Transportation Innovation

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>>> Lithium shortages: threat or opportunity?


Over the past two years, the price of lithium has risen 13-fold. We explore the causes behind the increase and potential challenges to upscaling.


Mining Technology

By Zachary Skidmore

June 16, 2022


https://www.mining-technology.com/analysis/lithium-price-challenges/


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.

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