Evaluating and forecasting the lithium market from a value perspective


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Understand how volume and value are related, how this affects companies' performance, and how future demand will influence both volume and value

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Evaluating and forecasting the lithium market from a value perspective

  1. 1. Evaluating and forecasting thelithium market from a valueperspectiveRobert Baylis30th January 2013
  2. 2. DisclaimerThe statements in this presentation represent the considered views of RoskillInformation Services Ltd. It includes certain statements that may be deemed"forward-looking statements“. All statements in this presentation, other thanstatements of historical facts, that address future market developments, governmentactions and events, are forward-looking statements. Although Roskill InformationServices Ltd. believes the outcomes expressed in such forward-looking statementsare based on reasonable assumptions, such statements are not guarantees of futureperformance and actual results or developments may differ materially from those inforward-looking statements. Factors that could cause actual results to differmaterially from those in forward-looking statements include changes in generaleconomic, market or business conditions.While Roskill Information Services Ltd. has made every reasonable effort to ensurethe veracity of the information presented it cannot expressly guarantee the accuracyand reliability of the estimates, forecasts and conclusions contained herein.Accordingly, the statements in the presentation should be used for general guidanceonly.
  3. 3. Overview• Market dynamics:• Producer market share by value• Product value and volume• Product markets:• Technical products• Battery products• Organolithium & specialty products• Market outlook and product impact• Summary
  4. 4. Market dynamics
  5. 5. Sales by company across market area (US$M), 2011/12Source: Rockwood Lithium; FMC Lithium; SQM; Tianqi; Talison; Ganfeng; Roskill estimatesNotes: Rockwood LTE 2012; FMC FY 2011;SQM LTE 2012; Tianqi + Talison FY 2011/12;Ganfeng FY2011; Tianqi + Talison technical salts includes mineral salesLithium market share by value shows how product diversification canincrease turnover substantially050100150200250300350400450ROC FMC SQM Tianqi +TalisonGanfeng Other 20ktpy BGLCEproducerOrganolithium Battery Technical Speciality/metal
  6. 6. Speciality/metal Organlithium Battery TechnicalCat-grade lithiummetalButylithium Battery-grade lithiumcarbonateTechnical-gradelithium carbonateHigh puritylithium saltsHexyllithium Battery-grade lithiumhydroxideDirect-usemineralsLithium aluminumhydride (LAH)Methyllithium Battery-grade lithiummetalTechnical-gradelithium hydroxideLithium hexa-methyldisilazidePhenyllithium Lithium salts, e.g.lithium fluorideLithiumhypochloriteLithium bromide Lithium chlorideValueVolumeProduct groupings can be roughly drawn around specific markets andproduct types
  7. 7. Tech-grade LCBatt-grade LCTech-grade LHBatt-grade LHTech-grade LMBatt-grade LMOrganollithiumFoil LMLithium hexa-methyldisilazideLithium aluminiumhydride01234561 10 100 1000Conversionsteps(No.)Added valueRockwood Lithium: Profitability of selected lithium products, 2012Source: Rockwood LithiumNote: Size of bubbles represents profitability of productsProfitability is not necessarily restricted to higher priced products, and willvary by producer depending on costs
  8. 8. 0123456789101,000 10,000 100,000 1,000,000Lithium hypochlorite Tech-grade LC Batt-grade LC Batt-grade LHBatt-grade LH Tech-grade LH Tech-grade LB Cat-grade LMBatt-grade LM ButyllithiumComplexity, price and market size of selected lithium products, 2012Source: Roskill estimatesNote: Size of bubbles represents size of market in LCE terms; market volume representativeof chemical market only (i.e. not including mineral direct use)There are very few areas with which to increase added value in thelithium market, so all avenues are explored by producers>90% by volume<US$10,000/t5-10% by volumeUS$30-40,000/t<1% by volume>US$1,000/kg
  9. 9. World: Lithium market size by volume and value, 2012 (t LCE and US$)Source: Roskill estimatesThere is a significant contrast between market volume and market value,with organolithium and other specialty products contributing most to value0%5%10%15%20%25%Batt-grade LCTech-grade LCMineral direct-useTech-grade LHLithium bromideOrganolithiumOtherBatt-grade LHLithium hypochloriteBatt-grade LMHigh-purity LCCat-grade LMLithium chlorideVolume Value
  10. 10. Technical products
