Supplying lithium gets trickier as electric revolution quickens

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An aerial view of the brine pools and processing areas of the Rockwood lithium plant on the Atacama salt flat, the largest lithium deposit currently in production, in the Atacama desert of northern Chile, January 10, 2013. Argentina, Chile and Bolivia hold the planet's largest reserves of lithium, the world's lightest metal and a key component in batteries used to power a range of technologies from cell phones to laptops to electric cars. Industrial production from countries in this so-called "lithium triangle" is already high. Chile is the world's leading source of the metal, turning out around 40 per cent of global supply, and Argentina is also a significant producer. Output from the Andes may soon rise after Bolivia - the country that holds an estimated 50 per cent of the world's lithium reserves - opened its first lithium pilot plant in January. Photo: REUTERS

Published: 11:38am, 22 Aug 2017Updated: 10:37pm, 22 Aug 2017

Hidden within the salt flats high in the Andes mountains of South America are vast deposits of the lithium that Elon Musk may need for his electric-car revolution. But extracting the mineral from brine ponds created by Orocobre Ltd. has proved more difficult than expected.

Bad weather and pump glitches meant production at the Olaroz facility in northern Argentina was 21 per cent below Orocobre’s initial target in the year through June. While things are getting back on track, chief executive officer Richard Seville says the company “either underestimated the complexity or overestimated our capability.”

A worker shows a sample of lithium carbonate processed from the Rockwood Lithium mine on the Atacama salt flat, the largest lithium deposit currently in production, in Antofagasta, northern Chile, in this January 14, 2013 file photo. Photo: Reuters

Producers everywhere have struggled to keep up with demand as electric cars went from almost no sales a decade ago to more than half a million vehicles last year. The battery in a Model S from Musk’s Tesla uses about 45 kilograms of lithium carbonate. More mines are planned, but difficulties at Olaroz -- the first new South American lithium mine in two decades -- are limiting funding for new ventures in Argentina, home to the world’s third-largest reserves.

“The uncertainty on the supply side is driving prices up and making investors nervous,” said Daniela Desormeaux, CEO of Santiago-based lithium consulting firm SignumBOX. “We need a new project entering the market every year to satisfy growing demand. If that doesn’t happen, the market will be tight.”

Australia is the biggest lithium producer, though Chile and Argentina account for 67 per cent of global reserves, according to the U.S. Geological Survey.

Extracting lithium from the salt flats that dot the arid northern regions of the South American countries is a lot easier and cheaper than digging underground for metals like copper. Producers just pump the brine solution into evaporation ponds, harvesting the mineral once the moisture is gone.