More
    HomeOpinionTechnology ArticlesIs Lithium Shortages Hazardous?

    Is Lithium Shortages Hazardous?

    In March 2022, lithium prices hit an all-time high of $77,000 per tonne. The boom in price has been the result of a range of factors, including surging energy prices strengthening the appeal for the energy transition, booming demand for electric vehicles (EVs), and rapid advancement in rechargeable battery technology.

    However, at the same time, battery manufacturers are confronting a severe lithium shortage due to the reliance of the supply chain on Chinese manufacturers to process the mineral for commercial use. China currently controls 70%-80% of the supply chain for EVs and lithium-ion batteries, increasing pressure on Western manufacturers to ensure their supply.

    This has led several EV manufacturers, namely Ford and Tesla, to explore other avenues of supply through direct agreements with companies and investments in new extraction methods, such as direct lithium extraction (DLE). It is expected that reserves from new extraction methods will be central to making up the shortfall of lithium needed to facilitate the increased demand.

    Despite these moves to shore up supply, there remains doubt within the industry that sufficient control over the price of lithium can be achieved and new supply chains created. Additionally, many new extraction methods have yet to be scaled up for commercial use. Until they are, EV and battery manufacturers will be accountable to a small supply base for the foreseeable future, placing further pressure on the supply chain and leaving it prone to sporadic price increases.

    Supply and demand

    Lithium demand is expected to rise from 500,000 tonnes of lithium carbonate equivalent (LCE) in 2021 to somewhere between three million and four million tonnes in 2030. This conventional lithium supply is expected to grow by over 300% between 2021 and 2030.

    However, like several other critical transition metals, the supply of lithium comes from a small group of producing countries. In 2021, Australia was the world leader in lithium production, with an estimated output of 55,000 tonnes, with Chile second at 26,000 tonnes, and China third at 14,000 tonnes.

    In the production of lithium-ion batteries, the producing base gets even smaller. China dominated this market in 2021, producing some 79% of all lithium-ion batteries in the global market. Due to the small supply base, the price of the mineral is exceptionally volatile, reflected in its increases over the past year. The cost of lithium has risen from $6,000 per tonne in 2020 to $78,032 a tonne in 2022, a 13-fold increase in less than two years.

    This price increase has come whilst the lithium market is experiencing significant technological advancement, with more and more lithium required to produce the latest EV and battery technology. For instance, the battery of a Tesla Model S contains about 12kg of lithium, making EV companies incredibly reliant on the consistent production of lithium to ensure that their supply lines are not disrupted.

    As a result of this surging demand, the global lithium mining market is expected to grow from $3.33bn in 2020 to $6.37bn by 2030. However, despite the surge in prices and EV demand, lithium is receiving less funding than required, risking a structural deficit in the future.

    Growth of the industry

    Currently, 98% of lithium production occurs in Australia, Latin America, and China. However, a spate of announced projects will lead to more countries becoming key producers over the next 10 years. The new capacity base is expected to be enough for supply to grow at a 20% annual rate to reach over 2.7 million tonnes of LCE by 2030.

    The industry can also achieve new capacity by exploiting new lithium resources to bridge the supply gap. In early April, Ford Motor’s signed a preliminary agreement to buy lithium from a Lake Resources NL facility in Argentina, the first time that Ford publicly announced where it will procure the battery metal from.

    The facility will be based on DLE, which, according to proponents, has several potential benefits, including eliminating/reducing the footprint of evaporation ponds; decreasing production times compared with conventional brine operation; and increasing recoveries from around 40% to over 80%.

    However, DLE has only been used commercially in Argentina and China to date. If it is scaled up, it is expected to boost existing capacities via increased recoveries and lower operating costs while improving sustainability.

    Corporate investments

    The booming price of lithium has led Western manufacturers to seek other means to obtain the lithium needed in their products. In early April, Tesla CEO Elon Musk made the most well-publicized of these overtures.

    In a lamenting tweet, Musk railed against the rising cost of lithium and suggested that Tesla is likely to become involved in the mining business to help alleviate the impact of shortages of the critical materials needed in their batteries. Last year, Tesla applied for a patent for its lithium extraction technology to extract lithium from clay minerals and compositions.

    It is still undetermined whether Tesla will actively engage within the mining industry. Still, these increased overtures represent an industry seeking new supply streams and a desire to break free of the Chinese-dominated lithium-ion market.

