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25 Jun 18

Chasing lithium in Bolivia, Argentina and Chile

The rising EV market is attracting new players to the lithium market, such as OEMs, who are encouraged by the changing policies in Bolivia, Argentina, and Chile.

Only a handful of companies own half the global lithium market: SQM (Sociedad Quimica y Minera de Chile S.A.), Albemarle (US), and Tiangi (China). Together with FMC Corp., these four are equipped to ensure the lion’s share of additional lithium carbonate production in the next years.

The Market Tomorrow

Several lithium producers in Chile and Argentina have announced plans to ramp up production, but the most remarkable is SQM, which recently received the necessary permit. However, the bid of Tiangi to buy shares of SQM was blocked by the Chilean government, to avoid that both companies combined would gain control over 70% of the global lithium market.

New in the market are OEMs, looking for contracts with lithium suppliers, altough none of them have so far reached a long-term agreement with the exception of Toyota, which has invested in lithium producer Orocobre. Tesla, on the other hand, is in talks with Chile’s SQM, and probably with Bolivia as well.

Moreover, China is also on the look-out for a role in the lithium triangle because of its goal to increase its EV sales sevenfold by 2025. This has resulted in the attempt of Tiangi to buy a share of SQM, and a symbolic shipment of lithium out of Bolivia.

On the Rise

These announced lithium production increases have given rise to concerns about oversupply and price collapses, since the price of lithium has already quadrupled since January 2015. However, the production increases in the next few years will probably not keep pace with increasing demand.

Ultimately, both demand and production will go up, resulting in rising prices and changing market dynamics, despite the other battery technologies which are under development.

Image: Tesla factory in Tilburg, Holland
 

Authored by: Fien Van den steen