Where to find the “lithium blood” of the economy of the future, by Dmitry Skvortsov for VZGLYAD. 09.22.2023.
Projects have begun to mine a metal that is strategically important for Russia.
Several lithium mining projects are beginning to be implemented in Russia. In the coming years, this should make our country one of the world leaders in the extraction and production of this metal, which has suddenly acquired strategic importance. This was the response of Russian industry to the difficulties created by the cessation of lithium supplies from abroad.
Lithium has traditionally been used to make glass and ceramics, improve alloys, lens coatings in optics, lubricants, textiles, food processing, and pharmaceuticals. In the Soviet Union, several lithium deposits were described in detail in the late 1940s, from the Kola Peninsula to Baikal and Altai, but production was organized only at the Zavitinskoye deposit in the Krasnoyarsk Territory. In 1997, the mine was mothballed (at that time it seemed cheaper to buy lithium abroad than to maintain production at the old Soviet mine, which needed reconstruction).
However, today lithium has acquired a completely different, revolutionary meaning. In particular, a couple of decades ago there was no such need for lithium for batteries in smartphones, laptops, drones and electric vehicles. Moreover, after several power crises in Europe, it became clear that the development of renewable electricity is impossible without the construction of giant battery stations. The UK has already built several battery stations to store significant amounts of energy and is building even more powerful ones. Similar projects are being implemented in Australia.
In general, from 2010 to 2021, lithium consumption in the world increased almost fourfold (from 23.5 thousand tons to 93 thousand tons). And a key area of lithium use has shown truly explosive growth: the production of lithium batteries. In 2010, 5,405 tons of lithium were used for these purposes, and in 2021 - 68,820 tons (an increase of 12.7 times).
The age of lithium lies ahead
If you compare lithium to oil or coal, you can say that it is not a fuel. That is, its use does not seem to provide humanity with significant advantages associated with new energy sources. But this is an apparent difference. In fact, the use of lithium allows you to use electrical energy more freely. Today, batteries are bringing electric buses to our cities, replacing trams and trolleybuses tied to wires. The use of electricity in transport will expand.
Supplying electricity through wires is easier than pumping oil through pipelines and transporting gasoline by fuel trucks. In addition, in the vast expanses of our country, there are many remote corners where people need to get to for some time to do important work, but where it is not very practical to lay a power line.
In the North, generators and barrels of diesel fuel/gasoline save the situation. But a windmill/solar panel and batteries of sufficient capacity can successfully replace them.
It is impossible to imagine life today without gadgets that contain processors. And with the advent of the Internet of Things, the use of processors will increase exponentially. And in many cases, these processors will be powered not only from the mains, but also from lithium batteries.
Where can I get lithium?
Shortages of lithium raw materials first surfaced in 2020, but were then blamed on supply chain disruptions. Then the exchange price for lithium carbonate increased from $5,900 per ton in November 2020 to $13,850 in mid-April 2021. The growth in demand for electric vehicles led to the next explosive wave of lithium urea prices up to 78 thousand dollars per ton. In 2022, prices rose to $84,000. Rising prices spurred investment in the extraction of proven deposits and the search for new ones.
Total lithium production in the world in 2021 was about 100 thousand tons. The largest producing countries: Australia (55 thousand tons), Chile (26 thousand tons), China (14 thousand tons) and Argentina (6200 tons). At the same time, the distribution of leading countries in terms of lithium reserves looks different. The first three places belong to Bolivia (21 million tons), Argentina (19.3 million tons) and the USA (12 million tons). The top ten holders of the largest lithium reserves also include Chile, Australia, China, Congo, Canada, Germany and Mexico.
All this data is as of the end of 2021. Russia was not in the top ten at that time, since it had not yet mined lithium. Nevertheless, according to Russian data, 17 lithium deposits have been explored in the country. Balance reserves amount to 3.5 million tons, or 7.2% of world reserves. Another about 1 million tons are off-balance reserves, including rock dumps created during the extraction of other minerals.
But Russia is not the only country planning to oust its leaders. At the beginning of March 2023, information appeared about the discovery of a large lithium deposit in Iran. According to Iran's Ministry of Industry, Mines and Trade (MIMT), its reserves reach about 8.5 million tons of minable lithium, making it the second largest on the planet. In mid-February 2023, Indian authorities announced the discovery of the world's largest lithium deposit with reserves of 5.9 million tons in the states of Jammu and Kashmir.
Six months before the start of the SVO, Ukraine signed an agreement on a strategic raw materials partnership with the EU. Among other things, it provided for the development of four lithium deposits. The European Lithium company (owned by Australian capital) was going to develop lithium. Now these plans are in question, because one of the fields - in Krutaya Balka near Zaporozhye - is already under Russian control; another one is located several kilometers from the front line in the part of the Donetsk region under the control of the Ukrainian Armed Forces. And the two remaining deposits require serious investments in mine production, which no one will undertake until the end of hostilities.
