Lithium has been under pressure in recent months following a rally that saw prices hit all-time highs in 2022.
But demand for the battery metal is expected to soar in the coming decades, with questions about where supply will come from still to be answered.
How did lithium perform in the first quarter of 2023, and what’s ahead for the commodity in the near term? Read on for an overview of the main news that impacted the lithium market in Q1, plus a look at factors investors should watch for the rest of the year.
Lithium prices in China have been on a downward trend since November, although they remain at historically high levels.
For Fastmarkets, lithium's Q1 performance was for the most part unsurprising — the agency was expecting prices to peak by the end of 2022 and then head lower.
“We expected this to happen as a result of the producer response that was underway with the ramp up of new supply, especially spodumene and lepidolite in China, expansions and the restart of idle capacity,” William Adams, the firm's head of base and battery metals research, told the Investing News Network (INN).
Additionally, Adams said record high lithium prices were attracting direct shipments of ore to China, which in effect was bringing forward the supply response.
“I do admit that prices came down faster and further than we thought likely … we were not expecting demand to retreat as much as it has, which was brought on by the severe COVID-19 hit China suffered towards the end of 2022,” he said. “The drop in price prompted destocking, which in turn has made apparent demand look worse than actual demand.”
Additionally, original equipment manufacturers (OEMs) have been discounting price tags for internal combustion engine vehicles ahead of emission standard changes in July. “This has taken market share from electric vehicles (EVs),” Adams said.
Lithium carbonate is widely used by lithium-iron-phosphate battery makers in China, so it makes sense that lithium carbonate prices have been hit the hardest.
“The battery and cathode active material manufacturers are the ones sitting on inventory, so we expect lithium carbonate to remain at a discount to lithium hydroxide,” Adams said.
Spodumene prices have remained high, with the Australian government expecting average realized prices to rise from US$3,110 per tonne in 2022 to US$4,350 in 2023. To put that into perspective, spodumene prices were hovering around the US$425 level in 2020.
“Many Australian spodumene contracts are tied to indexes in seaborne Asia markets, which have been higher than China,” Adam Megginson, price analyst at Benchmark Mineral Intelligence, told INN.
“It will be interesting to see if hydroxide maintains its wide premium to carbonate in Q2, and what the chemical pricing situation is when price clauses in spodumene contracts shift downwards to reflect the lower-price environment seen in Q1.”
Commenting on why hydroxide prices have fallen less than carbonate, Megginson said carbonate is more susceptible to sentiment as it is favored by traders.
“Hydroxide is a structurally smaller market, which means supply remained tighter than carbonate as overall lithium chemical demand fell,” he said. “A lot is also shipped overseas to Japan and South Korea, where demand has been more stable.”
Even though the energy storage segment is picking up pace, demand from the EV space remains a key driver for lithium, with Q1 seeing weaker demand than analysts had expected.
“The aftermath of the massive COVID-19 hit China suffered in late 2022 led to a build up of EV inventory at dealerships,” Adams said. “(Furthermore), the weaker property market in China has led to households being more cautious with their spending, plus competition from discounted internal combustion engine vehicles have had an impact.”
Outside of China, the parts shortage, especially for semiconductors, has restrained the production of EVs, leading to less demand for battery raw materials, Adams said.
“But we think there is considerable pent-up demand for EVs in Europe and the US, judging by the long EV waiting lists,” he added.
Following a strong end to 2022, Benchmark Mineral Intelligence was expecting EV demand to cool from the start of 2023. For Megginson, that points to the seasonality usually seen at the start of the year in the Chinese EV market.
“For lithium, this means Q1 pricing tends to be lower and Q4 pricing tends to be higher,” he said. “Although a combination of factors, including COVID-19 precautions in China and the extreme supply tightness scenario, meant we didn’t see this seasonality last year.”
Year-to-date, EV sales have been recovering at a steady pace, while the energy storage and portable markets have seen quite stable demand. “If the current trend of steady month-on-month increases in EV demand continues through Q2, we could see an uptick in lithium purchasing activity,” Megginson said. “Although inventory built up at different points in the supply chain — particularly finished products sat with cell manufacturers — could delay purchasing of material.”
When it comes to supply, talks about whether the market will be flooded with new supply or remain tight continue to be a topic of discussion for investors. For Fastmarkets, the current surplus the market is experiencing is temporary.
“The year is likely to be a year of two halves — surplus the early part of the first half switching to tightness later in the second half,” Adams said.
He added that some of the excess material has come from high-cost supply, much of which is likely to be halted.
“The key to watch is whether inventory is held in tight hands, and whether when demand recovers there is a rush to restock after the destocking that has been dominating in recent quarters,” he said.
Meanwhile, Benchmark Mineral Intelligence is forecasting that the lithium chemicals market will remain in deficit in 2023.
“But in the short term, inventory has built up with producers and converters over Q1 2023, so it will take some time for the supply chain to work through this material,” Megginson said.
Another trend seen in the first quarter of the year has been OEMs' increased interest in securing supply. These moves come at a time when governments from the US to China have pledged to phase out internal combustion engine cars, while carmakers have set ambitious targets to electrify their fleets.
A deal that was inked in January grabbed the attention of investors and industry analysts alike — Detroit-based GM (NYSE:GM) will make a US$650 million equity investment in Lithium Americas (TSX:LAC,NYSE:LAC) to develop the Thacker Pass asset in Nevada. This represents the largest investment ever by an automaker to produce battery raw materials.
“Strong demand means we expect to see more activity in terms of downstream players moving upstream, either via direct investment in lithium-mining projects or through offtake,” Megginson said. “For now, the market remains very diverse with a multitude of players, but pricing will dictate the extent of market consolidation.”
Later in the quarter, merger and acquisition activity also picked up. Top lithium producer Albemarle (NYSE:ALB) made a US$3.7 billion takeover offer for Liontown Resources (ASX:LTR,OTC Pink:LINRF), which was rejected. Another Australian company, Essential Metals (ASX:ESS,OTC Pink:PIONF), declined a bid from the joint venture formed by Tianqi Lithium (OTC Pink:TQLCF,SZSE:002466) and IGO (ASX:IGO,OTC Pink:IPGDF).
“These lower prices are likely to encourage more M&A,” Adams said.
The second quarter of the year is well underway, and there are a few key catalysts lithium-focused investors should keep an eye on.
Megginson said there are early signs of price stability in the Chinese market.
“However, traders outside of China and bulk consumers are more bearish, with the latter reluctant to start restocking. So there is definitely conflicting sentiment on where prices are moving in the market,” he said.
Commenting on prices, Adams pointed out that levels are still dropping in April and may have further to fall.
