R. Keith Evans

R. Keith Evans
Contributor since: 2009
Although brine grades are now lower at Silver Peak than at the start of operations there, Chemetall has announced that capacity is to be increased. Regarding other older deposits in the United States, production was transferred from North Carolina to South American brines commencing more than 20 years ago to reduce production costs.
The implication that the world is faced with a potential supply problem is incorrect with announced expansions of current operations in Chile, Argentina and Australia with new projects being developed in Quebec (3), Nevada, California, Arkansas, Argentina (3 possibly increasing to 5) and Australia (2). Together they will result in a major increase in supply and probable overproduction.
In my comment I need to change "production" to "productive", thanks
Mr. Moore says "of the production lithium deposits many are in decline, older and uneconomic"
Could he list these productive deposits?
The USGS no longer uses the classification of Reserve Base and now uses Resources. Its recently revised estimate is for 35.0 million tonnes Li. Check their website.
Keith Evans
Unfortunately, your article "The Market for Lithium" contains numerous major errors. It is at its worst when Tahil is quoted, almost verbatim, on the reserve/resource situation.
Readers are referred to my recent short paper in Seeking Alpha "Lithium Production and Resources-Possible Short Term Oversupply" dated Nov. 11th 2010 for an update on the current situation.
I do little to differentiate between the two categories in my estimates for reasons discussed later but as of January 2010 in a Keynote address at the second major lithium conference organised by Industrial Minerals they totaled 34.5 million tonnes Li with 8.9 million tonnes in pegmatites, 20.9 million in continental brines, 1.0 million in geothermal brines, 0.7 million in oilfield brines, 2.0 million in hectorite clays and 0.85 million in Rio Tinto's jadarite deposit in Serbia. In the course of the last 12 months the tonnages in Australia and Argentina have increased significantly.
Of the January total current chemical producers resources total 7.8 million tonnes Li and advanced new projects contain an estimated 7.2 million. The pipeline projects include pegmatites, brines, clays and the mineral jadarite. All the projects are expected to be viable and capable of producing battery grade lithium carbonate.
My estimate is an independent one and other reputable ones estimating similar tonnages have been produced by Clark & Harben, Yaksic & Tilton and the United States Geological Survey. The USGS resource estimate has increased dramatically from a total of 9.9 million tonnes in 2009 to 33.0 million tonnes currently.
Some current producers estimates have increased as a result of additional drilling and their estimates, like those of potential new entrants into the business, are subjected to scrutiny by regulatory authorities.
Finally, a word on reserves versus resources. Until the last few years the lithium business has been relatively small with the Western World having one dominant lithium concentrate producer and two chemical producers. Demand growth was modest and the need for increasing reserves from what was required for 20 or 30 years of production was not justified. With the prospect of a major increase in demand, principally for lithium-ion batteries their ability to meet this demand and the resources have been upgraded from projected geological resources to upgraded classifications. Reserves at the Salar de Atacama have been more than tripled (the lowest grades in the salar’s nucleus are well in excess of the highest grades in the Argentinian salares so it can be safely stated that the entire resource is economically viable) and at the Greenbushes pegmatite in Australia (most production destined for chemical production in China) has seen a similar major increase. This is not what is disparagingly called "producers creep".
To put the reserve and resource tonnages in perspective each million tonnes of recovered lithium is sufficient to power about 400 million Chevrolet “Volts”.
Mr. Pelham-Retirefund comment -
Please feel free to reprint the article in Retirefund,
Keith Evans
gkichan comment-Apologies for the slow response!
The Chinese predominantly use spodumene because the domestic brine resources, although large, have complex chemistries and there are problems in recovering lithium economically and of sufficient quality. They continue to work on the problems.
Keith Evans
Sr. Zuleta attended both “Lithium Supply & Markets” conferences - the first in Santiago, Chile, in January 2009 and the second in Las Vegas, January 2010.
At the first, Chemetall pointed out that the cost of lithium in lithium-ion batteries represented less than 1% of the total battery cost. The carbonate was priced at 6 Euros/kilo - close to the then price of technical grade carbonate. In Las Vegas, FMC gave a more detailed breakdown of battery costs to, again, demonstrate that the lithium cost represented less than 1% . They didn’t state the lithium price used in the calculations but by making reasonable assumptions a price of $3.50/lb can be calculated.
Sr. Zuleta referenced two items to justify his statement that battery grade material is ten times more expensive then technical grade. The first was a Metal Place price list. The prices in this are suspect as, for example, it lists battery grade material at about 3 times the price of potash! The second was a quote from Jon Hykawy of Byron Capital Markets where he reputedly stated in an interview with the Gold Report that battery grade material sells for $45,000-$50,000 tonne. I took the prudent step of checking with Dr. Hykawy who says that this is a serious misquotation which is hardly surprising in that in answer to an earlier question concerning production economics he quoted the potential revenue from a moderately sized 10,000 tpa operation using a selling price of $6,600/tonne. Dr. Hukaway is of the opinion that the price difference between technical and battery grade material is modest. Like myself, he has seen remarkably high prices only in respect of product with a 99.999% (or similar) purity, the market for which is probably miniscule.