Finally, according to information from the United States, a new lithium deposit has been discovered in the crater of a volcano on the border of Nevada and Oregon, the reserves of which, according to preliminary estimates, reach 20–40 million tons. The discovery, however, awaits final confirmation.
Russian lithium mining projects
Until now, Russia has covered its lithium needs through imports. However, Western sanctions have put a significant portion of these supplies at risk. In particular, lithium supplies to Russia from Chile and Argentina were stopped. According to the government strategy for the development of the metallurgical industry, in the future, Russia's needs for lithium raw materials should be met by expanding the production of this metal within the country.
Lithium will be mined at the Kolmozerskoye deposit in the Murmansk region with reserves of 75 million tons (about 19% of all Russian reserves; development will be carried out by Polar Lithium, a joint venture between Rosatom and Norilsk Nickel). Lithium production at the Polmostundrovskoye deposit (also in the Murmansk region) will be carried out by the Halmek company and the Chemical-Metallurgical Plant (an enterprise located in Krasnoyarsk that produces metals for the nuclear industry and is the main producer of lithium hydroxide in Russia, so far from imported raw materials).
The reactivated Zavitinskoye field in the Trans-Baikal Territory will be developed by Rosatom. In the Irkutsk region, lithium compounds will be extracted from the mineralized groundwater of the Kovyktinskoye gas condensate field (a subsidiary of Gazprom) and the Yaraktinskoye gas condensate field (Irkutsk Oil Company). There are talks about developing lithium deposits in Dagestan.
Rosatom's Uranium One (U1) project for the production of lithium carbonate from lithium-containing solutions from the Pastos Grandes salt marsh in Bolivia with a capacity of 25 thousand tons per year may turn out to be the most profitable Russian project. This is important, since Rosatom is building a gigafactory for the production of batteries for electric vehicles on the territory of the Baltic NPP in the Kaliningrad region. For its operation, at the first stage, 3.2 thousand tons of lithium will be required annually, and subsequently - about 10 thousand tons per year.
The cost of the battery is a significant part of the cost of an electric vehicle, and making it cheaper is important for the competitiveness of electric vehicles. But today there are significant risks when transporting raw materials through the seaports of Chile and Argentina (Bolivia is landlocked), and therefore it is important to provide Russia with domestic sources of strategic raw materials.
Technology competition and lithium OPEC
The number of domestic lithium mining projects shows that this is not just an attempt to quickly close the gap in the import of important raw materials (which, by the way, still comes to us from China). Lithium is becoming the lifeblood of tomorrow's economy.
Russia is a country with excess electricity generation. Negotiations are currently underway on the construction of export power lines to Kazakhstan and Iran. Next up is the electrification of Afghanistan, in which Russia can play a leading role. Under these conditions, it is natural to think about expanding the use of autonomous electric machines and devices that require batteries.
The question is not only about our comfort. The growing share of electric vehicles and the emergence of electric planes and electric ships will change transport around the world. And if today Russia’s international influence is partly based on its role in OPEC+ as one of the leading oil exporters, then in the future we can think about a comparable role in the economy of tomorrow - the economy “with lithium blood”.
The lithium market on the eve of a major redistribution
Information about the start of development of a number of previously unused deposits and the discovery of new deposits today brought down lithium prices on world exchanges to 26 thousand dollars per ton.
Taking into account the fact that the cost of lithium for its main producers is in the range of 5–15 thousand dollars per ton (and in South American deposits – 2.5–5 thousand dollars per ton), the profitability of production will remain. At the same time, at prices below 20 thousand dollars per ton, the launch of more expensive projects (for example, the extraction of lepidolite, a mineral containing lithium), will stop. The implementation of projects for the extraction of lithium from salt marshes and deposits of spodumene (lithium and aluminum silicate) will depend on the availability of cheap financing.
Under these conditions, those in whose hands will have the most effective technologies will win. Effective both from the point of view of direct costs and from the point of view of a gentle impact on the environment, which minimizes indirect costs allocated for environmental protection measures.
Russian companies have unique advantages that can be realized in lithium production. Gazprom has long been using water injection into gas-bearing formations to increase gas recovery from fields. In some soils, this results in the leaching of lithium-containing substances, which can then be easily separated from the solution. Rosatom has accumulated a significant package of competencies in working with solutions of radioactive waste for their disposal and in separating radioactive substances for medical purposes and for special sources of electricity (used in space, the Arctic and in military equipment). The conversion of these technologies for lithium mining has made it possible to develop a new technology for Bolivia that promises high environmental standards at a low cost of lithium production.
Well, if we talk about the distant future, then it is worth paying attention to the recent statement by several Latin American countries about their desire to create a “lithium OPEC” to reduce market volatility. An example of classic OPEC+ is before their eyes. Someday this will become practical, and now steps are being taken so that by that time Russia can enter this new international cartel as one of the leading countries.