The board of Chilean lithium producer Sociedad Quimica y Minera (SQM) has approved the company's investment in the Mount Holland lithium project in Western Australia, it said on Wednesday February 17.
The project is a 50/50 joint venture with Australian industrial group Wesfarmers.
The project is expected to deliver an initial production capacity of 50,000 tonnes per year of battery-grade lithium hydroxide when it starts production in the second half of 2024. Should all the necessary permits be approved, construction will start in the second half of 2021, SQM said.
Preliminary work to evaluate an expansion of the production capacity of the site will begin alongside construction works, it added.
"There are strong fundamentals behind the long-term demand growth in the lithium industry, and we believe the commencement of the production of this project is well aligned with future demand expectations," SQM chief executive officer Ricardo Ramos said in a statement.
"Following the capital raised in January, it seemed likely they were preparing to make a positive FID [Final Investment Decision] and the timing seems opportune, as bringing new production on in 2024 should help relieve what is likely to be a tight market by then," William Adams, Fastmarkets' head of battery raw materials and base metals research, said.
"Given the strong demand growth from both EVs [electric vehicles] and ESS [energy storage systems], the supply side of the market will have its work cut out for it to bring on enough production in a timely manner, so seeing projects being financed again is encouraging," Adams added.
Lithium is a critical battery raw material used to manufacture batteries that power hybrid and electric vehicles, as well as mass energy storage systems and consumer electronics.
Sales of lithium-ion batteries are expected to increase sharply in the coming years while Europe and other regions move toward a low-carbon future.
Fastmarkets' weekly price assessment for
lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price cif China, Japan & Korea was $8.50-9.50 per kg on February 11, unchanged since mid-September 2020 but down over 12% from $9.5-11 per kg on February 20, 2020.