The Green revolution has Arrived
Lithium-ion (Li-ion) Batteries
• Lithium batteries are extensively used in vehicles, consumer goods and grid storage
• Battery is the key application of lithium and it is further used in various end-use industries. The advantages of lithium such as lightweight and strong electrochemical potential over other counterparts have propelled manufacturers worldwide to increase the global production capacity of Li-ion batteries
Demand Growth
• Demand for the metal is expected to reach 117 kilotonnes by 2024, driven by the growth of EV battery production, particularly in China
• According to analysis firm GlobalData, lithium demand will grow at a compound annual growth rate of 25.5% over this four-year period, rising from 47.3 kilotonnes (kt) to 117.4kt.
Spot Price
• China’s battery-grade lithium carbonate price increased further, driven by tight spot supply despite thin trade ahead of Lunar New Year.
• The Asian battery-grade lithium carbonate spot price climbed 3.3% due to reducing supply at most global suppliers and bullish Chinese pricing.
• The European, US lithium carbonate price jumped 12.1% against a backdrop of a strong Chinese market and limited supply in the equivalent technical grade market.
Problematic Supply Chain
• Continuing increasing demand for lithium has created other problems. As the world scrambles to replace fossil fuels with clean energy, the environmental impact of finding all the lithium required to enable that transformation could become a serious issue in its own right. One of the biggest environmental problems caused by our endless hunger for the latest and smartest devices is a growing mineral crisis, particularly those needed to make our batteries
• Last 5 years have seen a 20% per year cost reduction in battery pack systems
• At the current rate of improvement, EV drivetrains are forecast to surpass the cost competitiveness of combustion engines within five to ten years
• Demand for the metal is expected to reach 117 kilotonnes by 2024, driven by the growth of EV battery production, particularly in China
• Global demand for lithium is expected to more than double over the next four years, driven by the expansion of the global fleet of electric vehicles.
• China will be the key driver of growth, as it ramps up its battery-manufacturing activities
• Electric vehicle producers such as Tesla, Volkswagen and other manufacturers are searching lithium supplies to avoid supply disruptions and as consumers press companies for auditable and ethical material sourcing
• Tesla’s Gigafactory requires more lithium per year than entire US annual production
• Tesla’s entry into home storage batteries and solar panels further increase the need for lithium
• It is estimated that the rapid adoption of electric vehicles between now and 2035 will create an uplift for commodities demand eight times larger than that generated by China’s boom in the early 2000s
• EV sales in the country are also poised to increase – and with China now committed to achieving decarbonisation by 2060, its focus on electrifying road transport is likely to accelerate even faster than previously anticipated leading to higher demands for lithium
• Large-scale lithium production - notably in South America and Asia are plagued by political instability and come from conflicted areas
• Up to 65% of water in Bolivia, Argentina, and Chile have been used solely for Mining activities. Water is used to extract the minerals for Lithium and has created multiple droughts, impacting several other industries like farming. This has lead to multiple restrictions and regulations against Lithium production in South America
• In Tibet, numerous toxic chemicals have leaked from evaporation pools into the water supply.
• In Congo, Cobalt is extracted from the ground by hand often using Child Labour without protective equipment.
• Lithium production over the next four years will be mainly supported by output from existing Australian and Canadian Mines which has been noted to be more accessible, auditable and ethical.