ISTANBUL – High lithium prices could delay or slow down the speed of sales growth in the electric vehicle (EV) sector if planned projects to expand lithium supply do not come online as scheduled amid persisting high demand.
Global lithium production, in terms of mining, is geographically limited to three major producers in Australia, Chile and China, each with a 52%, 22%, and 13% share, respectively.
“The mineral needs to be processed and refined into either chemical lithium or lithium hydroxide to be used in batteries and appliances. Around 60% of the refining capacity is in China. Some regions in China have recently experienced power cuts, which impacted lithium refining facilities,” Kim Tae-yoon, a world energy outlook analyst at the International Energy Agency (IEA), said in an interview with Anadolu Agency.
Because of the importance of China in supply chains, he foresees more pressure on the refining and processing value chain than on the mining side.
Lithium, nickel, cobalt, manganese, and graphite are crucial for battery performance, longevity, and energy intensity.
According to the IEA, clean energy technologies account for 30% of global lithium demand. Lithium demand for clean energy technologies is growing at a faster pace relative to other major minerals, and the rapid uptake of EV deployment is forecast to raise the share to around 75% by 2040.
Accelerating clean transition requires more supply of critical minerals and supply-demand imbalances reflect on prices.
The price of lithium stood at US$13,154 (RM59,548) per tonne on August 31 last year but reached US$59,928 per tonne on August 31 this year, marking a 355% annual increase.
On January 31 this year, lithium cost US$36,962 per tonne, but the price has now risen by 62%, supported by robust EV sales.
“The price of lithium is less affected by Russia’s war in Ukraine compared with other minerals, but the price increase has remained quite high up to now because of the very strong demand growth from the EV sector and some logistics disruptions in China,” Kim said.
Global EV sales reached 6.75 million units in 2021, up by 108% compared with sales in 2020, according to Ev-volumes.com data.
Lithium demand in the EV sector has almost doubled in a year, from 140 kilotons in 2020 to 270 kilotons in 2021. And according to Kim, this is expected to grow further this year.
He also noted that planned projects in Argentina, Australia, the United States, Canada, and New Zealand are likely to increase the lithium supply globally, tempering higher prices on the market. – Bernama, September 14, 2022
