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Russia is looking to participate in the global lithium race - what can go wrong?

08 january 2024

The global market for lithium-ion accumulator batteries in 2022 was estimated at 46,2 bn and it can grow to $189.4 bn by 2032. In addition to lithium, minerals like nickel, cobalt, copper, aluminium, graphite, manganese, titanium, iron, phosphates, and vanadium are required for manufacturing various types of lithium-ion battery cells. The focus in this article is specifically on lithium - not only because it is a key element of lithium-ion batteries but because lithium is the only type of raw material mentioned above that is not mined in the Russian Federation.

Raw material base and lithium production in the world

The global lithium supply is characterized by a high degree of clustering, with Australia accounting for almost half of the global lithium production. According to the US Geoplogical Survey (USGS), the country produced 61 thousand tons of lithium in 2022, which accounts for 47% of the global production (130 thousand tons). It is followed by Chile and China with the production of 39 thousand tons and 19 thousand tons, respectively. Only Argentina (6.2 thousand tons), Brazil (2.2 thousand tons), Zimbabwe (0.8 thousand tons), Portugal (0.6 thousand tons) and Canada (0.5 thousand tons) are among other producers. As mentioned above, there is currently no lithium mining in Russia. There are deposits in the country where accompanying mining of lithium-containing ores occurs, but lithium is not extracted from them.

At the same time, a significantly larger number of countries have lithium reserves, with Chile ranking first with 9.3 mn tons of the lithium reserves within its borders, which is more than one third of the global reserves (26 mn tons, according to the USGS). The lithium reserves of the Australia’s deposits are estimated at 6.2 mn tons, Argentina - 2.7 mn tons, China - 2.0 mn tons. Another 5.6 mn tons of lithium reserves are located in the USA, Canada, Zimbabwe, Brazil, Portugal, as well as Austria, the Democratic Republic of the Congo, Czech Republic, Finland, Germany, Ghana, Mali, Mexico, Namibia, Serbia, and Spain. In addition, the USGS takes into account 98 mn tons of identified resources of lithium, more than half of which is in the so-called ‘lithium triangle’ - Bolivia (21 mn tons), Argentina (20 mn tons) and Chile (11 mn tons). The USGS also includes the Russian lithium reserves in the category of the ‘identified resources’ estimated in accordance with the State Reserves Committee’s classification at 2,118.8 thousand tons of LiO2 (985.3 thousand tons of lithium) in categories A+B+C1 (in accordance with the State Report’s data). In Russia, the lithium reserves of category C2 have also been estimated at 1,373.2 thousand tons of LiO2 (638.6 thousand tons of lithium); the USGS does not take them into account in its data.

Lithium extraction technologies

There are two main technologies for lithium extraction, their use is determined by the geological and industrial properties of ore. Rare-metal granite pegmatites, in which lithium is present in the form of spodumene (LiAl[Si2O6]) are enriched to a spodumene concentrate at the beneficiation facilities of mining and processing plants. Next, the spodumene concentrate is processed using sulfuric acid technology to produce technical-grade lithium carbonate that is supplied to chemical factories for the production of end lithium products, including battery-grade lithium carbonate and lithium hydroxide, lithium chloride, and metallic lithium.

The extraction of lithium from the brines of salt lakes (such deposits can only form in the regions with an arid climate, in particular in Chile, Argentina and Bolivia) is traditionally carried out using evaporation ponds according to the halurgic scheme (hot leaching-crystallization) to obtain technical-grade lithium carbonate and lithium chloride. This method is generally less costly because it is not necessary to build mining and processing plants, but its effectiveness largely depends on the feedstock. For example, the brines from the Bolivian deposits have a very high concentration of magnesium, which significantly complicates the extraction of lithium. The problem can be solved by the development of the Direct Lithium Extraction (DLE) technology that makes it possible to obtain end lithium products (lithium carbonate and lithium hydroxide of battery grades, and lithium chloride) from brines without using the evaporation ponds but using absorbent resins and solvents.

Manufacture of lithium products in Russia

Despite the lack of lithium mining capacities, there are several enterprises in Russia manufacturing lithium products, including the TD Khalmek (the Tula Region), the Chemical Metallurgical Plant (KhMZ, Krasnoyarsk, its managing organization is UK Sibirskie mineraly (Managing company Siberian Minerals)), the Novosibirsk Plant of Chemical Concentrates (the Novosibirsk Region, part of the Rosatom State Corporation), and the Angarsk Electrolysis Chemical Plant (the Irkutsk Region, part in the Rosatom State Corporation). These enterprises base their production entirely on imported raw materials, mainly technical-grade lithium carbonate, as well as lithium hydroxide and lithium chloride.

