Wall Street Journal today has an excellent article on lithium. Here’s a brief summary from my readings.

  1. Australia is now the leading producer of lithium. They passed South America especially Chile in 2016.

  2. We continue to hear that China will dominate lithium but how can that be with most production in Australia and Chile? Tianqi Lithium is a Chinese company that controls 46% of global lithium production. In 2018 Tianqi acquired 24% of SQM, the leading producer in Chile. Talison Lithium, the leading producer in Australia is 51% owned by Tianqi in a jv with Albemarle. (Remember those surplus balance of payments dollars that go to China. I think we know what China is doing with them.)

  3. SQM and Albemarle are the leading producers. Both stocks are listed on the NYSE. Shares trade almost as twins. Both have ties with the Chinese.

  4. People talk about a domestic supply of lithium in Nevada or Quebec. Wikipedia describes the process (at the bottom of the notes). Its by fractional crystallization, takes 15 months, and produces numerous co-products. Permitting in the US can be a challenge given that any of a dozen trace elements (lead, arsenic, chromium, selenium, etc) will drive the EPA bananas. Lots of waste streams. Lots of disposal issues. In the West, water for processing is likely to be an issue.

Notes follow

Chile has traditionally been the leading lithium producer but chart shows Australia is now the leader by far. Crossover was 2016.

Chile, Bolivia, and Argentina all have operations but local politics limit potential.

Bolivia is an example of how bad it can be. The industry was nationalized in 2008, a state lithium company was created called YLB. Plant opened in 2013. Production in 2021 was 540 tons. Poor technology results in 9% recovery vs 50% or more in Chile.

Chile used to be the leader but lost out to Australia. Has expanded production by 80% since 2016 to 140k tons per year. (Australia’s production is about 280k tons; China 75k tons; Argentina 30k tons).

Chile’s left leaning govt threatens to create a state lithium company. In the future govt will require majority control of jvs. Water pollution is a concern.

LiCo of Canada tried a new operation in Chile but found its operations blocked by local protestors when they went to drill. They abandoned the operation in 2019.

Albemarle signed a new contract in 2016 that requires royalties up to 40% , a new high. They must supply local companies with product to process at a low price up to 25% of production.

There is no mention of SQM, the traditional leader in Chile.

Argentina is seen as great potential. Rio Tinto PLC, Ganfeng Lithium (China), and Eramet SA (France) are investing. Toyota, Ford, and BMW have deals to buy there. Now has two mines. Could be up to 19 mines and 230k tons by 2031. But Peronist govt has reputation of reneging on agreements.

Lithium Mining in Australia on Wikipedia provides the following–

Orocobre, Galaxy Resources, Pilbara Minerals, Mineral Resources and Altura Mining

Talison began production 1985. Split to form Talison Lithium 51/49 jv with Tianqi Lithium and Albemarle. Tianqi Lithium is a Chinese company that controls 46% of global lithium production. In 2018 Tianqi acquired 24% of SQM.

Mineral Resources founded 1992. Supplies Ganfeng. It primarily operates two iron ore hubs. But also two hard rock lithium mines in Australia.

Platypus acquired Lepidico in 2016

Orocobre is an Australian company with lithium interests in Argentina. Toyota is an investor. Also borax in Argentina. Listed Australia and Toronto. Also potash. Plan is 17.5 kt/yr battery grade lithium carbonate.

Galaxy Resources began 2010, is Australian company with developing interests in Argentina. Also in Quebec. Merged with Orocobre in 2021.

Pilbara Minerals produces in Australia. Partners include Gangfeng Lithium, General Lithium, Great Wall Motor Company and POSCO. Acquired the Altura lithium project in Western Australia in 2020.

Altura Mining produces 220k tons and is planning expansion to 440k tons.

SQM: Wikipedia article. Origin is the Chilean nitrates business. A state company for a while. Listed NYSE 1995. Began production of lithium carbonate 1997. Capacity of lithium carbonate reported at 70k tons in 2020 increasing to 150k tons. Has some lithium hydroxide capacity.

