Lithium Market
To deliver the green revolution and minimise emissions that are critical to climate change, industries including electric vehicles, solar photovoltaic, wind power and lithium-ion batteries will need access to significant quantities of critical minerals.
If you can’t make it or grow it, you have to mine it, so there will be an inevitable growth in the mining of critical raw materials such as lithium-containing minerals.
The production of lithium in 2030 will need to be 60 times the market size of 2015, if we are going to cease mass production of internal combustion engines in the 2030 to 2035 timescale. Electric vehicles are the primary driver of lithium demand and given lithium’s unique properties of light weight and high energy storage potential, it is highly likely to remain the material of choice in non-stationary batteries, whether in wet electrolyte or solid-state form. There will be changes in the type of lithium required by battery cell manufacturers – the balance of production will vary, from lithium carbonate to lithium hydroxide, lithium sulphate and even pure lithium but, one way or another, lithium will always be needed.
Existing mines do not have the reserves to expand to meet future demand, so new projects have to be initiated to meet market needs. One thing remains clear, without decarbonisation through electrification, we cannot hope to meet climate change goals, so these new projects are critical and a fast track to their completion is essential.
There is no standard specification for lithium-based materials today, with suppliers and customers agreeing on the chemistry of the material on a peer-to-peer basis. Typically, lithium carbonate is 99.7% pure, but the remaining 0.3% of impurities are extremely important. Just a few ppm too much of certain critical elements will reduce the selling price by more than 50%.
Pricing of lithium is currently following commodity style trends, with the price varying significantly depending on the supply / demand imbalance. Pricing of lithium carbonate has traded from $8,000 to $25,000 per tonne over the past few years and will no doubt continue to be volatile going forwards. As planned projects currently exceed forecast demand it is likely that prices will fall from where they are today.
