse long term (salars etc).

Even the most optimistic of ev adoption rates showed oversupply by 2023.

Some other facts I remember just as points of interest:

* lithium market is opaque. No open market and all contract based so very difficult to price.

* one major unknown that will further add to supply is recycling, with some tech I remember showing cost effective recycling of up to 80% of lithium.

* major bottleneck in short to medium term are the converters ability to refine. Premium will be placed on higher % Li product to increase recovery rates.

So yeah no surprising at all. (Am a mining/mechanical engineer)

~~~
yread
If you had to guess what will be the price of lithium once those big mines
come online? 5000/ton Li2CO3 (at 99%) or even lower? And do you think there
will ever be an open market with future contracts?

~~~
rmm
On the first question it’s been a while so haven’t really followed too
closely, but once the salars come online depending on the agreements they have
in place they really will have the ability to set the price to whatever they
want (as they have been doing for past 3-4 decades). These hard rock mines are
making serious money on the fact that the big 3/4 missed the boat (somehow) on
the lithium/ev boom. I reckon they will be they will set production/prices to
a point just below the number where hard rock equivalents are commercial.

With regard to opening the market I personally don’t think so. If the market
didn’t have big players in it then yes it probably would have by now. That
being said there were/are a lot of mid stage converters coming online that are
disrupting the old guard and taking whatever is out there and not being
secretive on pricing so maybe?

~~~
yread
Thanks, that's interesting. And what do you think of this PFS?
[https://www.share-talk.com/european-metals-hldg-aimemh-
pfs-c...](https://www.share-talk.com/european-metals-hldg-aimemh-pfs-confirms-
potential-low-cost-lithium-producer/)

People in .cz think this is a gold mine but investors don't seem to agree

~~~
rmm
I remember looking at that project back in the day and couldn’t make the
numbers work. Not sure if much has changed.

Firstly it’s an underground mine which is inherently much higher risk/cost
compared to open cut.

Second logistically it’s a world away from customers (Asia etc)

Again if they had kicked it off back when, and were in production now they
could have locked in some good terms from the starved customers and maybe set
themselves up as a player, unfortunately I think they have missed the boat.

~~~
duckymcduckface
I'd that they don't have any measured resources on their list, it's half
inferred and half indicated. So moderate uncertainty about everything down
there.

------
rudolph9
It seems like people often forget how applicable EVs are to in city heavy
commercial vehicles such as garbage truck, buses, service vehicles

The high torque nature and predicable nature (at least in the case of garbage
trucks and buses) make them ideal candidates for EV. Arguably much more viable
use case (at least initially) than household vehicles.

~~~
ianai
EVs are a clear winner for jobs like that. Has the prediction of EVs being low
on maintenance bore out? If so, its further incentive for commercial and
public use. Municipalities benefit greatly from predictable, constant
expenses.

I know Leafs have had their service lives (at least for their batteries)
revised up recently. Solid state is where it’s at.

~~~
neltnerb
Although I agree, I was interested in the article about how poorly planned EV
city owned equipment was a huge strain on the power grid that city planners
didn't seem to understand how to do right. I look forward to what I expect to
be the near future where cities start sharing best practices on this and
collectively we do this right.

~~~
glogla
Depends on the location. In cities that have trams, metro and electric trains,
the infrastructure shouldn't be that far out.

~~~
Reason077
Taxis, city buses, UPS trucks, etc, all tend to be busy during the day. They
get charged overnight, when grid demand is lower, and take advantage of low
off-peak electricity prices.

The idea that these things place a “huge strain on the grid” as the poster
above suggests just sounds like more made up FUD.

~~~
amadeusw
No, the poster above is right. There was an article about this a month ago or
so. Anyways, the TLDR is that vehicles need to charge more often than just
nightly and not just at the main depot. Transit agencies need to build heavy
duty fast charging infrastructure scattered across many locations in the city.
This has been so far a large upfront cost which holds transit EV expansion at
bay.

~~~
Reason077
If their vehicles need to charge more often than just overnight, then they
need to consider whether they are buying the right vehicles for the job.

The examples I mentioned are from London, which has a growing fleet of
hundreds of heavy electric vehicles (city buses, UPS trucks, etc). All of
these charge exclusively overnight.

~~~
neltnerb
Why move a heavier battery pack around if you can have a charging station at
both ends of your route? Certainly lower weight means lower cost battery packs
and overall higher efficiency since you're not dragging around spare energy
for most of your day.

------
davidhyde
I think that a lot of people (including the authors) think that electric
vehicles are only cars. You only need to walk around the streets of Beijing to
notice that far more electric vehicles are scooters and busses. Not the Bird
kind of scooters but the scooters that you see in very congested cities as
well as the chaps who deliver your pizzas. They are completely silent, it’s
surreal. They also omitted obvious other uses of lithium batteries like
electronic gadgets and solar farms.