The process involves pumping up lithium rich brine from below the ground into shallow pans. Water is evaporated thanks to the strong sun and dry air. The brine contains many different dissolved ions, and as the concentration increases, salts precipitate out of solution and sink. The remaining liquid (the supernatant) is used for the net step. In the first pan, halite (sodium chloride or common salt) crystallizes. This has insufficient economic value and is discarded. The supernatant, with ever increasing concentration of dissolved solids, is transferred successively to the Sylvinite (sodium potassium chloride) pond, the Carnalite (potassium magnesium chloride) pond and finally a pond designed to maximize the concentration of lithium chloride. The process takes about 15 months. The concentrate (30-35% lithium chloride solution) is trucked to Salar del Carmen. There, boron and magnesium are removed before, by addition of sodium carbonate, the desired lithium carbonate is precipitated out. SQM sells potassium chloride made from Sylvinite and potassium nitrate derived from the Carnalite.

Lithium carbonate solubility: 1.3%. Lithium chloride solubility: 43.5%


We continue to hear that China will dominate lithium but how can that be with most production in Australia and Chile?

I have not looked into this nearly as much as you have.
But possibly it is the difference between lithium mining and the process of purifying it to what is needed as a battery material.


“We continue to hear that China will dominate lithium but how can that be with most production in Australia and Chile?”

China owns a big park of these mines.

Getting the raw lithium chloride to battery grade requires intensive refining (and lots of potential pollution problems with toxic waste material).

China provides the lithium for battery cells and is growing it’s ability to produce battery cells and entire battery systems.

It has the largest EV market in the world, in part because you can’t get permit to buy an ICE car in most Chinese cities! You have to buy EV.



I hope you saw the process described. Once you get the lithium chloride crystals, most of us would simply dissolve in water and recrystallize to remove impurities.

The “removal of borates and magnesium” is not described. I would add lime to make calcium borate or magnesium oxide, which precipitate. Then add sodium carbonate.

All this can be done in tanks in a chemical plant. But requires investment to build, labor and energy to operate.

Quality of the brine used matters a lot. What else is in there? It too gets concentrated and where does it go?

I think its the battery electrodes where China really leads. The rest is mostly finance.

Unlike many processes favored by China, lithium is not labor intensive.


Lithium – Livent

Livent reported excellent earnings today and is up 9%. This is Lithium Corporation of America spun off from FMC a few years ago.

Lithium demand is expected to increase five fold in the next few years with all these companies planning to make electric vehicles. All suppliers are expanding production as fast as they can. But the technology required is primitive. It can take years to get permits, processing water, and etc before new capacity delivers salable lithium. Market is constrained by production capacity until new lithium arrives. Until then earnings have to increase mostly from rising market prices.

Motley Fool has article explaining how well Livent is doing. They have new capacity coming on line in 2023 and seem to be doing well.
[Livent Earnings Soar 400% on Strong Lithium Demand for EV Batteries](https://Motley Fool article)

PE is shown as 26.85. If I use the method I use for Tesla, 4 x 0.40/sh last quarter is 1.60 x 30% is 2.08/sh. Then estimated pe is 13.13.

Livent is -15% for 90 days in my method. Bottom was 18.97 on Jan 5. They are up 44% for the year.

As usual I bought too soon. I’m at $29.93/sh. Down 8.5% at this point, but looks promising.

I like stocks that perform as expected.

Livent earnings up sharply on lithium sales

Earnings for the quarter up 96% from last year. $0.28/sh to $0.55. This due to expanded production in Argentina and better pricing.

Lithium prices have been falling since November, but seem to have stabilised. Article says 70% of contracts not impacted by market prices.

PE shown as 16 on Yahoo Finance and likely to fall as production continues to increase.

After market price up 10% to 23.17.

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Lithium prices have bottomed (after earnings reports)

Current price is 197500 (cents US/2000 lb battery grade lithium carbonate) = $0.9875/lb

Bottom was 165500 (0.8275) on April 25. Price is up 19%.

As with oil, commodity prices translate into stock prices. Shares are making nice recovery

Livent (LTHM) doing best up 23% since May 1. Has operations in Argentina

Albemarle (ALB) up 12% since May 2. Most diversified but invested in Chile which proposes to nationalize the industry.

SQM up 10.5% since May 4. Heavily involved in Chile.

Lithium prices are here:

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