From 2014 to 2021, there was a steady increase in lithium supplies to Russia when the imports of lithium carbonate increased by 3.3 times to 9 thousand tons of the lithium carbonate equivalent (LCE). The largest suppliers were Chile and Argentina; significant volumes were also purchased from the United States in 2021 (Figure 1).

 

lithium_jan24_1.JPG

Figure 1 – Dynamics of the lithium carbonate imports to Russia in 2014 to 2022 and 9 months of 2023, thousand tons of the LCE.

Notes: Based on the International Trade Centre’s data; data for 2022–2023 are determined based on the ‘mirrored’ data; data for Bolivia for 2023 are given for the first 4 months. Прочие - Others. Аргентина - Argentina. США - USA. Боливия - Bolivia. Чили - Chile. Китай - China. 9 м - 9 months.

 

In April 2022, Chile and Argentina stopped exporting lithium to Russia amid fears of the Western sanctions after the beginning of the Russia-Ukraine conflict. According to the ‘mirrored’ data (the Federal Customs Service of Russia stopped publishing data on foreign trade operations from April 2022), China, Bolivia and the United States exported lithium to the Russian Federation in 2022 and 2023. China increased its supplies in 2022 significantly (by 5.3 times compared to 2021), however, according to estimates, the volume of lithium carbonate purchases in 2022 was only one third of the 2021 level, and its decline continued in 2023.

The cessation of supplies from Chile and Argentina became a trigger that intensified the activity on licensing the Russian lithium deposits. As a result, the work began on several projects at the same time. Let’s take a closer look at these projects.

Lithium deposits development in Russia

The Kolmozerskoe deposit of rare-metal spodumene pegmatites located in the Lovozero District of the Murmansk Region near Kolmozero (lake) was discovered in 1947. This is the largest lithium deposit in Russia, and its ores contain almost a quarter (24.2%) of the country’s reserves, including 738.3 thousand tons of Li2O of categories A+B+C1, and 105.9 thousand tons of category C2. The ores of the Kolmozerskoe deposit (like the ores of other Russian lithium deposits) are complex ones as in addition to lithium, they contain tantalum, niobium, and beryllium. The Polar Lithium, a joint venture of the Norilsk Nickel and the Rosatom State Corporation, received a 20-year license for the exploration and development of the deposit in February 2023; the one-time payment amounted to 1.718 bn rubles. Currently (as of December 2023), the geological exploration is in progress at the project, which can result in increasing the reserves of the deposit. The company’s plans are to build a mining and processing plant, the end products of which will be 45 thousand tons per year of technical-grade lithium carbonate and lithium hydroxide. The launch of the mining and processing plant is scheduled for 2030, but the plans are to put its first stage (10% of the design capacity) into operation by 2026. The new mining and processing plant will supply the raw materials to the chemical factories that are part of the Rosatom State Corporation (the Novosibirsk Plant of Chemical Concentrates and the Angarsk Electrolysis Chemical Plant) that will produce battery-grade lithium hydroxide and metallic lithium.

In the Lovozero District, there is the Polmostundrovskoye deposit, another large field of rare-metal spodumene pegmatites discovered in 1952. Its reserves of categories A+B+C1 were estimated at 165.6 thousand tons of Li2O, and the reserves of category C2 at 186.1 thousand tons. This deposit was licensed simultaneously with the Kolmozerskoe one in February 2023 and for the same period. The right to use the subsoil plot was awarded to the Arctic Lithium company (registered in September 2022), a joint venture of the TD Khalmek and the KhMZ; the final payment amounted to 671.973 mn rubles. A crushing and screening complex with an annual capacity of 1 mn tons of ore and a beneficiation facility will be built at the deposit; its end product will be spodumene concentrate containing 6% lithium. The concentrate will be supplied to the plants of the TD Khalmek and the KhMZ producing lithium products (technical-grade lithium hydroxide, battery-grade lithium, high-purity lithium and other lithium grades, lithium chloride, and metallic lithium). It is expected that 18 thousand tons of lithium products (in the lithium carbonate equivalent) will be produced annually from the Polmostundrovskoye deposit’s ores. Initially, the plan was to begin the exploitation of the deposit as the pilot industrial development (PID) in 2023, however, according to the company’s materials, a complex of drilling operations had been completed at the deposit as of November 2023, but the preparation of the PID project is still in the company’s plans only.