  11. 11. Technical products generally only require one or two process stepsMineral conversion Brine processingLithium carbonateLithium hydroxide Lithium chlorideTechnical-gradeTechnical-grade Battery-grade High purityBattery-grade Low sodium metal High sodium metalLithium bromideTechnical-gradeMineral production Brine productionMineral products
  12. 12. Lithium products for technical markets and their key end-usesOther salts LithiumhydroxideLithium carbonate MineralsAir treatment Greases Glass-ceramics GlassPool watertreatmentReagents Ceramic & enamelfrits & glazesCeramicsConstructionchemicalsOther Casting powders Glass-ceramicsDehumidification& CO2 removalGlass Casting powdersOther Aluminium smelting OtherOtherValueVolume
  13. 13. Important factors to consider when supplying technical products• Market is concentrated in Europe, USA and East Asia, but smallvolumes are consumed across a large number of countries• Logistics and distribution networks are critical as volumes generallyhigher compared to other lithium products (especially when includingminerals)• Consumers may buy material in bulk or bagged; some carry stock,some want “just-in-time”• Grade may be less critical for some applications, but will vary evenwithin different end-use sectors• Product form can also vary across end-uses, e.g. particle size• Consistency and reliability of supply perhaps more important thangrade• Pricing is competitive
  14. 14. Battery products
  15. 15. Battery products also generally require only one or two process steps,but feed and quality control is much more rigorousMineral conversion Brine processingLithium carbonateLithium hydroxide Lithium chlorideTechnical-gradeTechnical-grade Battery-grade High purityBattery-grade Low sodium metal High sodium metalLithium saltsTechnical-gradeMineral production Brine productionMineral products
  16. 16. Lithium products for batteries and their marketsOther salts Battery-gradelithium metalBattery-gradelithiumhydroxideBattery-gradelithiumcarbonateLithium-ionelectrolytesolutionsPrimary batteryanodesLithium-ioncathodematerialsLithium-ioncathodematerialsOther Rechargeable“primary” batteriesPrimary batteryelectrolytesLithium-ionelectrolytesolutionsLithium polymerbatteriesOther Primary batterycathodesOther OtherValueVolume
  17. 17. Important factors to consider when supplying battery products• Market is concentrated in East/South Asia, with lower volumes inEurope and USA, and in a smaller number of countries compared totechnical products• Logistics and distribution networks still critical (especially as volumesgrow); metal products require careful handling• Bagged material prevails to prevent contamination• Grade is important, but impurities and foreign particles even more so• Product form can also vary across end-uses, especially for metalproducts• Consistency and reliability of supply imperative• Competition is growing for lower value, higher volume salts (e.g.battery-grade lithium carbonate), but more restricted for higher valueproducts• Pricing is becoming increasingly competitive
  18. 18. Organolithium, metal andspecialty products
  19. 19. Organolithium and specialty products generally require more processstepsMineral conversion Brine processingLithium carbonate Lithium chlorideHigh purityLow sodium metal High sodium metalLithium salts Organolithium LDA/LAH/LHS
  20. 20. Organolithium and other specialty products and their usesOther Organolithium Specialty salts Lithium metalLithium hydride Polymers High puritycarbonate etc.PolymersLithium aluminiumhydride(LAH)Organic synthesis Lithium inorganics(nitrate, sulphateetc.)CatalystsLithium hexa-methlydialiszideAgrochemicals Lithium organics(acetate etc.)AlloysOther Other Other OtherValueVolume
  21. 21. Important factors to consider when supplying organolithium & specialtyproducts• Market is varied depending on product and end-use, e.g. catalysts andorganoltihium in USA, Europe, East/Southeast Asia and India• Logistics and distribution networks closer to end markets due tohazardous nature of organic and metal products, and products requirevery careful handling• Bagged or sealed material prevails to prevent reaction andcontamination• Products designed and produced to tight customer specification, highlevel of technical support and R&D• Consistency and reliability of supply imperative• Competition is thin, especially for organolithium and high valueinorganic and organics• Pricing is opaque, cost of lithium in process becomes a minor concern
  22. 22. Market outlook
