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Highlights
- Lithium carbonate prices have recorded nearly 553.19% gain in the last one year.
- Platts Analytics estimates that the global plug-in light-duty EV sales are anticipated to reach 6.5 million units in 2022.
- To meet the skyrocketing demand, lithium miners are planning to expand their capacity.
Global appetite for lithium has surged dramatically in the recent years, fuelling the price of the silvery-white metal. Lithium carbonate prices have surged to CNY 460,500 a tonne, recording nearly 553.19% gains in the last year. The spurt in lithium price was underpinned by a rapid upsurge in electric vehicle sales and fast depleting battery metal stocks in China.
As per the International Energy Agency (IEA) estimates, the global electric car sales, more than doubled in 2021, to 6.6 million against 3 million in 2020. According to Canalys, a leading technology market analyst firm, 85% of the total EVs were sold in Mainland China and Europe alone. Further, the report stated that the European and Mainland Chinese sales represented roughly 19% and 15% of the new car sales, respectively.
The advancement in technology to improve the economics of EVs and the introduction of superior performance lithium iron phosphate (LFP) batteries have put an extra burden on lithium miners. Lithium iron phosphate (LFP) batteries have been recognised as cost-effective since they reduce the overall dependence on ultra-rare raw elements like cobalt and nickel.
What’s Fuelling Lithium Prices?
Prices are soaring despite plenty of resources
To meet the skyrocketing demand, lithium miners are planning to expand their capacity. However, experts believe that the global lithium shortage would extend for at least three more years despite lithium being present in ample amounts on the planet.
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The fact that lithium prices are soaring in spite of sufficient reserves of the metal, is bound to spark curiosity. Actually, the lithium mining industry faces a structural shortage of lithium.
The current extraction and refining process of lithium is not quick enough to keep up with the rapidly growing demand. The process takes years for a mine to start producing lithium.
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Studies show that the world holds enough lithium sources required to fulfill its soaring demand.
A recent study conducted by MIT researchers, Lawrence Berkeley National Laboratory, and the University of California Berkeley states that the world would require only 2% of the total currently recoverable lithium reserves to meet the rising lithium demand for EV batteries in 2030.
Another study conducted by Bloomberg New Energy Finance indicated that the world requires just 0.7% of the known global lithium reserves to fulfill the burgeoning lithium demand for EV batteries in 2030.
Currently, Australia is the largest producer of lithium in the world with a production of 55,000 tonnes of lithium in 2021, a massive 28% rise from the 2020 levels.
Bottom Line
The global demand for lithium has witnessed a rapid jump in the last one year due to a staggering rise in EV sales. The demand is expected to rise further in the future; however, the world faces structural constraints and time delay to fulfill the burgeoning demand of the metal at the right time.