Lithium

Lithium is a key component in a range of innovative industries due to its high energy storage, insulating and heat resistant capabilities.

The increased application of rechargeable lithium-ion batteries, particularly within the automotive industry, is expected to drive demand significantly in the coming years providing an excellent platform from which to boost Bacanora’s growth.  The global lithium-ion battery market was valued at $30bn in 2018 and this market size is anticipated to increase to $100bn by 2025.

SignumBox (Chile) has provided the Company with their detailed 20 year analysis of the global lithium market, summarised as follows:

  • By 2037, SignumBox anticipates the annual global demand for lithium chemicals to reach about 1,700,000 tonnes of LCE in their base scenario, compared to 190,000 tonnes in 2017, equating to an average annual growth rate of about 11.5% over the next 20 years.
  • SignumBox estimates that the battery segment of the market will continue to grow strongly and by 2037 it would represent 84% of total lithium demand, compared to 35% in 2017.
  • When considering various pricing scenarios, SignumBox estimates that the lithium carbonate (battery grade) long term price (2030) would range between US$13,700/t to US$20,600/t.

The Company’s lithium pilot plant in Hermosillo continues to produce high quality battery grade lithium carbonate samples for distribution to potential customers in Asia. Bacanora has entered into an offtake agreement with Ganfeng for 50% of the lithium carbonate produced at the Sonora Lithium Project for Stage 1 and up to 75% of the production from Stage 2. The Company also has an offtake agreement with Hanwa for the remaining 50% of Stage 1 lithium carbonate production. The final pricing for both contracts is to be agreed on a quarterly basis predicated on market price or any other mutually agreeable method. The Company is therefore exposed to the risk of market fluctuations between the present and the commencement of production.