“But we are now seeing production cuts at some of the higher-cost lepidolite operations in China,” he said. “We expect the price fall will make direct shipments of ore and the processing of tailings uneconomical, so we expect supply to tighten.”
A key factor to watch in the next few months is more announcements from OEMs looking to secure supply.
“(What's more), China has been stepping up its lending — that should lead to a (delayed) stronger economic recovery,” Adams said. “(Also), as the parts shortage fades, the EU/US OEMs are likely to lift EV production rates.”
As Q2 began, the lithium space was hit with news from top producer Chile, which has decided to nationalize its lithium industry.
“It will be interesting if this has implications for future projects in the country versus its neighbors, although near-term impact is set to be minimal,” Megginson said.
Priscila Barrera / Jun. 01, 2023 01:50PM PST
Following a 2021 that saw lithium rally to all-time highs, prices began to stabilize in 2022.
Despite pulling back since then, the commodity remains at historically high levels and the future looks bright — demand for the battery metal is expected to soar in the coming decades, with questions about supply increasing every day.
2023 has now almost reached its mid point and the lithium market has already seen a slew of major announcements. Read on for an overview of the main news that has impacted the lithium sector so far this year.
After rallying since the end of 2020, lithium prices began to pull back at the end of 2022, when they took a downward turn. Chinese lithium prices have been declining from their all-time highs since November, although in April prices rose for the first time in five months.
In a recent webinar, William Adams, head of battery and base metals research with Fastmarkets, said that the firm had expected prices to peak in the fourth quarter of 2022, with prices reaching their peak in November and moving down quite heavily.
“It was a result of a combination of the very high prices creating huge margins, and that dragged in extra supply into the market, but we also saw some sort of demand hit as well,” he said.
Lithium demand is expected to increase by 28 percent year on year in 2023 and 24 percent year on year in 2024, with the electric vehicle (EV) segment set to represent 73 percent of all demand, according to Fastmarkets' forecasts.
“We expect the market to remain in deficit this year and next,” Jordan Roberts, battery raw materials analyst at Fastmarkets, said. “We have to consider the fact that supply always disappoints to the downside, and we can probably expect delays to new units suspected to come online and ramp up during the remainder of the year.”
Even though they are moving to more sustainable levels, Fastmarkets is expecting prices to remain volatile.
Some lithium miners have been hit by easing prices during the past few months, but producers also remain positive about the need for lithium this year.
Charlotte-based Albemarle (NYSE:ALB), which saw its lithium sales increase in 2022 on the back of high lithium prices, said it expects its energy storage segment sales volumes to be up 30 to 40 percent in 2023 compared to 2022. However, the company, which has lithium brine assets in the US and the Salar de Atacama in Chile, has revised its target due to the price performance of lithium.
"We see strong sales volume growth for the rest of the year but have modified our guidance to reflect softening lithium market pricing,” CEO Kent Masters said in a statement.
Chile’s SQM (NYSE:SQM) is expecting demand to increase this year, forecasting demand growth to reach 20 percent. But the lithium miner, which also operates its primary lithium business in the Salar de Atacama, saw its sales drop in the first quarter of 2023 compared to the same period last year.
The company said advanced purchases in the previous quarter, the change in subsidies in China and the high level of stock across the battery supply chain, were the reasons behind weaker demand, predominantly in China, in the beginning of the year.
“Based on the recent increase in customer activity, we believe that the destocking period has concluded and anticipate our sales volumes to recover in the upcoming quarters,” CEO Ricardo Ramos said in a statement.
Meanwhile, after seeing its revenue almost double last year thanks to higher prices, Argentina-focused Livent (NYSE:LTHM) saw further increases with its Q1 2023 revenue. The company, which operates its lithium business in Argentina's Salar del Hombre Muerto, also said it remains on track to deliver all previously announced capacity expansions.
Australian producers also posted quarterly results as lithium spodumene feedstock prices soften but hold on to historical high levels.
Western Australia’s Pilbara Minerals (ASX:PLS) is expecting prices to continue to ease in the short term. Lithium pricing could potentially strengthen in the second half of this year “as restocking of inventory levels in China occurs across the supply chain,” the company said in a statement.
In its financial year Q3 results, Mineral Resources (ASX:MIN) announced it had lowered its FY2023 lithium battery chemicals sales guidance for the Wodgina project, a joint venture with Albemarle, due to market conditions. The company reported that it expects spodumene concentrate production and lithium battery chemical sales from the Mt Marion project, which it owns jointly with Ganfeng, to come in at the lower ends of guidance because of a delay with the site's plant expansion and mine sequencing. Mineral Resources raised the FY2023 spodumene FOB cost guidance for Mt Marion for this reason as well.
For ASX-listed Allkem (ASX:AKE), despite recent volatility, the fundamentals underpinning lithium demand remain very strong. In the last quarter, the company saw production increase at its Olaroz facility in Argentina and at Mt Cattlin in Australia.
Consolidation in the lithium space has taken center stage since the start of 2023. Earlier in the year, top lithium miner Albemarle offered US$3.7 billion to buy Australia’s Liontown Resources (ASX:LTR,OTC Pink:LINRF) but was rejected. The yet-to-be in production ASX lithium mining company, which is developing the Kathleen Valley project in Western Australia, hopes to see first production by mid-2024. The asset is expected to supply about 500,000 metric tons of spodumene concentrate a year to global markets.
Another Australian miner, Essential Metals (ASX:ESS,OTC Pink:PIONF) also declined a bid, with this one coming from a joint venture formed by leading producers Tianqi Lithium (OTC Pink:TQLCF,SZSE:002466) and IGO (ASX:IGO,OTC Pink:IPGDF).
But the biggest M&A news came in May, when lithium producers Livent and Allkem inked a US$10.6 billion mega merger deal. Lithium experts believe more consolidation is ahead for the sector as demand for lithium continues to increase.
RK Equity’s Rodney Hooper told the Investing News Network that any large resource project in a Tier 1 jurisdiction will likely be bought out or merged. Despite the deals signed with junior miners in recent months, for the expert, original equipment manufacturers need to get more involved. “Offtake agreements are an insufficient hedge; they also need to lock in lower long-term lithium prices," Hooper said.
Lithium expert Joe Lowry of Global Lithium also expects more consolidation in the lithium market.
“I think you might see some of the better small exploration plays in Western Australia just get absorbed sooner than they would have otherwise, just because it’s a grab for the rock now,” he said. “Why wait until they have a market cap of $500 million if you can pick them off when they’ve got a market cap of $50 million?”
