Thread by @sdmoores

<thread> Tesla & #Lithium - a decade in the making

A lithium refinery has been in Tesla & Elon Musk’s @elonmusk thinking for ~10 yrs now & in (a serious way) for the best part of 3 yrs

The logic is sound

2020: 70-80% of lithium ion battery costs are raw materials

2010: 20-30%

Tesla has filed to build a lithium hydroxide refining facility in Texas (Gulf Coast).

This is a revisiting of its 2020 plan to build a spodumene conversion facility to make lithium hydroxide at #GigaTexas

Originally planned to launch Q4 2022.

This #GigaTexas lithium refinery would have been using a new hydromet process, as not to be reliant on sulphuric acid.

Our estimation was a smaller refinery to start with 15,000 tpa lithium hydroxide. Could now be 25,000tpa

@benchmarkmin story>>>

benchmarkminerals.com/membership/exc…

Interesting to note: Tesla also wanted to make a #nickel sulphate refinery side by side with #lithium in order to get a grip on the most worrisome lithium ion battery raw materials.

Tesla are now revisiting plans to relocate its upstream battery chemicals activities to the Gulf Coast to save shipping raw materials / ore / waste product in land.

Makes shipping raw material from Canada, South America and Australia easier. #lithium

Also note for #graphite - Syrah Resources is building its #anode facility (US government backed) next door in Louisiana… Tesla has a supply deal in place. 8,000 tonnes/ year initially = 6-7GWh worth.

benchmarkminerals.com/membership/tes…

Elon Musk’s interest in lithium goes way back, faithful to first principles strategy = owning the supply chain.

Here are a few highlights with historical lithium context = 📅 = as i experienced it

…

📅 2012-2014: Lithium lull… Post first price spike in 2007/2009, down time before the GigaEra

❌ Initially interested in buying Simbol Materials geothermal brine play for ~$300m but the bankers wanted much more

fortune.com/2016/06/08/tes…

📅 2015-2016: Beginning of the GigaEra - pre Tesla Gigafactory 1 buzz, not operational. Tesla wanted to dabble in lithium - first raw material target

❌ Signs deals with early stage lithium developers Pure Energy Minerals (lithium brine 🇺🇸 ) and Bacanora Minerals ( clay 🇲🇽)

Elon Musk plays the lithium stories down, shocked by the amount of press the junior mining industry and Tesla combined received.

Elon said:

“Lithium deal is not exclusive & has many contingencies. The
press on this matter is unwarranted”

ft.com/content/4a924a…

Tesla also signs a supply deal with a major lithium producer, FMC Lithium (now Livent) which ultimately becomes its initial primary supplier back then.

Spodumene and Canada is always in the thinking but nothing emerges.

📅 Sept 2020: Tesla Battery Day - we are firmly in the GigaEra. #GigaNevada up & running for ~1.5 years; #GigaShanghai 3 months out, #GigaBerlin anticipation builds

Tesla annouce #GigaTexas as Terafactory and with it most significant plans to go upstream of battery supply chain

❌ Tesla announce Lithium hydroxide plans at #GigaTexas but doesn’t happen

❌ Tesla announce land claims of lithium clay in Nevada, captures buzz of the day = Tesla gets into mining = Tesla mines in USA etc

Nothing materialises

📺 Benchmark Take >

📅 2020/2022: Post Tesla Battery Day momentum into a year of next level #EV demand surge.

Tesla announces a flurry of supply deals with both major producers (Yahua, Ganfeng) and developers (@PiedmontLithium, @CoreLithium , @LiontownRes)

Focus notably shifts towards spodumene

🌍 Summary thoughts on Tesla and #Lithium 🌍

If Tesla and Elon Musk had followed their instincts and gone all in on #lithium during first serious lithium thoughts (2015/2016), they would now be operating at least one refinery and prob have a second / third, fourth on the way.

Instead, as the world moves head first at 200mph into EVs, lithium’s prices have done this as supply struggles to keep up

@benchmarkmin lithium pride debrief below:

📺 benchmarkminerals.com/membership/wha…

Tesla’s latest actions to build a lithium refinery in Texas is the right thinking but again, if they pulled the trigger in 2020 they would be much further ahead of the curve.

Instead: stable lower cost lithium supply isn’t guaranteed for Tesla any more…

Tesla’s lithium position is threatening to undermine its world class #EV and battery (its GigaBusiness) it has built to date.

That and increased competition from China’s EV industry, Detroit and Europe has firmly put the cooker *gas* on to full power

Making lithium chemicals from scratch is not rocket science (pun intended) but it is not easy.

The Tianqi lithium hydroxide plan in Australia is an example to look to.

Annouced: 2016
Initial launch: 2018
Actual start: H2 2022
Full ramp: ~2025?

You need time…

https://twitter.com/sdmoores/status/1529020265937633287

On lithium raw materials, Tesla has made a notable shift in 10 years from unconventional / not yet commercial sources of lithium (geothermal brines, clay) to commercial (continental brines & now spodumene)

From more exotic sources that could disrupt, to more stable / more known

Long term and super long term Investments are need in every one of these arenas to solve this Great EV Raw Material Disconnect we are seeing today #batteries

As has been showcased by Tesla, you need to think 10 years plus down the track

The upstream trend for Tesla and EV makers / OEMs is clear.

Increasing competition means that OEMs will need to “become miners” aka own the lithium mines and resources if they are to 100% guarantee lithium supply, make batteries and make EVs

We are now in JP Getty times #oil

For myself it’s been fascinating to watch this unfold since 2006 when I started in the lithium / battery raw materials space

And even more so when we launched @benchmarkmin in 2014 to specialise in lithium prices and supply chain data

Find out more here benchmarkminerals.com/lithium-prices/

A few useful links to keep up to date with Team Benchmark:

🖊 Free Newsletter: benchmarkminerals.com/newsletter-sig…

📈Free - Benchmark’s Battery Raw Material Price Index

benchmarkminerals.com/lithium-ion-ba…

🎈 Our next event 09/26: #GigaAPAC in Perth 🇦🇺 events.benchmarkminerals.com/gigaapac2022