Demand for lithium, which is used to produce electric vehicle batteries, is likely to grow in the coming years, supporting prices that have fallen significantly in recent years, Market Watch reports, citing experts.
“Currently, the world does not produce enough lithium hydroxide to meet the demand driven by the growing popularity of electric vehicles,” said Austin Devaney, chief commercial officer of Piedmont Lithium Inc. Austin Devaney.
According to the International Energy Agency (IEA), the share of electric vehicles in total global vehicle sales last year was 14%. It more than tripled from 4% in 2020. In 2023, global sales of electric vehicles are expected to grow by 35% compared to the previous year.
Fundamental factors suggest that the global electric vehicle market will continue to grow, says Devani.
Meanwhile, the average price of lithium-ion batteries fell by 8.7% in August, falling below $100 per kWh for the first time since August 2021, according to Benchmark Mineral Intelligence. The price reached $98.1 kWh on September 6, which is 33% lower than the peak recorded in March last year – $146.4 kWh.
The global lithium surplus has increased this year compared to last, but S&P Global Commodity Insights expects it to decline over the next three years.
According to S&P Global Commodity’s forecast, this year’s market supply will amount to 990.065 thousand tons of lithium carbonate equivalent, while demand will be 928.717 thousand tons. As a result, the surplus of lithium will reach 61,348 thousand tons compared to 10,061 thousand tons in 2022.
In 2024, the oversupply will decrease to 43 thousand tons of lithium carbonate equivalent, in 2025 – to 11 thousand tons, in 2026 – to 3 thousand tons, and in 2027 a deficit of 8 thousand tons will be recorded, according to S&P Global Commodity.
After 2027, demand for lithium will exceed supply, Devani said, citing Benchmark Mineral Intelligence forecasts.
“We believe that the expected lithium shortage requires the US to increase production capacity and reduce dependence on other countries,” the expert says. The bulk of lithium raw materials used in the US are mined in Australia and South America, with 80% of these raw materials being processed in China, Devani said.
According to him, the total amount of announced investments in battery production capacity in the United States over the past two years amounted to approximately $80 billion. In order for these capacities to be utilized, the annual supply of lithium hydroxide in the United States should reach 715 thousand tons by 2030, which is more than 40 times higher than the volume currently produced in the country (approximately 17 thousand tons).
Devaney noted that his company plans to produce about 60 thousand tons of lithium hydroxide per year in the long term, which is expected to be enough for about 1.2 million electric vehicles per year.