For car manufacturers from Tesla (NASDAQ:TSLA) to General Motors (NYSE:GM), the past few years have seen the race to secure a steady supply of lithium increase — and this increased even more in the past year, as prices climbed and geopolitical tensions exposed the vulnerabilities of the global lithium supply chain.
Following deals earlier this year, such as General Motors' investment in Lithium Americas (NYSE:LAC) and the amended agreement between Piedmont Lithium (ASX:PLL) and Tesla, US carmaker Ford (NYSE:F) stepped up its lithium game signing five supply agreements in May, two of which are with established producing companies Albemarle and SQM.
“This is a big moment for Ford. Deals with developers are important, but ones with active producers are irreplaceable,” Simon Moores, CEO of Benchmark Mineral Intelligence, said. “The lithium land grab is underway.”
The Michigan-based company's remaining three deals were all with companies developing sources yet to come on stream: Compass Minerals (NYSE:CMP), privately owned EnergySource Minerals and Quebec-focused Nemaska Lithium (TSX:NMX). Ford became the first customer of Nemaska with their deal.
In April, Chile’s President Gabriel Boric revealed plans to nationalize the country’s lithium industry, aiming to boost its economy and protect the environment. Future lithium contracts in Chile will now only be issued as public-private partnerships with state control, Boric said.
Top lithium producers Albemarle and SQM have operations in the country, with contracts that expire in 2043 and 2030, respectively. SQM has already started conversations with state-owned Codelco, tasked to handle the talks, while Albemarle is expected to follow suit soon.
Chile is also planning to request all new lithium developments to use direct lithium extraction, a technique yet to be commercialized at scale, to speed up production and reduce water consumption.
The South American country's move follows Mexico's nationalization of its lithium industry last year, although Mexico is yet to exploit lithium at a commercial scale while Chile is the world's number two producing country just after Australia.
The automotive industry is undergoing a major transformation from petrol and diesel cars to electric vehicles with significant implications for the Western auto supply chains.
Morgan Stanley's global director of research Katy Huberty told clients in a note Tuesday that her global Autos research desk forecasts a complete "re-wiring" of the EV battery supply chain "through the lends of a multipolar world" will require $7 trillion in investment by 2040.
Our global Autos team led a broadly collaborative analysis that revisited the investment implications of the EV battery supply chain, which they first explored in November 2021 (The New Oil: Investment Implications of the Global Battery Economy).
A key enhancement in their new work: They viewed the battery supply chain through the lens of a Multipolar World.
They conclude that if the West wants to drive EV adoption to meet decarbonization goals, while also mitigating national security concerns, a radically new battery supply chain will need to be created, with developments in battery chemistry having the potential to widen the menu of technologies available to meet climate goals.
They estimate that total investment of $7 trillion would be needed in the EV battery supply chain by 2040, a figure that assumes an array of targeted regulations and policies to facilitate an onshore, decarbonized battery supply chain. They think it may require more than a decade to achieve industrialization and standardization, gated by a host of geopolitical, environmental, and economic considerations.
Onshoring the EV battery supply chain from Asia to the West will require a massive effort by governments and corporations. They will need to invest trillions of dollars to take market share from China, which already controls 90% of the global EV battery supply chain.
"We cannot rely on market forces alone to drive us to an electrified, onshore future. Policy around adoption must be coordinated with policy around supply chain and sourcing, and the more acute need is on supply rather than demand, in our opinion," Morgan Stanley analysts said in a Sunday report note titled "Re-Wiring the EV Battery Supply Chain: Global Investment Implications."
Though the US Inflation Reduction Act has been incentivizing onshoring of critical EV supply chains, the Western world faces a significant task in rejiggering the battery supply chain to be less reliant on China. This is all in an effort to achieve clean energy targets for the transportation sector by the mid-2030s.
The green future sounds great, but for it to be realized, nuclear power generation capacity needs to be dramatically increased. If not, the West's power grids will be even more unreliable and resemble ones from third-world countries.
PUBLISHED THU, MAR 28 2019 EDT UPDATED THU, MAR 28
That’s why Gates, Bezos, Ma and dozens of other high-net-worth individuals (including Michael Bloomberg and Richard Branson) launched Breakthrough Energy Ventures (BEV). The $1 billion fund will forgo near-term returns on investments, providing much-needed time and operating capital to researchers and companies solving difficult technical problems in the capital-intensive renewable energy space. The fund currently lists 14 companies in its portfolio, ranging from startups working on battery and grid storage technologies to companies developing better geothermal and even fusion energy generation systems. Investments range from $200,000 to $20 million, depending on each company’s needs and stage of development.
Favorable trends
According to reports from the International Energy Agency, electricity investments are flowing toward renewables, networks and flexibility, while at the same time more than 100 globally significant financial institutions have implemented policies restricting investments in carbon-intensive fossil fuels like coal.
In a February research note, UBS analysts pointed to trends in urbanization and population growth, technological progress driving cost advantages in the renewable space and an improved regulatory environment as factors driving the long-term viability of renewable-energy investments. Globally, cumulative investment in renewables will surpass $9 trillion by 2050, they say, while cumulative investment in energy efficiency and clean-air technologies will balloon to $35 trillion by 2030.
Institutional investors such as UBS are following the same trend lines start-ups and private project financing firms have been following for some time. “There are a number of trends that we see,” said Ramya Swaminathan, CEO of Malta Inc., a maker of distributed thermal electricity storage, and a former public finance banker in the energy sector. “For the first time in [10 to 15 years], renewable-energy sources are cheaper than carbon-intensive sources of electricity.”
Trillions on the sidelines
Historically, start-ups developing new renewable energy-enabling technologies or developing clean energy projects have experienced difficulty raising funds from institutional investors, in part because of long development timelines and sizable technical risk. But particularly on the project financing side of things, renewable-energy projects suffer from a lack of familiarity. Institutional fund managers simply don’t have a thorough understanding in the renewable energy industry and the potential returns to be had there.
“There are huge opportunities, but it looks completely unfamiliar if you’re a pension fund — it just doesn’t look like the project finance you’re used to,” said Rob Day, managing partner at Boston-based investment firm Spring Lane Capital. “They see these trends, and they take a step back and say ‘we have to figure out how to play this from a 30-year investment perspective.’
(Reuters) - Miners are pushing to sharply boost lithium output in the United States, as automakers in the world’s third biggest electric vehicle market are eager to cut their dependence on China for the critical battery ingredient and find more local sources.
In North Carolina, Nevada and half a dozen other states, miners are working to revive the U.S. lithium industry, once the world’s largest until it fell off in the 1990s.
