The trading giant's plan to invest in a new UK lithium refinery will mark the beginning of the trading giant's plan to buy and sell the crucial battery metal.
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Last week s agreement to back the plant being developed by Green Lithium brought the world's top independent commodities trader into a market struggling to create enough new supply to meet demand for electric vehicles. The deal is part of Trafigura's plan to grow a lithium trading book and link global car and battery companies to mines, its nickel and cobalt head said.
There is a big movement in this space, with a question mark on where the raw materials and cathodes will be coming from, Trafigura s Socrates Economou said in a phone interview. We can't stop ourselves from looking at nickel and cobalt when it comes to battery metals. As the green revolution grows faster, demand is driving battery metals higher and sparking worries about shortages. Trafigura already moves about a fifth of the world's tradeable battery-grade nickel and 10% of cobalt, but the company has largely stayed on the sidelines when it comes to lithium, along with the very biggest players in the metals and mining world.
Some car companies have gone directly to miners to secure metal needed to deliver cars to consumers because of demand for lithium in batteries. Ashwani Gupta and Elon Musk of Nissan Motor Co. talked about owning or investing in mines in the future.
As part of the plan with Green Lithium, Trafigura will supply feedstock to the UK plant, which will sell battery-grade lithium chemicals to EV makers in Europe. The biggest assets have been run by industry mainstays such as Pilbara Minerals Ltd., Albemarle Corp. and Chile sQM with the rest being run by cash-hungry juniors in need of funding.
That has attracted traders to the sector. In the past year, both Traxys SA and IXM SA have bolstered their lithium trading desks, while Mitsui Co. and Toyota Tsusho Corp. have a history of buying and selling the metal.
There's a chance that there's going to be more metal to trade with carmakers spending billions of dollars on a battery-powered future and miners and governments looking to boost production.
By the year 2030, at least 60% of the mine supply will be coming from new projects and expansions, said Claire Blanchelande, head of lithium business development at Trafigura. There is going to be a lot of growth in the tradeable market with volumes due to come online in the next few years. That could expand spot markets for lithium carbonate, hydroxide and raw material spodumene, which are currently traded outside of China, aside from long-term contracts.
More volumes from existing producers are becoming available, Economou said. A lot of contracts are coming up for renewal in the next two to three years.
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