  23. 23. World: Consumption of lithium by end-use, 2000-2017 (t LCE)Source: Lithium: Market Outlook to 2017, Roskill Information Services Ltd.Consumption growth may exceed 11%py, even in the base-casescenario, as demand from 3C, EV and off-grid battery markets increase050,000100,000150,000200,000250,000300,0002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Rechargeable batteries Ceramics Glass-ceramics GreasesGlass Metallurgical powders Air treatment Pharmaceutical & chemicalsAluminium Polymer Other11%py10%py
  24. 24. World: Consumption of lithium by type, 2007, 2012 & 2017 (t LCE)Source: Lithium: Market Outlook to 2017, Roskill Information Services Ltd.Non-LIB market to grow 20% by 2017 = 20,000t LCE additional demand010,00020,00030,00040,00050,00060,00070,00080,00090,0002012-2017 growth+134%+22%+14%+22%+9%+700%+25% +57%+20% +10% +13% +10%+10%200720122017
  25. 25. World: Lithium market size by volume and value, 2017Source: Roskill estimatesVolume will move upwards for battery-grade salts relatively quickly, butsignificant value will still remain in specialty products0%10%20%30%40%50%60%Batt-grade LCBatt-grade LHTech-grade LCMineral direct-useTech-grade LHOrganolithiumLithium bromideOtherLithium hypochloriteHigh-purity LCCat-grade LMCat-grade LMLithium chlorideVolume Value
  26. 26. Summary• A wide spectrum of lithium products are produced to meet the needs of adiverse range of end-uses• Volume is centered on relatively low priced lithium salts that, for the most part,are straightforward to produce• Value is however centered on high value metal and organolithium products, whichare not so easy to produce; competition in these is limited• Non- rechargeable battery market forecast to grow by 20% in five years =20,000t LCE additional requirement• Rechargeable battery market forecast to grow by ~200% in five years = 90,000tLCE additional requirement• Incumbent producers will look firstly to capture growth in high revenuegenerating products• Secondly they will look at higher revenue generating battery products, perhapsshifting away from technical salts• Thus potentially leaving new producers to fulfill demand at the bottom of thevalue chain; progressing downstream as opportunities arise
  27. 27. Roskill Information Services“Lithium: Market Outlook to 2017”• New Multi-Client Report Available March 2013• Pre-publication delegate offer available – save 10%“Roskill’s Lithium Digest”• Tracking news and trends in the lithium business• Available quarterly• Free copies available
  28. 28. Robert BaylisManaging Director; Manager – Minor Metals ResearchAbout the speakerRobert Baylis is Managing Director of Roskill Information ServicesLtd. Roskill is based in London, UK, and provides reports andconsultancy services on the supply, demand, end-use applications,trade and prices of industrial minerals, minor metals and steelalloys. Robert joined Roskill in 2006 focusing initially on the cobaltmarket, which, similarly to lithium, was starting to witness significantinterest due to lithium-ion battery and emerging market demandgrowth. He first started researching the lithium market in mid-2008,authoring Roskill’s 11th edition of its multi-client lithium reportpublished in 2009. Since 2009, he has undertaken several single-client research projects on lithium, as well as being a regularspeaker at the Lithium Supply and Markets conference.
  29. 29. Roskill Consulting GroupGlobal coverageIn recent years we have served clients in the US, Canada, China,Russia, the EU, Japan, Brazil, Australia, South Africa and the MiddleEast. We are experienced in interviewing overseas, with the advantageof having several French, Spanish, Italian, Dutch and Chinese -speaking consultants.Tracking news and trendsOur primary research is backed up by our uniquely comprehensive in-house information system. This database is a fund of published andunpublished information, collated under 350 file headings, compiledfrom company reports, official national statistics, over 150 leading tradejournals, technical and trade literature and many other reliableinternational sources.We also subscribe to a range of on-line resources, includingcomprehensive business information services and a trade database, sothat we can analyse developments in metals and minerals markets asthey happen.We have a staff of senior consultants, each with many years ofconsulting experience. In turn, they are supported by a team of analystswho are engaged in full-time metals and minerals research.This means that we are able to offer a wide range of consulting skillscombined with detailed, practical knowledge of the metals and mineralsbusiness today.WWW.ROSKILL.COM/CONSULTING