- Lithium is extensively used in the manufacturing of lithium-ion batteries, used to power electric vehicles.
- Growing popularity and government focus on electric vehicles amid climate change have skyrocketed the demand for this silvery-white metal.
- With the current production rate and known reserves, lithium extraction will last long.
Lithium is a chemical element that is special in many ways. The soft, silvery-white alkali metal has the lowest density of all metals. Since it is the lightest weight alkali metal, the metal is an ideal choice for use in portable devices.
The metal is widely used to manufacture rechargeable batteries. Nearly half of the global lithium supply is directed towards batteries.
The strong demand for lithium-powered batteries in electronic gadgets, portable devices, and electric vehicles (EVs) has cranked up the demand for this metal. Lithium is used as an electrolyte in lithium-ion batteries (LIBs) to provide high-intensity power to the batteries.
The technological advancements in battery technology that provides extra mileage, higher power, and lower charging time have surged the demand for lithium in the battery industry.
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The euphoric surge in demand for EVs in the past two years has pushed the demand for lithium globally. The government subsidies, lower vehicle prices, and reduced technical challenges have lured automobile lovers to choose EVs over fossil fuel-driven vehicles.
The global demand for lithium is anticipated to grow from 305,000 tonnes of lithium carbonate equivalent (LCE) in 2020 to about 426,000 tonnes in 2021, as per the Resources and Energy Quarterly March 2021 report of the Australian government.
The demand is expected to surpass half a million tonnes in 2022 and more than 1.0 million tonnes in 2026.
Who is the biggest producer of lithium in the world?
Australia is the world’s leading producer of lithium, accounting for nearly 49% in 2020. Last year, the country was also the biggest exporter of lithium globally.
Lithium export earnings for the country were pegged at approximately AU$1.1billion in 2019-20. With higher prices of spodumene, the earnings are expected to increase to AU$5.4 billion in 2025-26.
Australia is well-positioned to meet the surging demand for lithium in the near future with ramped-up production operations and new projects under pipeline.
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Most of the lithium demand across the globe is currently addressed by five mineral operations in Australia, two brine and one mineral operation in China, and two brine operations each in Chile and Argentina.
Australia produced around 40,000 metric tonnes of lithium in 2020, as per the U.S. Geological Survey, Mineral Commodity Summaries, January 2021. Some of the other countries that contributed towards global lithium production included Chile (18,000 metric tonnes), China (18,000 metric tonnes), and Argentina (6,200 metric tonnes).
While focusing on the reserve size, China holds the world’s largest lithium reserves of 9,200,000 metric tonnes followed by Australia that contains 4,700,000 metric tonnes, and Argentina that hold 1,900,000 metric tonnes of lithium reserves.
Will we run out of lithium?
Lithium is the thirty-third most abundant element found in the Earth’s crust. Earth's lithosphere contains around 17-20ppm of lithium.
The main challenge with the extraction of lithium is that it is widely distributed in traces in soil, rocks, sea, and ocean water, and only a fraction of lithium resources is economically extractable.
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The lithium industry has expanded well in the past few years with the exploration of new lithium resources.
As per the U.S. Geological Survey, Mineral Commodity Summaries (2001-2021) data, the identified lithium resources have increased significantly from 12 million metric tonnes in 2001 to 86 million metric tonnes by 2020. Similarly, the global lithium reserves have also increased from 3.4 million metric tonnes to 21 million metric tonnes in the past two decades.
EVs are the biggest consumer of battery metals in the world. Favourable economic policies and government incentives in Europe, China, North America, and other parts of the world have pushed the demand for lithium to newer heights. It is expected that the world will have 140 million EVs on the road by 2030.
A typical lithium battery consists of around 7% lithium by weight that accounts for 3,000kt lithium in total. As per the USGS data, global lithium consumption was 56,000 tons in 2020. So, with this annual production rate and known reserves, lithium extraction can continue for the next many decades.