------
api
Something incredible just happened.

After a half century of jaw-boning about the need for renewable "green"
energy, we now have a repeatable scalable tech template similar to the [oil
well + refinery + piston engine] or [coal mine + pulverizer + furnace +
turbine] tech templates that scaled fossil fuel energy. It is: [wind turbines
and/or solar PV panels + lithium ion cells].

By repeatable and scalable tech template I mean something that no longer
requires non-incremental forms of R&D. We no longer have to think that deeply
about it. It's now in the realm of "see that stuff? Build more stuff like
that."

The solar/wind+li-ion template can, _if scaled,_ power almost all current
human industrial activity with the exception of long-haul heavy vehicles
(land, sea, or air) and rockets. Those are important things but they're
collectively less than a quarter of all fossil fuel use.

The key is "if scaled." We are going to need more lithium. Good news is that
it's not really all that rare. Bad news is that until quite recently there
hasn't been _serious_ investment in getting it. Look at what we invest in
getting oil vs. lithium.

That's because until quite recently there hasn't been the demand to justify
that investment. Now there is. Lithium prices have exploded, signaling the
need for more. The price signals are working. Good.

It's normal during this kind of scaling to have periods where it looks like
investment is outpacing demand and vice versa. Demand and supply don't scale
at the same rate so you get price spikes in both directions. This doesn't
change the underlying reality now in effect.

------
aurizon
There is already a backing up of IC car production in the luxury car markets
as large numbers of people are delaying the purchase of new IC based cars in
anticipation of a new EV supplanting it based on lower running costs, lower
maintenance costs et al. In addition, these longevity factors are making EV
buyers move up-market. This has gutted Mercedes and BMW sales, among others.
[https://electrek.co/2019/07/24/tesla-model-3-outsellin-
gas-p...](https://electrek.co/2019/07/24/tesla-model-3-outsellin-gas-powered-
equivalents-combined/)

------
Recurecur
Well, this topic went south really fast! I'm surprised the new Goodenough
battery design hasn't come up!

Getting back to an actual discussion of _lithium_ , it'll be very interesting
to see if the Goodenough solid electrolyte batter works well enough with
sodium. If so, a lot of expensive lithium mines will be worth a lot less over
time!

The Goodenough battery (he invented LiON batteries for those who don't know)
looks to improve on LiON in most important areas:

    
    
      - higher energy density (~2x)
      - not flammable
      - faster charge rates
      - many more charge cycles (~100x more)
      - better performance in cold conditions
      - either lithium or *sodium* based glass electrolyte
    

Apparently 89 companies are evaluating the patents for production:

[https://www.texasmonthly.com/energy/all-charged-up-john-
good...](https://www.texasmonthly.com/energy/all-charged-up-john-goodenough/)

~~~
FrojoS
It took me a while to get, that Goodenough is the name of the inventor (John
Goodenough) and not a tacky brand name.

~~~
Recurecur
His name should already be famous, but it sure will be if this new battery
works out.

Phones that fully charge in five minutes, then last twice as long...and can go
for many thousands of charge cycles?

Count me in!

------
Mengkudulangsat
Do people really build mines with a 5-year horizon? Of course it's going to
outpace demand... initially.

The great thing about mines is that you can just leave the lithium in the
ground if the current prices aren't right.

~~~
barry-cotter
If you try and time the market at horizons greater than five years when that’s
your startup time from planning to production sometimes you’ll win big and
sometimes you’ll discover you’ve made a genuinely awful investment. With a ten
year turnaround time you could easily have the technical, social or economic
environment just destroy the viability of your investment. Imagine you’re
investing in a new city somewhere in Malaysia or Pakistan and the government
falls or there’s a war. Imagine you’re going to build a new auto manufacturing
hub in Nigeria and the entire West African economy tanks because Ebola goes
pandemic. Timing the marker is fantastic if your bet pays off but nothing is
guaranteed.

~~~
throwawaycert
The point is more to not try timing the market. There are all sorts of things
one could reasonably say about what would be right or wrong for these unstable
areas, but fundamentally the most long term good would be if they could engage
in slow but steady development of both their natural resources and their
infrastructure. I'm quite confident lithium will continue to be quite valuable
for at least a generation. Remember, we still use NiMH and even _NiCad_
batteries in some cases. Even if science has already discovered the magic new
battery chemistry that will replace lithium ion, you're most likely looking at
5-10 years before the very _first_ commercial applications come about.

