Lithium Demand in Future

25 January, 2023

Will the mining industry be able to keep up with the lithium demand? Lithium is one of the most important minerals to play apart in a decarbonised future.

Lithium demand has increased significantly in recent years, as it is lightweight metal used in the cathodes of lithium-ion batteries, which power electric vehicles (EVs).

Followed by China and Chile, Australia is the world’s largest lithium producer. Australia is responsible for more than half of global production in 2021.

Due to the high demand for the mineral, pricing has increase from $3 billion USD in 2020 to a whopping $35 billion in 2022.

Elon Musk, chief executive of major EV manufacturer Tesla, has called the price of lithium “insane”.

The market is anticipating a large supply of lithium in 2023, in an effort to balance out the rapidly growing market. This will by no means freefall the price, rather plateau it.

“(This year) is when lithium becomes what I call a volume game,” Chris Berry, president of House Mountain Partners, a consultant to the battery-materials sector, said. “We need to see a supply response from both existing producers and near-term producers who will need to execute flawlessly in the face of sustained lithium demand.”

According to reports, forecasts predict production increases of between 22–42 per cent in 2023, though experts warn of pain if mining companies in Australia, China and Chile run into any issues in producing new volumes of supply.

“I really don’t think there’s any reason to believe that so many tonnes can magically appear this year to return the market to balance,” Claire Blanchelande, a lithium trader at Trafigura Group, said. “The pain is not over yet.”