All potential new operations realise that most of the growth in demand will be for battery grade material. This ($6,600/tonne) is also the selling price estimate used by Western Lithium in its recently published scoping study where the target product is battery grade.
I stand by my earlier statement that the price difference between technical and battery grade material is modest and this has been confirmed by numerous industry contacts.
At the recent Lithium Supply & Markets conference held in Las Vegas, FMC Corporation, one of the largest lithium producers, presented a breakdown of the costs of producing a 25 kWh automove battery with a lithium nickel cobalt manganese cathode. The raw materials in the cathode consist of 7% lithium, 6% nickel, 25% cobalt and 2% manganese. The cathode cost represents 23% of the total cell cost and the cell cost approximates to 50% of the total battery cost.
The cost of the lithium in the cell approximates to about 1.5% of the cell cost and less than 1% of the final battery cost.
The statement that battery grade carbonate is ten times more expensive than technical grade material is totally incorrect. Prices vary but battery grade carbonate is typically between 10% and 15% higher.
Keith Evans
The obsession with Bolivia as a potential source of lithium continues to surprise me. There appears to be general agreement that lithium reserves and resources outside of Bolivia - in Chile, Argentina, Africa, Europe, Australia and China approximate to 25.0 million tonnes and is being added to as a result of exploration activity prompted by the potential growth in demand.
The Bolivian source is large and probably larger than generally acknowledged but quality is what determines production costs and hence ones ability to successfully market the product.
The brines in the Salar de Uyuni contain a significantly lower concentration of lithium than currant South American producers and have a higher magnesium content than competitive brines. Both these factors together with much lower solar evaporation rates will push up costs.
As stated earlier, in situ reserves and resources outside of Bolivia approximate to 25.0 million tonnes Li and each million tonnes of recovered lithium (133 million tonnes of lithium carbonate) is sufficient for 560 million vehicles requiring a 10KW/h battery.
When you do the maths and assume that 50% of the non-Bolivian resource tonnage is recoverable it can be seen that the world then can, if necessary, manage without Bolivia.
Rather than continuously preaching about potential exploitation the Government should be laying out a red carpet for potential partners if they can help accelerate evaluation and possible development. When large scale recycling of lithium batteries kicks in ten years or so after initial large scale usage, primary lithium production could fall significantly.
R. Keith Evans
Industrial Minerals Consultant
I apologise for the delay in responding to comments on my report on the Santiago lithium conference. Unfortunately, it did little to reduce John Petersen’s skepticism regarding the economic viability of battery powered vehicles! I am glad, though, that he has ticked one issue off his list,
The figures on auto usage are not mine of course. How will the resources stand up to a much higher demand?. Look at the resource base and assume that a conservative 50% is recoverable i.e. 15.0 million tonnes Li times 560 million vehicles with 10 kW/L batteries with appropriate adjustments for larger and smaller vehicles and a deduction for ‘conventional’ lithium chemical demand growing at 5% annually.
As far as I am aware, the papers presented in Santiago are only available, to participants. But see www1.metalbulletin.com/
Regarding Jack Lifton’s higher figure for carbonate requirements per kW/h I can only repeat that all three major producers who, I imagine, are in more or less continuous contact with their current and future customers quoted 0.6 kg carbonate per kW/h.
Finally, the issue of response time to meet a rapid demand was raised. Each lithium occurrence is different. In the case of open pit mining operations (or an existing underground mine) the principal determinant will be the time required to construct the upgrading (concentration) and chemical plant facilities.
In the case of ‘greenfields’ brine operations the timing will be controlled by the need to construct solar ponds, lay down a salt base in the ponds to allow heavy equipment to harvest, in most cases, non paying sodium chloride and mixed sodium/potassium chloride for potash production prior to the recovery of lithium chloride in liquid form. There are, of course, variations from this – e.g. FMC does not recover potash. The speed of the salt precipitation is very much a function of the evaporation rate.
In the case of SQM my article pointed out that the company is currently pumping “excess” lithium. Adding pond capacity to increase production could be accomplished rapidly. The “excess” lithium tonnage will increase as the company’s potash production capacity grows from a current 860,000 tpa to 1.2 million tpa by 2011.
My article mentioned Chemetall’s expansion plans and other projects in various stages of their feasibility studies. Most new projects could, if demand justified, be on stream in less than three years.
R. Keith Evans
It is wrong to assume that lithium will not be coming from here (i.e. the United States). Large reserves exist in pegmatites in N. Carolina, oil field brines, geothermal brines in S. California and in the clay mineral hectorite. See worldlithium.com