Global demand for the lightweight material is expected to quadruple by 2025. Miners are betting U.S. expansion will pay off with orders from battery and vehicle manufacturers who are wary of relying too much on China, which is home to the majority of the world’s lithium processing facilities and sucks up most output of top producer Australia.
Piedmont Lithium, a small mining company in the early stages of a plan to revive lithium production in North Carolina, was approached in recent months by two large U.S. automakers, Chief Executive Officer Keith Phillips said. “They are excited about the idea of securing lithium supply outside of China,” Phillips said in an interview, declining to name the automakers. Miners are also advancing lithium projects in states including Utah, California and Arkansas.
The United States produced only about 2 percent of the world’s lithium last year, from a single mine in Nevada. But it has around 13 percent of the world’s identified resources, according to the U.S. Geological Survey (USGS).
Higher prices could make mining profitable. In May, the United States counted lithium among 35 critical minerals, which could up speed up mine permitting. “Given its close proximity and the opportunity to diversify the supply chain, we would certainly be interested in U.S.-based lithium sources - as long as it is sustainable, environmentally friendly, and competitively priced,” a spokesman for a major U.S. automaker said in an emailed response to a question. The company declined to be identified.
LA Times story “…lithium, which is abundant in the Imperial Valley, are the building blocks for many technologies”
“These new investments are going to do more than create good-paying jobs. They are also going to set America up to lead the world in building a clean energy economy and a clean energy future,”
Biden, Newsom bet on minerals for tech sector
A GEOTHERMAL ENERGY and lithium plant on the south side of the Salton Sea. Minerals such as lithium, which is abundant in the Imperial Valley, are the building blocks for technologies found in everyday products. (Gina Ferazzi Los Angeles Times)
By Anumita Kaur
WASHINGTON — President Biden is looking to California to help secure a permanent pipeline of critical materials essential to the tech industry that can boost the nation’s green energy production and its competitiveness.
Speaking Tuesday at a virtual roundtable with Gov. Gavin Newsom, the president touted a series of investments around the country, highlighting several in California, including a new $35-million contract that the Department of Defense has awarded a Las Vegas company to separate and process heavy rare earth elements at its facility in Mountain Pass, Calif.
The goal of the contract with MP Materials will be to establish a permanent end-to-end domestic supply chain for the magnets used in electric vehicle motors, electronics and wind turbines.
Nearly 100% of the nation’s critical minerals are imported from foreign sources, including materials such as lithium and graphite, “which are badly needed for so many American products,” Biden told the group of industry and community leaders.
“China controls most of the global market of these minerals, and the fact is that we can’t build a future that’s made in America if we ourselves are dependent on China for the materials, the power, the products,” he said.
U.S. officials have long emphasized that such a lag in competitiveness poses not only an economic risk, but also a national security one.
Those concerns were driven home Tuesday as Biden joined the roundtable minutes after announcing economic sanctions against Russia for its latest military incursion in Ukraine.
Minerals such as lithium, which is abundant in the Imperial Valley, are the building blocks for many technologies found in everyday products such as computers and household appliances, as well as green technology.
Among the projects Biden touted: Berkshire Hathaway Energy Renewables plans to break ground on a demonstration facility in April in Imperial County, where the company will test their lithium extraction process. It’s a multibillion-dollar investment in sustainable lithium production over the next five years. The company received $6 million the project from the California Energy Commission.
Controlled Thermal Resources and EnergySource Minerals have also established operations in Imperial County to extract lithium from geothermal brine. “These new investments are going to do more than create good-paying jobs. They are also going to set America up to lead the world in building a clean energy economy and a clean energy future,” Biden said.
With such a positive outlook for a Californian critical minerals industry, Newsom said the state will focus “not just on the economic opportunity, but making sure that the growth and inclusion strategies include local hires, local benefits in a sustainable way.”
“We’re still doing a lot of the due diligence, but if it’s as big as it appears to be, this is a game changer in terms of our efforts to transition to low-carbon green growth and radically change the way we produce and consume energy,” Newsom said.
Silvia Paz, executive director of Alianza Coachella Valley, who attended the event, said that when her community hears about the excitement around lithium, “there is a cautious optimism.”
The Salton Sea, in northern Imperial County, faces environmental degradation, and her organization is concerned about the impact of the race to extract more lithium. The region also has high unemployment rates and was hit hard by the COVID-19 pandemic.
Could “this be a game changer?” she echoed Newsom. “Yes, it could, if done right.” This means pursuing plans “in an environmentally friendly manner” and involving the local community from the beginning, so “that they can have a seat at the table when we’re talking about community workforce agreements and determining what percent of labor should come from the local region,” she said.
Global demand for critical minerals is set to skyrocket by up to 600% over the next several decades, White House officials said.
For minerals such as lithium and graphite, which are used in electric vehicle batteries, the administration said, demand is expected to increase by as much as 4,000%.
Will one of the planet's most polluted lakes become California's Lithium Valley?
By Derya Ozdemir
Jul 13, 2021 (Updated: Jul 14, 2021 14:32 EDT)
Lithium is an essential ingredient in electric car batteries and renewable energy, which makes it incredibly valuable as the world transitions toward a more sustainable future. Currently, the overwhelming majority of lithium in today's batteries comes from Australia, Chile, China, and Argentina. So, a race is on to produce the vital raw material in the United States.
In order to address the near-total reliance by the U.S. on foreign sources of lithium, there are many competing projects, and in one of the latest advancements on the issue, General Motors Co. (GM), the country's largest domestic automaker, has announced a deal with a company called Controlled Thermal Resources (CTR) to supply it with lithium from the Salton Sea, which is one of the most polluted places on the planet due to decades of agricultural runoff.
“Lithium is critical to battery production today and will only become more important as consumer adoption of EVs (electric vehicles) increases, and we accelerate towards our all-electric future,” said Doug Parks, GM executive vice president, Global Product Development, Purchasing and Supply Chain, in a press release.
“By securing and localizing the lithium supply chain in the U.S., we’re helping ensure our ability to make powerful, affordable, high mileage EVs while also helping to mitigate environmental impact and bring more low-cost lithium to the market as a whole.”
The announcement represents a step toward GM’s commitment to phasing gasoline-powered cars out of its production line by 2035. CTR is building a lithium extraction and power generation facility in the Salton Sea's Hell’s Kitchen geothermal area and is scheduled to begin providing lithium to GM by 2024. Then, GM will be well-poised to achieve its goal.
The Salton Sea was formed in 1905 when flooding caused the Colorado River to break through an irrigation canal and flow into the Salton Basin for 18 months. It is thought to sit on top of one of the country's biggest lithium brine reserves, capable of supplying up to 40 percent of global demand, according to the California Energy Commission.
