Meeting lithium demand to reach government decarbonisation pledges and automotive electric vehicle targets will be “almost impossible” at current rates of investment, analysts have warned.
The global lithium industry can currently produce 915,000 tonnes of lithium carbonate equivalent per year – which is a key component in EV batteries and is a vital commodity in reaching net zero goals – but to meet expected demand, this must reach 5.3m tonnes of production by 2030, analysis by commodity firm Benchmark Mineral Intelligence have said.
This means a further $116bn of investment is needed, Benchmark said. If this investment is not reached, it warned, EV automakers will have to “go upstream and get their hands dirty,” it said.
Benchmark analyst Cameron Perks told Supply Management the $116bnis needed to fulfil electric vehicle manufacturing targets and government climate action ambitions. He said it gives an idea of where demand could be, given prices along the supply chain, as well as how much lithium is actually required to slow down global warming.
Perks warned, however: “I doubt it is really possible. This spend is just for lithium; so you’d need a corresponding increase for other raw materials and for cathode/cell/EV production. Even next year, when we are forecasting a balanced market, it is not guaranteed you will get lithium, as much of this is tied up in offtakes, and for these EV makers, like Ford, General Motors etc, they will need a lot of quality lithium.”
The money is needed to build new mines and refineries, as well as expanding existing assets. Benchmark warned that, even if “every asset in the pipeline came online on time and hit their projected lithium production capacities,” 1.8m tonnes of additional capacity would still be needed to meet automaker targets and achieve governmental decarbonisation goals.
“The quality consideration is also key, and you will find that not everyone will produce a battery grade material. There are risks in this of course; you spend money on something you don't understand, you can end up making the wrong bet on a bad project and bad management, for example, and it goes awry.”
Perks said there was a chance there will be enough lithium to go around in coming years, but added “it's not looking promising”.
“It’s almost impossible, and definitely a race against time”, he continued.
“The big money that needs to be spent takes time to get approval for and to deploy. The players with skin in the game are the least likely to rush their spending. They don’t want to flood the market with lithium too quickly. They want to release it slowly to maximise their return.”
EV automakers may wish to switch strategies, go upstream and invest in lithium production facilities directly, in order to secure supply for their own operations.
Perks explained: “Some EV makers are indeed going upstream to secure lithium supplies themselves; securing volumes will help alleviate the volatility in lithium prices, and allow them to confidently expand output. Without it, price and material availability is uncertain. Perhaps on that weigh-up, the safer bet is to go upstream and get your hands dirty.”
The IEA reported last month that General Motors has announced a new investment of $650m in Lithium Americas to develop Nevada's Thacker Pass lithium mining project, while Stellantis acquired a 8% stake worth $52m in Vulcan Energy, an Australian-German lithium startup.
Meanwhile, Tesla will invest over a billion dollars to build its own lithium hydroxide refinery in Texas, which began construction in May this year.
The report comes as Volkswagen, Stellantis and General Motors agreed earlier this year to back a $1bn deal by ACG Acquisition Company to acquire two mines in Brazil that produce nickel and copper used in EVs.
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