The commissioning of the Kolmozerskoye and Polmostundrovskoye deposits will require the construction of transport and energy infrastructure facilities, but an exact information about their financing is not publicly available. At the same time, the development of the area where these projects are located can be considered favorable due to the relative proximity to the village of Lovozero (50 km to the Polmostundrovskoye deposit and 86 km to the Kolmozerskoye deposit) that is connected to the railway by a road (about 75 km to the Olenegorsk railway station).

The lithium reserves of the Tastyg deposit of rare-metal spodumene pegmatites in the Republic of Tyva are not yet listed in the State Register of Mineral Reserves of the Russian Federation. The facility’s off-balance reserves amount to 596.3 thousand tons of lithium oxide. The Elbrusmetall-Litiy company (part of the Rostec Group of Companies) received a license in October 2023 to use the mineral resources of the deposit for 20 years, the final payment was 557.8 mn rubles. According to the data provided by the government of the Republic of Tyva, the plans are to create a mining and processing complex at the deposit with the lithium oxide production. The capital costs are estimated at 13.75 bn rubles (according to other sources - 17 bn rubles), a payback period is expected to be 17.5 years. In 2022, an article was published in the Mining Industry magazine stating that the investments in the development of the Tastyg deposit would be recouped in case of capital investments of up to 4.2 bn rubles. The main problem is the remote location of the deposit, the nearest settlement (the village of Ervin) is 120 km away, the city of Kyzyl is 425 km away, the railway station (in the city of Abakan) is 900 km away. The Tere-Kholsky District, where the deposit is located, is one of the most difficult-to-reach areas of Tyva; that is why the deposit’s reserves, based on the results of the geological exploration, were classified as off-balance reserves in the State Register of Mineral Reserves.

The Zavitinskoye deposit of rare-metal spodumene pegmatites in the Trans-Baikal Territory is the only deposit in Russia that was previously developed for lithium. Mining and beneficiation of ores was carried out in 1941 to 1997, the resulting spodumene concentrate was sent to the Krasnoyarsk KhMZ (now public company (PAO) KhMZ that has been using imported raw materials since the cessation of the development of the deposit); this plant produces lithium hydroxide and metallic lithium. Residual lithium reserves of the Zavitinskoye deposit amount to 153 thousand tons of Li2O of categories A+B+C1 and 54.1 thousand tons of category C2. In addition, there are tailings of off-balance ore (about 19 mn tons) at the deposit with an average Li2O content of 0.3% (approximately 57 thousand tons of lithium oxide). The work at the deposit is carried out under the geological exploration license by the Zabaikalsky Lithium company, owned by the KhMZ. The tailings are of primary interest to the company as it plans to create a beneficiation plant with a capacity of 50-75 thousand tons of spodumene concentrate per year on its basis. The concentrate, accordingly, will be supplied to the KhMZ, Krasnoyarsk. The company will be able to begin mining and processing ores after obtaining a development license. According to the statements made by the Ministry of Natural Resources in the media, the plans were to license the Zavitinskoye deposit by the end of 2023, however, this has not yet happened as of mid-December. According to the company representatives, a development license cannot be obtained due to the imperfect Russian mining legislation.

Plans for the development of Russia’s remaining lithium deposits associated with rare-metal spodumene pegmatites have not been determined since they are mainly located in areas with poorly developed infrastructure (however, as the experience of the Rostec State Corporation has shown, this is not always an obstacle to obtain rights to use a subsoil plot), or are characterized by difficult-to-process ores.

A promising source of lithium in Russia is highly mineralized formation water (brine) that flows from wells of the gas, gas condensate and gas-oil fields and is also pumped out during the development of kimberlite diamond deposits (in particular, at the Udachnaya pipe in the Republic of Sakha (Yakutia)). These brines contain lithium, as well as magnesium, calcium, bromine, etc. The main obstacle to creating the lithium extraction capacities based on such facilities is the lack of efficient industrial technology. If the technology is developed, the Kovykta gas condensate field in the Irkutsk Region will be the main contender for the accompanying production of brines and the extraction of lithium from them. In 2022, the Gazprom company signed a cooperation agreement with the Ministry of Industry and Trade for the implementation of a project for extracting and processing of formation brines. In addition, the company signed an action plan (‘road map’) for the implementation of this project with the Irkutsk Oil company. According to the Gazprom’s estimates, the plans are to produce 704.8 tons of lithium carbonate per year from one well at capital costs of 1.756 bn rubles, and operating costs of 236.7 mn rubles per year (2021 calculations).

