How prepared is Australia to cash in on the upcoming lithium boom?

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How prepared is Australia to cash in on the upcoming lithium boom?

Lithium
Image source: © 3dalia | Megapixl.com

Highlights

  • Countries across the globe are exploring the best possible ways to limit their carbon emissions.
  • The demand for lithium has increased significantly in the past few years due to robust demand in the electric vehicle sector.
  • Australia is the biggest lithium exporter in the world and has made significant progress in increasing the capacity of lithium production.

The rise in demand for low-carbon energy systems across the globe has ratcheted up demand for lithium, which lies at the heart of the global EV (electric vehicle) revolution. Countries across the globe are exploring the best possible ways to limit their carbon emissions as part of their long-term goal to attain carbon neutrality by 2050.

Interestingly, lithium has emerged as one of the significant components used in new-age batteries that have taken charge of green mobility. New age lithium-ion batteries are far better in performance than conventional batteries, which fail to provide high-intensity power and have a longer charging time.

Related Article: 5 Hot Lithium (Li) stocks on ASX

Skyrocketing demand for lithium

The significant increase in demand for lithium in the past few years is underpinned by soaring demand from the automobile industry to power electric vehicles (EVs). As per the Resources and Energy Quarterly December 2021, the global EV sales rose by 18% q-o-q in the September 2021 quarter, indicating a staggering growth of 93% relative to the last year.

Rising lithium demand

Source: © Krisdog | Megapixl.com

As a result of the acute shortage of critical metal, various renowned automakers have extended the delivery timeframes for various models to 2023. Global demand for lithium is further predicted to increase to 724,000 tonnes by 2023, with the rise in EV uptake.

Related Article: 10 exciting ASX-listed battery metal stocks under $1

Is Australia well-positioned to retain its leadership

Australia is the biggest exporter of lithium in the world. The country has produced nearly half of the world’s total lithium in 2020, contributing as much as AU$1.1 billion towards the country’s economy in 2020-21 in lithium export earnings.

Lithium Mine

Source: © Xura | Megapixl.com

Over the recent years, the country has made significant progress in increasing the production capacity of lithium.

Let’s skim through some of the key milestones achieved by ASX-listed lithium miners to capitalise on the upcoming lithium boom.

  • Production at Train I of Tianqi’s Kwinana lithium hydroxide refinery has already started with the production of the battery-grade product expected in March quarter of 2022. The project is jointly owned by Tianqi Lithium and IGO Limited (ASX:IGO).
  • The finalisation of construction work at Kemerton’s Stage I is underway for the production of 25,000 tonnes of lithium hydroxide. The project is jointly owned by Albemarle and Mineral Resources (ASX:MIN).
  • Pilbara Minerals (ASX:PLS) has finalised a JV agreement with POSCO for the production of 43,000 tonnes of refined lithium hydroxide monohydrate Conversion Facility in South Korea.
  • The construction work at the Kwinana lithium hydroxide refinery, jointly owned by Chile’s SQM and Wesfarmers (ASX:WES), is underway. The refinery is expected to begin operating in 2024.
  • Orocobre (ASX:ORE), which is currently known as Allkem (ASX:AKE), is advancing to complete the construction of the Naraha plant in Japan for the conversion of lithium carbonate into lithium hydroxide.
  • Core Lithium (ASX:CXO) has made a final investment decision on the development of the Finniss deposit near Darwin, with a scoping study underway to extend mine life.
  • Rio Tinto (ASX:RIO) has inked a binding agreement for acquiring the Rincon lithium project in Argentina and boost its position in the lithium industry.

Also read: Three ASX stocks to watch in the wake of Biden’s Green Energy push

Bottom Line

With rising demand for low-carbon energy systems across the globe, the need for lithium as battery metal has increased significantly. Miners around the world are trying their best to step into the lithium business to capitalise on the upcoming boom in the sector.

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