The Salton Sea already has a network of ten geothermal power stations, and it does not hold lithium itself -- rather, the lithium is dissolved in hot brine that comes from the Salton Sea geothermal reservoir deep beneath the surface. CTR will be using a "closed-loop, direct lithium extraction process" that integrates direct lithium extraction with renewable geothermal energy, offering, "the highest sustainability credentials available today."
"CTR’s closed-loop, direct lithium extraction process utilizes renewable power and steam – significantly reducing the time to produce battery-grade lithium products and eliminating the need for overseas processing. CTR’s operations will have a minimal physical footprint and a near-zero carbon footprint. The brine, after lithium extraction, is returned to the geothermal reservoir deep within the earth," CTR explains, in a press release.
The first phase of the Hell’s Kitchen development is expected to start providing lithium in 2024.
The announcement has been met with mixed feelings by some in the area. While the economic benefits will be especially welcome, the impact of the technology used by CTR is yet to be fully analyzed.
California Assembly member Eduardo Garcia, who represents part of Imperial County and wrote the law that created the Lithium Valley Commission, reminded the Desert Sun newspaper that, “One of the main principles is to do no harm. A lot of information is still to be gathered and understood before we are able to determine that this is going to be the best thing to happen and will have the return investment from a social, human health, economic perspective."
Some environmentalists are concerned about further deterioration of air quality in the already-polluted area, which has very high rates of asthma, and possible damage to wildlife and habitat. However, unlike traditional mining, CTR claims that its system will leave no tailings, as they will re-inject the brine back underground once the lithium has been extracted, and that the entire process will use renewable energy with no carbon emissions.
Editor's Note: Information in this article has been updated. An earlier version mistakenly stated the company uses open pits. This was corrected.
A Bloomberg New Energy Finance Limited report in 2020 highlighted China’s global dominance in the lithium-ion battery supply chain market, due to its grip on raw material mining and refining. In 2019, the US imported 80 percent of its rare earth minerals from China, while the EU states imported 98 percent of these materials from China.
China incidentally also shares a small border with Afghanistan called the Wakhan Corridor – 210km long. While the length of the border may appear insignificant, its location is crucial. Afghanistan is believed to have large deposits of gold, iron, copper, zinc, lithium and other rare earth metals, valued at over $1 trillion.
“Afghanistan may hold 60 million metric tons of copper, 2,2 billion tons of iron ore, 1,4 million tons of rare earth elements (REEs) such as lanthanum, cerium, neodymium, and veins of aluminium, gold, silver, zinc, mercury…” according to a 2020 report in The Diplomat.
But the Wakhan Corridor has been used by Islamic Uighur militants opposed to Chinese rule in Xinjiang. Chinese officials meeting with the newly installed Taliban are certainly aware of risk that radical Islamists pose: “We hope the Afghan Taliban will make a clean break with all terrorist organizations including ETIM (East Turkestan Islamic Movement) and resolutely and effectively combat them to remove obstacles, play a positive role and create enabling conditions for security, stability, development and cooperation in the region,” said a high-ranking Chinese official.
Why is this important?
Global demand for lithium is projected to increase 40-fold by 2040, according to the International Energy Agency, along with rare earth elements, copper, cobalt, and other minerals also abundant in Afghanistan. And these minerals happen to be concentrated in only a small number of pockets around the world.
The Bolivian Andes may contain 70 percent of the planet’s lithium and many analysts argue that extracting lithium from brine as in Bolivia is more environmentally friendly than extracting it from rock.
Interestingly, metallic lithium and its complex hydrides are used as high-energy additives to rocket propellants, thermonuclear weapons or even as a solid fuel.
In 2010, the US Department of Defense called Afghanistan “Saudi Arabia of lithium” after American geologists then discovered that the country’s deposits amounted to at least a trillion dollars. Lithium is an essential ingredient to produce long-lasting batteries used in electric cars in particular. The battery of a Tesla Model S, for example, has about 12 kilograms of lithium in it.
Ten years later, these metals have not yet been extracted. The Taliban is unlikely to sell the metal to Americans, and the United States views China, the world’s largest lithium producer, as its main rival. And the US wants at least 40 percent of its cars to be electric by 2030. Thus the previous US-led government in Kabul had previously hoped that the promise of mineral wealth would entice President Trump into making a commitment to stay in the country.
“Afghanistan can be an appropriate place for US industry, and specifically the mining sector, to look at opportunities for investment,” Mohammad Humayon Qayoumi, the former chief adviser to Afghan president on infrastructure, human capital and technology, once opined.
But Tom Benson, a PhD in the Department of Geological Sciences at Stanford University, has focused his research on a 16,3-million-year-old super volcano on the Oregon-Nevada border which contains the largest lithium deposit in the United States. A number of other active volcanoes may hold the same deposits and there is a particularly “exciting” one, called Bogoslof, in Alaska. That may be why the US has lost interest in Afghanistan.
“The Taliban are now sitting on a stockpile of one of the most strategic minerals in the world,” said Rob Schoonover, an ecology expert at the US think tank Center for Strategic Risks, in an interview with Quartz. “The question of whether they will be able to play this role will be important in the future.”
Could the Taliban benefit from this resource?
The exploitation of these rare earth metals could undoubtedly give the Taliban an economic advantage. Before the US retreat, the Afghan government had considered selling lucrative mining contracts to American companies. But such agreements were always discussed with the view of keeping the US military in the country and sharing the spoils. With the Taliban now leading the government, the option of involving American mining concerns is of course out of the question.
“As long as there are safer and more reliable sources (of metals, note) elsewhere, the use of Afghan minerals will remain low,” said Schoonover. However, the Taliban already have experience in extracting rare stones. By mining lapis lazuli, the Taliban earns at least $300 million per year.
Ashraf Ghani, the Afghan president now in exile, thought that the abundance of mineral deposits were a curse for his country. Indeed, many economists are aware of the fact that such rich deposits in developing countries generally become a source of corruption and violence, to the detriment of the locals.
The Taliban will have to find a way to participate in the global lithium trade, much larger that their lapis lazuli trade. Access to Afghan central bank reserves has been denied to the Taliban by the US. The new Afghan leadership could also have trouble in convincing Chinese investors who once lost $3 billion in 2007 in a Taliban copper mine that could not be exploited due to persistent administration blunders.
However, good reason for China become involved in the extraction of lithium in Afghanistan may not only be the wealth it could generate, but also to avoid more ecological damage caused by lithium mining on its own soil and to limit the scope of Islamic infiltration. The extraction of this metal leads to water shortages and air pollution, but the rewards could coax Taliban leaders into addressing the Uighur headache.
