Lithium: A Raw Material Set to Keep Gaining Value on E-Mobility and Scarcity

As things stand, the price of lithium carbonate — a key component of lithium-ion batteries — is climbing markedly once again.

The main reason is state incentives for the purchase of electric vehicles in Europe and elsewhere, which are stimulating demand for lithium while supply remains tight. In China alone, sales of electric vehicles rose by more than 82 % in 2023 against the previous year.

In Europe, sales of alternatively powered vehicles — battery, hybrid and biofuel — overtook diesel sales for the first time in the third quarter of 2020, and now account for a third of new passenger cars.

Battery-powered vehicles were once considered a niche product; today they are seen as the key to a green overhaul of transport, and they generate substantial future demand for lithium.

The United States has set itself the target of 500,000 charging points for electric cars by 2030. Investment by the large institutions in potentially profitable lithium mines is still not substantial, because the earlier large-scale investment in deposits fell away sharply after the boom of 2018. Every signal now points to a greater willingness to invest.

Long-term forecasts suggest that lithium demand will continue to grow strongly over the next ten years. Analysts at the information service Roskill project that demand will exceed one million tonnes of LCE (lithium carbonate equivalent) in 2027, growing at more than 18 per cent a year through to 2030.

Bringing new mines and brine projects into production requires heavy investment and takes four to seven years on average.

Lithium-ion cells are an integral part of electric cars, hybrid vehicles and e-bikes. They are also used in the storage units attached to domestic solar installations. Another field of application is medicine, where lithium is used mainly to prevent and treat manic episodes. Unlike crude oil, a high proportion of it can be recycled and reused.

Seventy per cent of the world’s deposits lie in the “lithium triangle” of Chile, Argentina and Bolivia, where large salt flats such as the Atacama, Salinas Grandes, Uyuni and Hombre Muerto form enormous reservoirs.

Besides South America and China, the large lithium mines are found above all in Australia, which currently still accounts for around 60 % of world output.

Chile currently holds just under 19 % of the market. Newer, more powerful batteries — the so-called “super battery” developed at Germany’s Fraunhofer Institute, or Tesla’s lithium iron phosphate cell — also depend on lithium as a central ingredient.

The same applies to the development of a particularly powerful, lighter and more environmentally friendly lithium-sulphur cell.

Lithium demand from the battery sector will shortly rise from around 140,000 tonnes to more than 1.5 million tonnes. By 2030 world demand will exceed supply by 500,000 tonnes, which means the raw material could become drastically scarce. According to Fastmarkets, 45 lithium mines were in operation worldwide last year, with 11 due to open this year and seven next year. That is far below the rate consultants regard as necessary to secure adequate global supply.

Source: Global Electric Vehicle Outlook 2022