I don't remember exact context, but I recall a long time ago someone was
talking about shipping medicine and such to a particularly poor area of
Africa, and the reply was basically "There are no roads here to ship the
medicine on."

~~~
zaarn
NiMH and NiCad batteries do have some useful properties. We still use Lead
Acid too, despite it begin a truly awful battery in terms of energy density
and based on fairly ancient designs because it's incredibly robust against
environmental changes, can delivery incredibly high currents and don't care
about how to charge them; you can comfortable load them up by plugging them
into a 14.4V supply.

NiCad for example is great for low temperature environments and they can
deliver almost 100% of their capacity at the maximum rated discharge. They are
essentially lead-acid with a tad more energy density and being very sensitive
about how they're charged.

NiMH don't have that great of a capacity at maximum rated discharge but they
do have a very very low internal resistance while still (almost) matching
Lithium batteries in energy density. Additionally, they are almost perfectly
constant voltage until discharged, making them suitable for applications where
you might not want a complicated voltage controller.

Lithium is actually a fairly difficult cell. Drawing maximum discharge will
reduce capacity, they don't like shocks or extreme temperatures and their
voltage stability is _meh_ at best. They also heat up a lot when charging or
discharging, making cooling circuits required in some scenarios. They do have
extraordinary energy density though.

Don't discount other battery types; battery chemistry dictates the behaviour
of the battery under load scenarios, Lithium batteries aren't always the
answer.

------
dsfyu404ed
This is no big deal. Prices will tank and an equilibrium will be reached. This
kind of stuff happens all the time when supply lags demand and then catches up
and you have a little bit too much supply.

~~~
yarg
You also have to consider the percentage of the market controlled by China.

Look at what they've done with their control of rare earth metals.

Artificial scarcity and resource hoarding is something that needs to be
considered.

~~~
Sabinus
But China doesn't have control of the lithium market.

------
Erlich_Bachman
Aren't other metals like Nickel and whatnot are the main bottleneck for the
vast numbers of batteries required for the electric car boom? Didn't we
already know for the long time that lithium is very abundant, but it's those
other metals (which are required much less by mass, but still required) that
might be a problem, and this is why different companies are betting on
different lithium chemical processes, because they don't know for sure which
secondary metal will become the bottleneck?

~~~
hwillis
Cobalt yes, kind of. Nickel absolutely not. Every single car, globally, could
be electrified without making a big dent in nickel demand. Stainless steel is
FAR more demanding of nickel.

Cobalt is tricky because in most places it's a byproduct of nickel mining, and
it is only mined on its own in a couple places (notably the DRC). Despite that
it's fairly likely that it will scale well, and it also becomes less and less
relevant as electrodes reduce the amount of cobalt they use.

Virgin spheroidal graphite is another possibly-constrained supply, as it's a
very particular kind of hard coal. Luckily it can be produced artificially-
batteries use a roughly 40-60 mix and it costs roughly the same. IIRC natural
graphite has a slightly higher power output and synthetic graphite has higher
capacity, due to the nanoscale patterning of the graphite grains. As coal
mining decreases graphite will probably just become more artificially
produced, since it can be made from essentially anything.

------
crb002
Industrial battery will eat it.

~~~
taneq
Exactly. The potential market for grid storage for renewables will be similar
in size to the market for EV batteries once the cost of battery-backed
renewables falls below the cost of a grid connection. And once that does
happen, power grids worldwide are going to rapidly enter a death spiral as
their fixed costs are spread between fewer and fewer users.

~~~
dTal
Why? The role of the grid will still be arbitrage between power generation and
power consumption. A flat in a high-rise in a city doesn't have anywhere to
put solar panels; a factory couldn't possibly sustain its power consumption
with on-site renewables, and no amount of on-site battery storage will change
that. Somebody needs to buy power from net producers, and sell it to
consumers.

~~~
ecpottinger
A factory may put in batteries to prevent the cost of demand/surge power.

An apartment depending of where it is may put in batteries if it is in a
location where power sagging/failures happen often.

Remember the entire world is not North America or Europe.

~~~
dTal
Yes, of course power sinks gain value from having their own power buffer, even
if only to take advantage of fluctuations in energy cost. But why would this
cause grid collapse? They still need the energy delivered, at some point. It
puts whoever runs the grid in the quite enviable position of power market
middleman. Far from collapsing, I would expect grids to do extremely well out
of such a shift.

------
nrev
There’s so much energy waste in electric cars from the greater number of times
energy must be transferred specifically where it’s changing form. I don’t
really see how this can be minimized or changed enough to make and electric
car world (or even hybrid electric) scalable in a way that isn’t
problematically energy-inefficient. So, I’m at least a little tired of the
idea that electric cars are such a groundbreaking solution.

I have nothing against them/people who use them but I’m not convinced that
it’s the solution to the looming crisis/possibly explosive break up in our
love affair with crude oil. Plus, I’m a little afraid that here in the US
we’re about a minute away from destroying Appalachia even moreso—I.e. due to
particularly destructive coal mining practices and mountain topping, etc. So
I’m apprehensive about increased strain on the power grid. (And I’m not keen
on nuclear power either). But I welcome some kind of paradigm shift/future
work that reveals I am wrong in this regard. It would be awesome if someone
re-engineered and improved some aspects of these things rendering them more
effective and less destructive.