All rights reserved. You have permission to quote freely from the articles provided that the source Free West Media is given. Photos may not be used without our consent.
Berkeley Lab leading investigation to better understand the Salton Sea’s geothermal lithium resources
News Release Julie Chao • February 16, 2022
The Salton Sea geothermal field in California potentially holds enough lithium to meet all of America’s domestic battery needs, with even enough left over to export some of it. But how much of that lithium can be extracted in a sustainable and environmentally friendly way? And how long will the resource last? These are just a few of the questions that researchers hope to answer in a new project sponsored by the U.S. Department of Energy (DOE).
There are currently 11 commercial plants at the Salton Sea field producing geothermal energy, a clean, renewable form of energy in which hot fluids are pumped up from deep underground and the heat is then converted to electricity. Normally the cooled fluid would simply be reinjected underground, but the idea is to first extract the lithium from the brine before injecting it back.
With the push by California and many other states and countries to expand adoption of electric vehicles (EVs), the demand for batteries – and the lithium needed to make those batteries – will skyrocket. With nearly $1.2 million in support from DOE’s Geothermal Technologies Office, scientists from Lawrence Berkeley National Laboratory (Berkeley Lab), UC Riverside, and Geologica Geothermal Group, Inc. will work together to both quantify and characterize the lithium in this hypersaline geothermal reservoir, located far beneath the surface of Earth near the Salton Sea in Imperial County.
The project is the first comprehensive scientific effort to map out California’s so-called “Lithium Valley” and attempt to gain a detailed understanding of the mineral-rich underground brine at the Salton Sea geothermal system. Using an electron microscope and other advanced analytical tools, for example, they hope to learn the mineral sources of lithium and whether the rocks will “recharge” the brine with lithium after it has been extracted from the produced fluids.
The project team will also investigate potential environmental impacts – to quantify how much water and chemical usage is needed for lithium extraction, air quality during the extraction process, and potential induced seismicity from the associated geothermal energy production.
“We are excited to fund Berkeley Lab to develop this rich and detailed analysis of the lithium resource potential at the Salton Sea. This project will provide critical insights about the subsurface that will help us secure a domestic lithium supply chain using the most environmentally responsible, data-driven pathway,” said Alexis McKittrick, Program Manager for Hydrothermal Resources in DOE’s Geothermal Technologies Office.
“The Salton Sea geothermal system is the primary potential geothermal resource for lithium in the United States, and it’s a world-class resource,” said Pat Dobson, the Berkeley Lab scientist who is leading the project. “But there is a wide range of estimates in terms of the size of the resource, and also not a great understanding of where the lithium comes from, the rate at which it would decline over time with extraction of lithium from the geothermal brines, and whether it would be replenished by the remaining lithium in the host rocks.”
Currently, most of the world’s lithium supply is either mined from open pit mines, which are common in China and Australia, or extracted from salar deposits, or Salt Lake flats, in South America. Lithium is obtained from these huge deposits (the largest salar, located in Bolivia, is the size of the “Big Island” of Hawaii) simply by pumping up the shallow groundwater and letting it sit for a year or two while the sun evaporates the water.
But both of these methods have serious environmental issues associated with them. “We think geothermal lithium is one of the least environmentally impactful ways of obtaining lithium,” said Dobson, an expert in geothermal energy and a key contributor to Berkeley Lab’s Lithium Resource Research and Innovation Center. “We want to understand how to mitigate any environmental side effects to make it even more benign.”
The “Saudi Arabia of lithium”
The potential size of the lithium resource at the Salton Sea is staggering. Governor Gavin Newsom recently called California the “Saudi Arabia of lithium,” and the state established the Lithium Valley Commission last year to research and write a report on the opportunities.
UC Riverside geochemist Michael McKibben, who has been studying the Salton Sea geothermal field since the 1970s, agrees with the potential.
“If you do a back-of-the-envelope calculation, you can convince yourself there’s somewhere between 1 and 6 million metric tons of lithium in that field,” he said. “That would be the largest brine source of lithium in the world, bigger than any individual South American salar deposit. So, it’s a big number, and it means the potential is there for – again, back-of-the-envelope calculations – something like 50 to 100 years’ worth of lithium production.”
McKibben, a professor emeritus, and Maryjo Brounce, an assistant professor in the Department of Earth and Planetary Sciences, lead the UC Riverside effort in this project. Brounce, a petrologist by training, will use instrumentation to map out where the lithium is located within the reservoir rocks, and what form it’s in. This geochemical characterization will then be incorporated into models to assess the rate of resupply of lithium to geothermal fluids.
We’ll look at how quickly might you expect the resource to be regenerated – is it centuries? Decades?” Brounce said. “Those chemical reaction rates will depend on where in the rock lithium is stored pretty strongly, so it can help create a predictive tool.”
This work will complement geochemical studies being conducted by researchers in Europe, who are also investigating the potential of geothermal brines for supplying lithium.
Strong industry support
Several companies have started pilot operations at the Salton Sea to extract lithium, including Berkshire Hathaway Energy (BHE) and Controlled Thermal Resources. (Berkeley Lab has projects with both under grants from the California Energy Commission.) For this new project, Berkeley Lab and UC Riverside will use data from companies active in the area as well as published documents and field data from the state of California’s Geologic Energy Management (CalGEM) databases.
“We need better data on the chemistry of the brines and their lithium content and how it’s distributed in terms of position and depth in the geothermal field,” McKibben said. “We’ve asked the geothermal companies to share their brine data with us. Pat and his group will put that in a database. Then if we can use the database to correlate lithium concentration with things like temperature, chlorinity, and other physical and chemical parameters, we can actually predict how much lithium might be in brine in parts of the field that haven’t been completely drilled out yet.”
BHE has pledged to work with the research team. “BHE Renewables supports this research effort and looks forward to assisting Lawrence Berkeley National Laboratory with this important study,” said Jonathan Weisgall, BHE’s vice-president of government relations.
The vision is that lithium from the geothermal field located near the Salton Sea will one day form the basis for a new domestic battery industry in the United States, generating much-needed economic growth in Imperial County, the county with the lowest per capita income in California.
“We need to get students to understand they can have very lucrative careers involving green energy,” McKibben said. “This is one opportunity to do that.”
Founded in 1931 on the belief that the biggest scientific challenges are best addressed by teams, Lawrence Berkeley National Laboratory and its scientists have been recognized with 14 Nobel Prizes. Today, Berkeley Lab researchers develop sustainable energy and environmental solutions, create useful new materials, advance the frontiers of computing, and probe the mysteries of life, matter, and the universe. Scientists from around the world rely on the Lab’s facilities for their own discovery science. Berkeley Lab is a multiprogram national laboratory, managed by the University of California for the U.S. Department of Energy’s Office of Science.
