* Company set to double production capacity in 2012
* Sales locked in for year, sees higher prices next year
* Will build carbonate plant in Australia by 2015
* Carbonate plant expected to cost around $150 million (In U.S. dollars unless noted)
By Julie Gordon
TORONTO, Aug 5 (Reuters) - Talison Lithium <TLH-T> is set to double production capacity in 2012, as the lithium producer sees demand for the metal outpacing supply over the next few years, the company's chief executive said on Friday.
The tight supply has already boosted the price of lithium carbonate, though Talison, which sells lithium concentrate into China where it is converted to a carbonate, will not see the impact of higher prices until the end of the year, when current sales contracts are renegotiated.
"Clearly we'll be encouraging higher prices," said Chief Executive Peter Oliver of the next round of contracts.
The Toronto-listed company, which owns the Greenbushes mine in Australia, is in the process of doubling production to the equivalent of 110,000 tonnes a year of lithium carbonate.
"We feel very comfortable that the demand is there to support that growth," said Oliver, adding that the $70 million expansion is fully funded.
Driving the market is rising demand for lithium batteries, used in a wide range of electronic devices, with electric and hybrid autos seen playing a bigger role after 2015, said Oliver.
Lithium demand in 2011 is about 150,000 tonnes a year, said Oliver. The company expects that to grow to between 350,000 and 500,000 tonnes annually by 2020.
Talison also plans to build a lithium carbonate conversion plant by 2015, which will be fueled by some of the additional production at Greenbushes.
By taking lithium to the carbonate stage, Talison will be able to broaden its industrial customer base and to get more value for its lithium products.
"There is an improved margin, but it also gives us access to markets outside China," said Oliver. "There's big demand from places like Japan and Korea."
The 20,000 tonne a year plant will costs around $150 million to build and can be expanded to meet higher market demand, he said.
Though it would be cheaper to build abroad, Oliver said the plant will be built in Australia, likely on the Greenbushes site, about 250 km (156 miles) south of Perth, where the company is based.
"I think one of the key things is security of supply, so the lowest of risk to security of supply would be to build it in Australia," he said.
Talison is also developing the Salares 7 lithium brine project in Chile.
(Reporting by Julie Gordon; editing by Rob Wilson)
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