    Circular model

    Another potential solution to the shortfall of lithium is developing the circular model: recycling, reusing and repurposing. The worldwide lithium-ion battery recycling market is expected to reach $3.48bn by 2027, according to a new report by Emergen Research.

    A major barrier to the upscaling of recycling and repurposing has been the lack of profit tied to the practice. However, the boom of EVs has led to reclaiming lithium, cobalt, manganese, and nickel from spent lithium-ion batteries profitable.

    So far, the recycling process has been heavily curtailed by profitability. However, as the shift towards EVs continues, the applicability of recycling in creating a new and reliable stream of lithium becomes more apparent. For example, the profit associated with recycling a Tesla Model 3 b EV could be as much as $1,691, demonstrating the potential profitability of newer EVs.

    Challenges

    Despite the range of new players expected to enter the lithium industry in the next 10 years, some doubts still exist. For instance, the planned Jadar lithium mine in Serbia, one of the biggest in the world, was delayed by Rio Tinto after protests citing environmental and social concerns.

    If such issues impact further projects, battery manufacturers that are already confronting a severe lithium shortage will be unable to continue to scale up their production. Stuart Crow, chair of Lake Resources, cites the failure of Western companies and governments in failing to build adequate supply chains as a major cause of this shortage.

    He stated: “There simply isn’t going to be enough lithium on the planet, regardless of who expands and who delivers, it won’t be there.”

    He continued: “Forecasts for the [lithium] deficit this year vary from 50,000 tonnes per annum out to 400,000 tonnes, on a market that looks potentially to produce 450,000 tonnes a year.”

    Therefore, there is a risk that shortages in lithium will impact goals such as the US’s plan to have all car sales by 2030 be EVs and the EU’s intention to ban all internal combustion engines by 2035, due to a lack of supply of batteries. With the International Energy Agency estimating that global EV sales must reach 47 million a year by 2030 to ensure transport emissions are consistent with its “sustainable development scenario”, there is still much work to do.

    Related Post

    Most Popular

    Best Picks

    Simulation Tool Prevents Severe Issues in Various Automotive Scenarios

    Authors: Giusy Gambino, Alessio Brighina, Francesco Giuffre’, Filippo Scrimizzi, STMicroelectronics, Catania, Italy When conceiving and implementing cutting-edge solutions that can thrive in harsh automotive environments a...

    SensorTile.box PRO, a new story about a professional board...

    Author: STMicroelectronics  The SensorTile.box PRO redefines what it means to use professional tools destined for the Internet of Things by making the technology accessible to more than...

    STM32CubeMonitor 1.7, STM32CubeMonitor-UCPD 1.3, and STM32CubeMonitor-RF 2.12, more powerful...

    Author: STMicroelectronics STM32CubeMonitor 1.7 became more flexible thanks to new UI improvements in an effort to adapt to the many use cases it must handle. For...

    Driving the Future: Exploring Innovations in the Automotive Power...

    The global automotive power electronics market is set to achieve a valuation of US$ 6 billion by 2033, advancing at 4.1% CAGR from 2023 to 2033, as...

    Empowering Karnataka’s Electronics Industry: An Insightful Conversation with CLIK...

    Karnataka, a shining star in India's technological landscape, has earned international acclaim for its thriving electronics and IT sectors. Fuelled by a legacy of...

    Aimil Ltd.: Setting the Benchmark for Instrumentation Solutions at...

    Aimil Ltd., an ISO 9001:2015 certified company with a heritage tracing back to 1932, holds a prominent position as a leading provider of cutting-edge...

    Electrify Your Future: A Thriving Career in the E-Mobility...

    In an era where sustainability and innovation reign supreme, the E-Mobility sector has emerged as the driving force behind a transformative shift in the...

    X0115ML, the smallest SCR now supports a surge peak...

    Author: STMicroelectronics The X0115ML is our first compact silicon control rectifier (SCR) for ground fault circuit interrupters (GFCIs) and arc-fault circuit interrupters (AFCIs) that can withstand a...

    Exploring the Future of Electronics: Unveiling the Power of...

    In a recent interview conducted by technology journalist Himanshu Vaibhav of eletimes.com and timesev.com, Dr. John W. Mitchell, President & CEO of IPC, discussed...

    Must Read