DOE’s Office of Science is the single largest supporter of basic research in the physical sciences in the United States and is working to address some of the most pressing challenges of our time.
Priscila Barrera Sep. 22, 2022 01:55PM PST
US carmaker Tesla needs lithium to power its electric vehicles, but where does it get it from? Find out more here.
Unlike some of its rivals, US electric vehicle (EV) pioneer Tesla (NASDAQ:TSLA) has been making moves to secure supply of the raw materials it needs to meet its production targets.
Lithium in particular has caught the attention of CEO Elon Musk. Back in 2020, the battery metal had a spotlight moment at Tesla’s Battery Day, when Musk shared that the company had bought tenements in Nevada, and was looking for a new way to produce lithium from clay — a process yet to be proven at commercial scale.
Since then, lithium prices have hit all-time highs and stayed elevated. Prices for other key battery metals have also increased, leading to higher costs for batteries themselves — according to Benchmark Mineral Intelligence, raw materials currently make up about 80 percent of battery costs, up from around 40 percent back in 2015.
“Price of lithium has gone to insane levels,” Musk tweeted back in April. “There is no shortage of the element itself, as lithium is almost everywhere on Earth, but the pace of extraction/refinement is slow.”
Most lithium mining happens in Australia from hard-rock sources and in Chile from brines. But lithium refining is dominated by China, which currently accounts for more than 75 percent of global lithium processing capacity.
“I’d like to once again urge entrepreneurs to enter the lithium-refining business. The mining is relatively easy, the refining is much harder,” Musk said on a July earnings call, adding there are software-like margins to be made in lithium processing. “You can’t lose, it’s a license to print money.”
Do Tesla batteries have lithium and cobalt?
As mentioned, it wasn’t just lithium that saw prices climb last year — cobalt doubled in price in 2021. Most cobalt mining takes place in the Democratic Republic of Congo, which has been often associated with child labour and human rights abuses, fueling concerns over supply of this battery metal in the long term.
In its batteries, Tesla is known for using nickel-cobalt-aluminum (NCA) cathodes developed by Japanese company Panasonic (OTC Pink:PCRFF,TSE:6752). This type of cathode has higher energy density and is a low-cobalt option, but has been less adopted by the industry compared to the widely used nickel-cobalt-manganese (NCM) cathodes. Those aren't the only cathodes containing cobalt that Tesla plans to use; South Korea's LG Energy Solutions (KRX:373220) is working on supplying Tesla with batteries using nickel-manganese-cobalt-aluminum cathodes.
That said, not all Tesla’s batteries contain cobalt. For its standard-range vehicles, Tesla said last year it was changing the battery chemistry it uses to lithium-iron-phosphate (LFP) cathodes, which are cobalt- and nickel-free. At the time, the company was already making vehicles with LFP chemistry at its factory in Shanghai, which supplies markets in China, the Asia-Pacific region and Europe.
How much lithium is in a Tesla battery?
For those interested in the EV space, it is a fair question to ask — how much lithium is there really in a Tesla battery? The answer is that even though it might not be huge compared to other raw materials, it can become a hurdle for any EV maker if there’s not enough, and enough of the right quality.
Back in 2016, Musk said batteries don't need as much lithium as they need nickel or graphite — describing lithium as "the salt in your salad" and saying it is about 2 percent of the cell mass.
But a key factor to remember is volume — given the amount of batteries Tesla needs to deliver its ambitious goals, if it can’t secure a steady supply of raw materials, it could hit a bottleneck. Of course, this is true not just for Tesla, but for every carmaker producing EVs today and setting targets for decades to come.
For that reason, demand for lithium is expected to soar in coming years. By 2030, Benchmark Mineral Intelligence forecasts lithium demand will reach 2.4 million metric tons (MT) of lithium carbonate equivalent — much higher than the forecasted 600,000 MT of supply expected to be produced in 2022.
Which lithium companies supply Tesla?
It's important to understand that there is not only one company that supplies lithium to Tesla.
At the end of 2021, Tesla inked a fresh three year lithium supply deal with top lithium producer Ganfeng (OTC Pink:GNENF,SZSE:002460). The Chinese company will provide products to Tesla for three years starting from 2022. Major miners Livent (NYSE:LTHM) and Albemarle (NYSE:ALB) also have supply contracts in place with the EV maker, and China’s Sichuan Yahua Industrial Group (SZSE:002497) agreed to supply battery-grade lithium hydroxide to Tesla back in 2020 for a period of five years.
The company also holds deals with junior mining companies for production that is yet to come on stream. Australia’s Liontown Resources (ASX:LTR) is set to supply Tesla with lithium spodumene concentrate from its AU$473 million Kathleen Valley project. The deal is for an initial five year period set to begin in 2024, conditional on Liontown starting commercial production by 2025.
Earlier in 2022, Core Lithium (ASX:CXO,OTC Pink:CXOXF), another ASX-listed company, was also in talks with Musk’s Tesla to supply the car company with lithium from its Finniss project, but negotiations collapsed in October. The lithium company said it remained open to maintaining further dialogue with Tesla.
Even though Tesla has secured lithium from all these companies, the EV supply chain is a bit more complex than buying lithium directly from miners. Tesla also works with battery makers, such as Panasonic and CATL (SZSE:300750), which themselves work with other chemical companies that secure their own lithium deals.
What company makes Tesla’s batteries?
Tesla is currently working with Japanese company Panasonic, its longtime partner, and South Korea’s LG Energy Solutions, the second largest battery supplier in the world. They supply the EV maker with cells containing nickel and cobalt.
China's CATL has been supplying LFP batteries to Tesla for cars made at its Shanghai plant since 2020. It’s also been reported that BYD Company (OTC Pink:BYDDF,SZSE:002594) will soon supply Tesla with its Blade battery, a less bulky LFP battery.
Are Tesla’s batteries expensive because of lithium costs?
Battery costs have been rising on the back of inflation, price hikes for raw materials and the ongoing Russia-Ukraine war, among other factors. Raw materials, including lithium, currently make up about 80 percent of battery costs, up from around 40 percent back in 2015, according to information from Benchmark Mineral Intelligence.
Lithium prices are up over 300 percent year-on-year and more than 120 percent year-to-date, and it’s not only spot prices that are climbing — lithium producers have said contract prices are also up, with some moving from fixed to more variable agreements.
Is there enough lithium for electric cars?
