US Lithium Hydroxide Supply Challenges and Plans for Expansion

And if you look at [domestic] lithium hydroxide supply by 2025, it’s apparent massive shortages are on the way and it's not going to be anywhere close enough, Phillips said later, during an investor presentation at the NWR Near Term Producers Conference.

Domestic battery producers in the US will be needing more than 500,000 mt/year of lithium hydroxide supply in the second half of the decade, on the current slate of fusion factories announced, Phillips said.

“That number will increase as more plants are announced,” he said. Addition: “Unfortunately, the US will continue to be reliant on places like China, but whoever can produce domestically is going to be extremely well positioned.”

That US domestic lithium hydroxide capacity will only reach an estimated 151,500 mt/year in 2025, Phillips said. The U.S. currently has roughly 15,000 mt/year of lithium hydroxide conversion capacity, but with plans to build out 60,000 mt/year of capacity by 2030, the Piedmont project's capacity could come to dominate domestic production, he said.

“We are in discussions with potential strategic investors, and very excited because of the scale of our business, and 60,000 mt/year of hydroxide is certainly a lot,” he said. “It’ll by far be the largest in the US, and for anybody that is building a car plant or a battery plant here in the US, having Piedmont as a supplier is going to become very critical to those companies.”

Based in Belmont, North Carolina, the company is creating two lithium hydroxide conversion plants and a spodumene concentrate mining operation in the United States. The company also has joint ventures to build spodumene assets in Quebec and Ghana to feed its conversion capacity.

“We want to control the spodumene, so we don’t get exposed to the market like the Chinese converters are,” Phillips said. It is a feedstock for lithium hydroxide, using spodumene concentrate as a raw material.

Production Timelines

Phillips also said Piedmont would see lithium hydroxide production in the US as soon as late 2024 or early 2025.

Livent, meanwhile, is advancing its flagship Carolina Lithium asset near Bessemer City, North Carolina, which will host the US' first integrated spodumene concentrate and lithium hydroxide conversion operation.

But Phillips added that Piedmont's initial lithium hydroxide production will likely be sourced from its newly announced second lithium hydroxide factory.

“With the second lithium hydroxide plant, we would anticipate site selection hopefully in June and the [definitive feasibility study] in September, and then the permitting process should be fairly rapid,” he said. “We believe this should be funded and in construction by early next year and production by late 2024 or early 2025.”

The timeline for the second facility is much shorter than for Carolina Lithium, Phillips added, which has a complex permitting process due to the proposed spodumene mining operations that would take place at the site.

Changing Lithium Pricing Structures

The structure of lithium contracts that set pricing is likely to change over the next few years as the industry matures alongside the EV market, Phillips said and contract prices become more closely tied to spot prices.

“Contracts signed by lithium majors I expect increasingly will be rebased from a pricing perspective on a quarterly rather than an annual basis,” he said. “It’ll probably be quarterly or even monthly with spot indices,” I think. I believe that’s the canon that the industry has moved towards.”

Unlike the way other competitors have approached this in recent years, Piedmont does not plan to include price ceilings in long-term contracts, Phillips said, but will “see how things go with each of our customers.”