Lithium supply is a crucial component of the world’s clean energy story. With EV demand on the rise, a ramp up in lithium-ion battery production is inevitable to meet growing requirements.
Fitch Solutions anticipates that tight supply will continue to drive up lithium prices, with lithium hydroxide monohydrate (56.5 per cent) forecast to reach $US17,500 ($22,593) per tonne by 2025. The consultancy reports that demand will grow to 1.5 million tonnes of lithium carbonate equivalent (LCE) in 2030.
This is expected to lead to an influx of new lithium supply coming online to meet market appetite. “In 2020, decarbonisation rose to the forefront of government attention and has led major economies to prioritise lithium investment in an effort to strengthen their supply chain resilience for critical raw materials,” Fitch Solutions states in a May report.
However, even with the 124 lithium operations identified by Fitch Solutions – many of which are still in development – supply is unlikely to meet demand.
“Existing lithium producers such as Chile and Australia will also experience significant growth over our forecast period as companies seek to ramp up operations ahead of the anticipated demand surge,” Fitch states.
“This will help the production balance, but ultimately we expect the pace of new capacity to prove insufficient in meeting the pace of increasing demand, pushing the market into deficit.”
Government initiatives, including the Australian Government’s Critical Minerals Prospectus 2020, encourage investors to support a growing number of lithium projects in development or operation across Australia. The Prospectus highlights Australia’s leading lithium mines, including Pilbara Minerals’ Pilgangoora project, one of the world’s largest resources of the battery metal.
Pilgangoora currently produces a spodumene concentrate that is converted by international customers into lithium carbonate or lithium hydroxide for batteries. Pilbara Minerals also plans to diversify the site alongside partner Calix by together developing a lithium chemicals refinery that creates a product used in lithium-ion batteries.
While a developed mine such as Pilgangoora is one of a few ramping up to full capacity in Australia, junior explorers on the Australian Securities Exchange (ASX) are also planning to ride the lithium wave.