Accompanying lithium production can also be launched at the Znamenskoye, Verkhnechonskoye, Yaraktinskoye deposits in the Irkutsk Region.

Lithium concentrations have also been found in the groundwater of the Yuzhno-Sukhokumskoye, Tarumovskoye and Berikeiskoye geothermal deposits in the Republic of Dagestan. According to preliminary estimates, the production of lithium compounds based on them could amount to 5-6 thousand tons per year. As part of the Russia International Exhibition and Forum held in December 2023, an agreement was signed between the Republic of Dagestan and the Research and Production Company Radiy (previously called the Moscow Plant Era) on setting up the waste-free lithium production in Dagestan using an experimental industrial installation. However, no details of the project have been disclosed.

Following the “better late than never” principle, increased efforts to restart lithium mining in Russia is a great thing. But at the same time, we should take into account the fact that decisions on the development and implementation of most lithium projects were made in 2022 and early 2023, at the peak of lithium prices (Figure 2). In case of stabilization of relatively low metal prices (at the level of December 2023), the market situation may adversely affect the development of Russian projects, especially taking into account the need to create infrastructure and build mining and processing plants. In this regard, the prospect of accompanying lithium production from mineralized waters of the deposits under development looks more favorable (at least, in the near future), but for now, it struggles against the technological difficulties.

 

lithium_jan24_2.JPG

Figure 2 – Dynamics of monthly spot prices (at the beginning of the period) for lithium carbonate (min 99.5%) in China in 2014 to 2023, US$ 1,000.

Notes: Based on the Investing.com data; RMBs were converted to US dollars at the average annual exchange rate.

 

Consumption of lithium products in Russia

As for the plants manufacturing lithium products to make lithium-ion batteries, it should be noted that most of their produce is exported. Thus, according to the Federal State Budgetary Institution VIMS (All-russian scientific-research institute of mineral resources named after N. M. Fedorovsky), 95% of the lithium hydroxide produced by the KhMZ was sold to the Belgian company SQM Europe N.V. in 2021, and the TD Khalmek sold 63% of its products to the companies from South Korea, Japan, and Singapore. Perhaps, setting up Russia’s own production capacities amid the restrictions imposed on importing the goods from "unfriendly" countries will contribute to the development of enterprises for the production of lithium-ion batteries (including for electric vehicles) that mainly use imported components. There are already such plans, and in the autumn of 2023, the Rosatom State Corporation started the construction of a gigafactory for the production of lithium-ion batteries in the Kaliningrad Region. The production will be launched by 2025. It is expected that the factory will carry out a full production cycle of lithium-ion batteries (cell production and battery assembly), and the future mine at the Kolmozerskoye deposit will provide raw materials for the enterprise. In addition, the Rosatom State Corporation plans to build a similar plant in New Moscow.

It is interesting that the construction of a gigafactory capable of “meeting the electric vehicle manufacturers’ demand for traction lithium-ion batteries, and the electrical grid complex’s demand for stationary energy storage systems” began after the shutting-down and bankruptcy of the Liotech company, Russia’s largest producer of lithium-ion batteries that was located in the Novosibirsk Region. The factory that was part of the Rusnano group and was created in 2011, first went bankrupt in 2016, but in 2019, the company’s managers decided to bring it out of bankruptcy and convinced the creditors of the company’s solvency. However, it became clear in 2022 that Liotech was unprofitable, and bankruptcy procedures were carried out. The reason was a low demand for the factory’s products as they had very few orders.

Currently, almost 80% of the lithium-ion battery imports to Russia (according to the 2021 data) are provided by China, and the supplies to the Russian Federation make only 0.4% of the total China’s exports. Accordingly, batteries that will be produced in Russia should be more affordable for the domestic buyers than the Chinese ones, otherwise the Liotech company’s sad experience may be repeated. It also seems difficult to orient the products for export under the sanctions imposed. In addition, it is worth taking into account the development of lithium-free technologies for the production of energy storage systems like supercapacitors, sodium-ion batteries and others, which may at least deprive lithium-ion batteries of their competitive edge in the future, if not drive them out of the market.

It is obvious that Russia’s participation in the global lithium race will not be easy, but the available necessary resources and the increased efforts in this area undoubtedly inspire optimism.

Anastasia Smolnikova, Senior Expert Analyst at the Institute for Natural Monopolies Research, for Rough&Polished