Lithium has become an essential commodity in the world’s move towards sustainability, being an integral part of electric vehicles and renewable energy storage systems. As a result, demand for lithium has skyrocketed, and with the geopolitical competition for the critical element heating up, it is crucial to ask: Is there enough lithium to meet the world’s demand?
What is lithium needed for?
One of the reasons why the demand for lithium has grown is that lithium-ion batteries have become the primary means of powering electric vehicles and many other devices. Virtually all batteries used in electric vehicles, mobile phones, laptops, and other electronics require lithium. By 2030, batteries are expected to account for 95% of total lithium demand, up from 30% in 2015.
Who produces the most lithium?
The three largest lithium producers globally are Australia, Chile, and China. Together, they account for 98% of global lithium production. There are not many areas globally that mine lithium. Australia, Latin America, and China make up most of the lithium production worldwide. This limited number of lithium-producing areas presents a significant challenge, especially with the projected increase in demand for lithium. By 2030, electric vehicles and other products requiring lithium could account for 4,000 to 4,500 gigawatt-hours of lithium-ion demand, which is more than a 500% increase on current demand.
German Chancellor Olaf Scholz recently visited Latin America, where almost half of the world’s lithium resources are located, to secure more lithium supplies. The trip was not only about boosting supplies for the German car industry but also about reducing China’s lithium dominance in the region. Chile sells most of its lithium to China.
How has the price of lithium changed?
As lithium demand is set to increase, the price of lithium has also risen dramatically over the past year, with prices jumping by around 550% in a year. The lithium carbonate price is currently sitting around $75,000 per metric ton, while lithium hydroxide prices are around $70,000 per metric ton, compared to a five-year average of around $14,500 per metric ton.
While lithium supply is expected to expand by over 300% between now and 2030, at about a rate of 20% per year, the current rate is unlikely to cover the needs of an electrified world. The global competition for lithium has led to strategic geopolitical moves. Germany and Argentina recently signed a memorandum of understanding to secure Germany’s access to Argentina’s lithium resources, and Chile is now determined to reorganize its lithium industry.
The world’s growing demand for lithium to support its transition to a sustainable future has led to an unprecedented level of competition for this critical element. As demand for lithium continues to rise, it is crucial for countries to secure a stable and reliable supply of lithium to maintain the momentum of the sustainability drive.
If you want to learn more about whether the world has enough lithium, check out our recent episode of The Dive!