In the vicinity of Itinga, Minas Gerais state, Brazil, a bulldozer is in motion, relocating lithium ore at the Sigma Lithium Xuxa mine.
Bloomberg | Bloomberg | Getty Images
As demand for lithium increases, the world is projected to face a potential shortage by the year 2025. However, conflicting forecasts suggest that this deficit might not occur until a later time.
BMI, a research unit of Fitch Solutions, anticipates a dearth in lithium supply by 2025. BMI attributes this deficit largely to China’s consumption of lithium surpassing its own production capabilities.
“We expect China’s lithium demand for electric vehicles to grow annually at an average rate of 20.4% between 2023 and 2032,” states a report published by BMI.
Contrarily, China’s lithium supply is expected to grow by only 6% during the same period, which will not even meet a third of the projected demand, says BMI.
China holds the distinction of being the third largest producer of lithium globally, an essential component for electric vehicle batteries.
In 2021, worldwide lithium production reached 540,000 metric tons. The World Economic Forum forecasts that global demand will exceed 3 million metric tons by 2030.
The global battery supply chain may encounter a lithium shortage toward the end of this decade.
– Vice President Susan Zou, Rystad Energy
S&P Global Commodity Insights predicts that electric vehicle sales will reach 13.8 million in 2023 and then surge to over 30 million by 2030.
“We firmly believe in an impending shortage for the lithium industry. While we anticipate supply growth, the demand is expected to increase at a much faster pace,” says Corinne Blanchard, Director of Lithium and Clean Tech Equity Research at Deutsche Bank.
Blanchard envisions a “modest deficit” of approximately 40,000 to 60,000 metric tons of lithium carbonate equivalent by the end of 2025. By 2030, the deficit is projected to widen considerably, amounting to 768,000 metric tons.
2030 deficit?
While some analysts do not anticipate a deficit occurring so soon, they still predict a shortage by the end of the decade.
According to estimates from Rystad Energy, although the emergence of new lithium mines and exploration projects may support the growing demand, they will only delay the inevitable shortage by a few years.
Currently, there are only 101 lithium mines worldwide, as per Refinitiv data. Numerous lithium projects are currently being explored, but the complexities of geology and lengthy permitting processes present challenges.
Rystad Energy’s Vice President, Susan Zou, predicts an annual increase of 30% to 40% in total lithium mine supply for 2023 and 2024. Miners are expected to continue developing both existing and greenfield projects due to the global push toward transportation electrification.
However, Zou warns that regional supply imbalances are inevitable in the next couple of years, even if the overall lithium supply remains adequate. Mining and processing capacities in the United States and Europe may struggle to keep up with the demand for electric vehicle batteries.
“The global battery supply chain may face another lithium shortage approaching the end of this decade when supply growth fails to keep pace with demand,” Zou cautions.
In such a scenario, lithium prices could spike to their record highs in 2022, leading to increased battery production costs. Lithium carbonate prices surged to nearly 600,000 yuan per ton in November 2022, exceeding January 2021 prices by over 12 times.
According to Wood Mackenzie, the lithium market is expected to have a surplus in the coming years. However, limited project development and growing demand suggest that another supply shortage might occur by the early 2030s.
“The main risks are likely to arise from project commissioning delays and permitting setbacks for new assets,” says Robin Griffin, Vice President of Metals and Mining Research at the consultancy.
Lithium mines typically require 10 years or longer from initial discovery to full-scale operation, according to Austin Devaney, Chief Commercial Officer at Piedmont Lithium.
“While we believe that eventually there will be sufficient lithium to meet the demands of electrification, we expect the impact of supply constraints on lithium pricing to persist for many years to come,” Devaney explains.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
