MELBOURNE – Pilbara Minerals, seeking to develop one of the world’s largest lithium projects, believes prices can sustain recent rapid gains on soaring demand in China for renewable energy, especially electric vehicles.

“Big buyers of big volumes are right now paying more than $20 000 a metric ton for lithium carbonate in the battery market,” CEO Ken Brinsden said Monday in an interview with Bloomberg Television from Kalgoorlie, Western Australia.

Prices are likely to remain at that level on accelerating demand growth as China’s government seeks to expand its use of renewable energy, he said.

Pilbara is attempting to fast-track development of its Pilgangoora project, the second-largest deposit of tantalite and lithium-bearing spodumene, to tap rising demand. It’s aiming to begin some production as soon as December 2017 and last month agreed a sales agreement with China’s General Lithium.

Battery-grade lithium prices have surged in China to more than $20 000/t from about $7 000/t in mid-2015, CRU Group said in a June report. Rising demand as a result of increased used of lithium-ion batteries, driven by growth in electric vehicles, will require new capacity to be developed, according to the consultancy. By 2040, about 35% of all light vehicles sold will be electric, equivalent to 41-million cars and about 90 times the total in 2015, according to Bloomberg New Energy Finance. Investment in renewable energy will rise to $7.8-trillion by that date, compared to $2.1-trillion for energy generated by fossil fuels.

Rival lithium projects, particularly those in South America focused on evaporation of brine from salt ponds, are unlikely to be developed as quickly as hard rock deposits in Australia, said Brinsden, adding this will also support prices in the medium-term. The speed of the expansion of China’s lithium-ion battery supply chain has also “probably been underestimated by the rest of the world,” he said.

Pilbara Minerals plans to examine lithium projects in Western Australia that have been flagged for potential sale by Fortescue Metals Group, though doesn’t regard the process as a key focus, according to Brinsden.