Lithium - the Power and the Passion

Recently I was asked to make a presentation on the Lithium sector at the Resource Information Unit (RIU) Explorers Conference in Fremantle (for which BDO was a key sponsor).

Every day we hear of lithium in the media, mostly in the context of the batteries which are enabling new and advanced technological devices such as electric cars, tablets, drones etc. so I thought it would be appropriate at this time to offer some observations on the lithium sector, the potential opportunities and the key success factors.

I have broken this article down into two parts, with this part considering the potential of the lithium sector and the second article discussing how the lithium sector is performing as well as the outlook for the future.

Part 1 – potential of the lithium sector

What is lithium?

Lithium is the first metal in the periodic table and is approximately half as dense as water.  It is highly reactive and is not found as a metal in nature. It has the highest charge to weight ratio and is found in two forms – brine and mineral.

Trace amounts of lithium are present in all organisms. The element serves no apparent vital biological function, since animals and plants survive in good health without it. Non-vital functions have not been ruled out. The lithium ion Li+ administered as any of several lithium salts has proved to be useful as a mood-stabilizing drug in the treatment of bipolar disorder, due to neurological effects of the ion in the human body.

Lithium is not just used for batteries. Lithium and its compounds have several industrial applications, including heat-resistant glass and ceramics, lithium grease lubricants, flux additives for iron, steel and aluminium production as well as lithium batteries and lithium-ion batteries. These uses consume more than three quarters of lithium production.

Applications and commercial uses of lithium

Electronic devices

If you consider the devices that we have at our finger tips today, mobile phones (with decent battery lives!), Fit Bits, Tablets, Google Glass, drones and the list goes on.

Electric cars

There are now over 100,000 Tesla and other brands of electric vehicles on the road, sales of PLUG (plug-in electric) vehicles have been exponentially increasing year on year from 2011 until 2014 only dropping in 2015 following a decline in fuel prices, not to mention sales of hybrid vehicles which also require batteries.

Power storage potential

However, these advancements almost pale into insignificance when you consider the disruption potential associated with the impact that viable power storage will have on the electricity grid as we now know it.

The high level of adoption of solar panels in WA was far in excess of that expected by the Government resulting in a dramatic reduction in the tariffs paid and the potential for a future increase in charges to solar panel owners in an attempt to recover the infrastructure costs incurred.

The main limitation associated with these solar panels is the storage of any excess power generated during the day for use after dark and during peak usage times.  To date the batteries required to store the excess power have been impractical due to their high cost and inefficiency.  Tesla has claimed to solve this problem with a game changing system for homeowners that reduces reliance on the electricity grid at half the price of the existing technology.  Called the PowerWall it uses lithium-ion batteries and an inverter to store any extra energy.

Research conducted by Deutsche Bank has found that the combination of rooftop solar panels and lithium ion battery storage can be cheaper than the grid especially in places like Australia where we have sunshine in abundance and the cost of electricity from the grid is high. 

As demonstrated by the rapid uptake of solar panels in WA, as an economically viable option to electricity from the grid, it is clear that an efficient and affordable power storage option is the key to unlocking the potential of this technology.

To be continued.....