There’s plenty of lithium on the Earth’s crust, but extracting, processing and qualifying it for its use in EVs is a different story. Lithium demand from the EV sector is rising, a trend that is expected to continue throughout the decade. But supply is not keeping up, with many analysts and even lithium producers forecasting a tight market ahead.
At the moment, there aren't enough raw materials in the pipeline to take the majority of EV makers beyond 2030, as per Benchmark Mineral Intelligence.
Will Tesla buy a lithium mine?
For carmakers, securing lithium supply to meet their electrification goals is becoming a challenge, which is why the question of whether they will become miners in the future continues to come up.
As mentioned before, back in 2020, at the company's Battery Day event, Musk surprised the lithium industry by saying Tesla had acquired the rights to lithium-rich clay deposits in Nevada; it said it had found a way to mine the material in a sustainable and simple way — using table salt and water.
But mining lithium is not easy, and despite speculation, it's hard to imagine an automaker being involved in it, SQM’s (NYSE:SQM) Felipe Smith said in June. “You have to build a learning curve — the resources are all different, there are many challenges in terms of technology — to reach a consistent quality at a reasonable cost,” he said. “So it's difficult to see that an original equipment manufacturer (OEM), which has a completely different focus, will really engage into these challenges of producing.”
Even so, OEMs are coming to the realization that they might need to build up EV supply chains from scratch after the capital markets' failure to step up, as per Benchmark Mineral Intelligence’s Simon Moores. Furthermore, automotive OEMs that are making EVs will in effect have to become miners.
“I don't mean actual miners, but they are going to have to start buying 25 percent of these mines if they want to guarantee supply — paper contracts won't be enough,” he said.
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Back in 2016, Musk said batteries don't need as much lithium as they need nickel or graphite — describing lithium as "the salt in your salad" and saying it is about 2 percent of the cell mass.
But a key factor to remember is volume — given the amount of batteries Tesla needs to deliver its ambitious goals, if it can’t secure a steady supply of raw materials, it could hit a bottleneck. Of course, this is true not just for Tesla, but for every carmaker producing EVs today and setting targets for decades to come.
For that reason, demand for lithium is expected to soar in coming years. By 2030, Benchmark Mineral Intelligence forecasts lithium demand will reach 2.4 million metric tons (MT) of lithium carbonate equivalent — much higher than the forecasted 600,000 MT of supply expected to be produced in 2022.
Which lithium companies supply Tesla?
It's important to understand that there is not only one company that supplies lithium to Tesla.
At the end of 2021, Tesla inked a fresh three year lithium supply deal with top lithium producer Ganfeng (OTC Pink:GNENF,SZSE:002460). The Chinese company will provide products to Tesla for three years starting from 2022. Major miners Livent (NYSE:LTHM) and Albemarle (NYSE:ALB) also have supply contracts in place with the EV maker, and China’s Sichuan Yahua Industrial Group (SZSE:002497) agreed to supply battery-grade lithium hydroxide to Tesla back in 2020 for a period of five years.
The company also holds deals with junior mining companies for production that is yet to come on stream. Australia’s Liontown Resources (ASX:LTR) is set to supply Tesla with lithium spodumene concentrate from its AU$473 million Kathleen Valley project. The deal is for an initial five year period set to begin in 2024, conditional on Liontown starting commercial production by 2025.
Earlier in 2022, Core Lithium (ASX:CXO,OTC Pink:CXOXF), another ASX-listed company, was also in talks with Musk’s Tesla to supply the car company with lithium from its Finniss project, but negotiations collapsed in October. The lithium company said it remained open to maintaining further dialogue with Tesla.
Even though Tesla has secured lithium from all these companies, the EV supply chain is a bit more complex than buying lithium directly from miners. Tesla also works with battery makers, such as Panasonic and CATL (SZSE:300750), which themselves work with other chemical companies that secure their own lithium deals.
What company makes Tesla’s batteries?
Tesla is currently working with Japanese company Panasonic, its longtime partner, and South Korea’s LG Energy Solutions, the second largest battery supplier in the world. They supply the EV maker with cells containing nickel and cobalt.
China's CATL has been supplying LFP batteries to Tesla for cars made at its Shanghai plant since 2020. It’s also been reported that BYD Company (OTC Pink:BYDDF,SZSE:002594) will soon supply Tesla with its Blade battery, a less bulky LFP battery.
Are Tesla’s batteries expensive because of lithium costs?
Battery costs have been rising on the back of inflation, price hikes for raw materials and the ongoing Russia-Ukraine war, among other factors. Raw materials, including lithium, currently make up about 80 percent of battery costs, up from around 40 percent back in 2015, according to information from Benchmark Mineral Intelligence.
Lithium prices are up over 300 percent year-on-year and more than 120 percent year-to-date, and it’s not only spot prices that are climbing — lithium producers have said contract prices are also up, with some moving from fixed to more variable agreements.
Is there enough lithium for electric cars?
There’s plenty of lithium on the Earth’s crust, but extracting, processing and qualifying it for its use in EVs is a different story. Lithium demand from the EV sector is rising, a trend that is expected to continue throughout the decade. But supply is not keeping up, with many analysts and even lithium producers forecasting a tight market ahead.
At the moment, there aren't enough raw materials in the pipeline to take the majority of EV makers beyond 2030, as per Benchmark Mineral Intelligence.
Will Tesla buy a lithium mine?
For carmakers, securing lithium supply to meet their electrification goals is becoming a challenge, which is why the question of whether they will become miners in the future continues to come up.
As mentioned before, back in 2020, at the company's Battery Day event, Musk surprised the lithium industry by saying Tesla had acquired the rights to lithium-rich clay deposits in Nevada; it said it had found a way to mine the material in a sustainable and simple way — using table salt and water.
But mining lithium is not easy, and despite speculation, it's hard to imagine an automaker being involved in it, SQM’s (NYSE:SQM) Felipe Smith said in June. “You have to build a learning curve — the resources are all different, there are many challenges in terms of technology — to reach a consistent quality at a reasonable cost,” he said. “So it's difficult to see that an original equipment manufacturer (OEM), which has a completely different focus, will really engage into these challenges of producing.”
Even so, OEMs are coming to the realization that they might need to build up EV supply chains from scratch after the capital markets' failure to step up, as per Benchmark Mineral Intelligence’s Simon Moores. Furthermore, automotive OEMs that are making EVs will in effect have to become miners.
“I don't mean actual miners, but they are going to have to start buying 25 percent of these mines if they want to guarantee supply — paper contracts won't be enough,” he said.
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
We use cookies to analyze website traffic and optimize your website experience.