Lithium Hydroxide: A New Gold Rush in Transition to Renewable Energy
Lithium hydroxide is a lithium-based inorganic compound soluble in water and sparingly soluble in ethanol. It is available in anhydrous as well as monohydrate (LiOH•H2O) form both being strong bases. Commercial lithium hydroxide comes from two sources–brines and petroleum hard rocks. On industrial scale, lithium hydroxide is manufactured via two-step metathesis process. In the first step, brine is fed to the processing facilities to produce lithium carbonate or lithium chloride. Lithium carbonate is further treated with calcium hydroxide to obtain lithium hydroxide and calcium carbonate. It can also be synthesized via dissolving lithium oxide or lithium in water.
Of late, there are various projects are being carried out to extract lithium hydroxide from mineral spodumene or triphane. This pegmatite rock is high in lithium content and a lot of investment and movement has been observed with regards to conversion of spodumene concentrates into lithium hydroxide. Lithium hydroxide is used in range of applications from greases to dyes and colorants, coatings to specialty chemicals, and battery materials to water treatment systems.
Booming Demand for EV Batteries to Supercharge Lithium Hydroxide Growth
In 2019, the estimated production of lithium hydroxide stood at 70,000 tons of LCE. Lithium carbonate has widely dominated the market for lithium minerals. However, in the past few years, lithium hydroxide has gained popularity with increasing use in batteries owing to its advantages over the lithium carbonate. The demand for lithium hydroxide is anticipated to grow owing to change in preferences for battery materials. Electric vehicle batteries with lithium hydroxides have longer battery life and larger capacities compared to lithium carbonate.
EV production is anticipated to reach more than 26 million units globally by the end of this decade. Growing production and adoption of nickel rich cathodes batteries are likely to ramp up the demand for lithium hydroxide. Lithium hydroxide is a key element in the production of rechargeable battery cathodes. As per industry reports, Tesla is poised to build a spodumene conversion facility in Austin, Texas. This facility is adjacent to its Gigafactory 5 and is anticipated to feed lithium hydroxide to the Tesla’s battery production plan. This move will make Tesla the first automaker into enter lithium chemical space.
One of the most important non-battery uses of lithium hydroxide is in the production of lubricating greases. It is used to create fatty acid-based thickener systems usually accounting for 3%-20% of the final grease product. Lithium hydroxide offers high water resistance, temperature resistance, and excellent stability as compared to sodium and calcium-based lubricating greases. Approximately 70% of the lubricating greases consumed worldwide contains lithium.
Lithium hydroxide is used in glass and ceramic products to impart color and improve glazed finishing. Its addition to glass and ceramic renders the products stronger with low thermal expansion, which is an important aspect in applications such as glass cooking surfaces, kitchenware, and car windshields wherein thermal environments tend to change quickly. Lithium hydroxide is also deployed in protection coatings to improve corrosion resistance and enhanced adhesion. It also adds self-healing characteristics to organic coating systems. Growth in these non-battery applications is projected to boost the demand for lithium hydroxide over the coming years.
East Asia Countries to Dominate the Demand for Lithium Hydroxide
Asia Pacific is one of the largest consumers and processors of lithium hydroxide worldwide. Countries such as China, Japan, and South Korea dominate the demand with strong company presence in middle stream and downstream of Li-Ion batteries supply chain. There has been significant investment and rapid development of upstream companies, especially in China as the country has a strong appetite for EVs.
In 2021, China introduced a new legislation ‘The China 6 Emissions Standards’ to push eco-friendly mobility solutions. This will further cut the maximum carbon and nitrogen oxide emissions per unit were thus promoting electrification of vehicles. Globally, China has become home for major lithium refining facilities and holds a critical position in supply chain being largest consumer and importer of lithium hydroxide.
Europe is second to China in terms of adoption of EVs and expects to drive more than 40 million EVs by the end of this decade. Furthermore, Europe-based battery manufacturers also prefer nickel batteries that use lithium hydroxide as a key element. Although the region is facing a short supply of lithium hydroxide as prices are not competitive compared to its Asian counterparts, a significant investment in the projects has been observed to increase the output and ensure a sustainable supply of raw materials in the region. The region has observed boom in lithium-ion giga factories despite slowdown due to the COVID-19 pandemic. There has been a growing demand for clean technologies as well as battery storage systems in the region and this is likely to drive the growth of lithium hydroxide especially in battery applications.
Companies Aggressively Expand Capacities to Meet Bloating Demand
Companies operating in lithium hydroxide market are highly aggressive in terms of expansion and bringing in new processing facilities. Companies such as Albemarle, Tianqi Lithium, SQM S.A., Jiangxi Ganfeng, FMC Corporation, etc. have strong presence in the market. In the past few years, many companies have expanded their lithium hydroxide capacities to meet existing and future demand, especially for rechargeable batteries for EVs, power tools, mobile devices as well as for energy storage systems. The industry is energy intensive and requires large amounts of water to process per tons of lithium. There are stringent regulations in the mining industry and huge investment and developments are seen in lithium mining and processing facilities.
In 2021, SQM S.A. announced its intentions to double its production of lithium hydroxide to 60,000 tons due to soaring demand for electric vehicle batteries. The company already has an ongoing facility expansion to be completed by the end of 2021. Furthermore, the company is also advancing to develop a mining project with a lithium mine and a processing plant at Mt Holland and a refinery at Kwinana, Australia. The project is joint venture between SQM S.A. and Wesfarmers Limited, Australia-based conglomerate. This battery grade lithium hydroxide project is anticipated to be completed by second half of 2024 with an annual production capacity of 50,000 tons.