(Edited at 2:24EST for typos)

------
Causality1
I would've been very excited about this back in the halcyon days of being able
to carry spare batteries for my phone and laptop.

~~~
xxpor
I bought a laptop with a replaceable battery, RAM, and HDD this year. A Lenovo
T480. Most people don't _have_ to buy a MacBook (outside of iOS dev).

~~~
Causality1
Good choice, since it's the last one which had the feature. The T490 drops
support for removable batteries.

~~~
xxpor
>The T490 drops support for removable batteries.

That's seriously disappointing :(

------
natch
The electric car boom is in such early days now, I don’t know that anyone can
even discern the shape of the curve yet.

~~~
rcMgD2BwE72F
>I don’t know that anyone can even discern the shape of the curve yet.

Now, you have: [https://assets.weforum.org/editor/large_opfwi0Tq43oLA-
yv3bAv...](https://assets.weforum.org/editor/large_opfwi0Tq43oLA-
yv3bAvJAPxmmvpzpeqDpa2HoienxQ.jpg)

One a country tells its population to go electric and put the infrastructure
in place to support that, people adopt EVs at a pretty fast pace and end up
pretty happy about it.

------
S_A_P
Hey. That looks like what happens with crude/natural gas/agriculture/any
commodity. While it is worth being reported, this is Econ 101 supply and
demand. Price volatility is part of the market.

------
want2know
There are other problems arising for electric cars: road tax.

Electric cars are way havier than most cars and have so much traction that
road maintenance will be much more expensive when everybody has an electric
car.

This is why countries like Norway and the Netherlands are thinking about
raising the road tax for electric vehicles.

I also think this is why brands like Toyota are still thinking about hydrogen
cars. They still don't believe 100% in electric battery cars.

~~~
AgloeDreams
This is hilariously misguided with little real truth to it.

Are electric Cars heavier? Yes...but not really by much. Sure a Model S is
heavy, but it is a full size car designed to compare with other 4000-pound
range cars and a side effect of the platform's age meanwhile a Model 3 is less
than 10% heavier than a BMW 3 series.

The traction idea is just absurd.

The real reason why Norway wants to raise the road tax is because the taxes
they use on gas cars and gas itself is used to pay for road repair and if
there are no gas cars then there is no road upkeep budget.

Also, Toyota wants to do hydrogen because they are materials-cheap, offer
specific marketable advantages, and easy to build under current architectures
enabling larger profits.

~~~
want2know
Well maybe this is different in the US but in Europe electric cars are easily
20% heavier than similar models.

The traction idea is not absurd. Tesla owners claim the tires last around
25000 kilometers instead of 60000 when the drive 'insane' all the time.

Takeshi Uchiyamanda was always talking about the environment when he talked
about hydrogen. And even now he sees that battey cars are taking off he still
stand by his point.

But that is all marketing talk?

~~~
AgloeDreams
The first two points don't really apply to future electric cars however.

Euro Electric car models (like the e-golf or such) are generally adapted
gasoline models that require additional hardware to make the design work, this
is obviously inefficient. To make it clear, the current non-tesla/Jag/Audi EVs
are almost all examples of designs that will not be seen in the future so I
don't think they are fair to compare. The VW ID3 would probably be the best
example of a future euro electric car.

The traction idea is absurd for a few reasons: 1: fast cars exist currently.
2: There is no proof to the idea that accelerating hard has any effect at all
on roads. 3: Tesla's Performance is incredible, sure...but that's a $100K car,
it is not what will be sold mass market or bought mass market. It's priced
near that of a Porsche 911 turbo, which accelerates somewhat near to the level
of the Model S and has never been this kind of issue.

As for hydrogen, look at this Toyota-press chart:
[https://insideevs.com/news/353600/toyota-six-global-
bevs/](https://insideevs.com/news/353600/toyota-six-global-bevs/)

1: they are not all in on FCEV 2: Their own chart shows them believing that
BEVs will eventually outsell Fuel Cell (but of course not before FC takes
off..which it hasn't. )

------
Animats
OK, another worry out of the way.

------
ninju
So first the SKY IS FALLING because demand is greater than supply and now the
SKY IS FALLING because supply is (forecasted) to catch up to demand.

Sensationalist media articles win both ways :-)

~~~
dang
_Please don 't use uppercase for emphasis._

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html).

------
ironfootnz
Kinda useless build up. More material are been used to build dense battery and
they don’t use only lithium as major source for these new types of batteries.

~~~
Sabinus
No competing battery chemistry has been proven to work at scale. Plenty of
research in the pipline, but no breakthroughs that scale so far.

