Tackling the lithium conundrum and mineral supply sources

By Jordan Roberts
Jordan Roberts, Battery Raw Materials Analyst at Fastmarkets, believes more focus should be placed on increasing efficiency and traditional recovery

Lithium is widely viewed as an essential piece of the puzzle in order for the global energy transition to become reality. Demand for the metal is set to soar over the next decade, driven by mass adoption of electric vehicles and increased storage capacity for renewable energy.

However, our forecasts show there is not enough battery-grade lithium available to meet this exponential demand. As a result, unconventional sources of the metal have been thrust into the limelight, but questions remain over how much of an impact they could have in meeting global needs.

In 2021, available lithium production reached 499 kt LCE. But unparalleled demand of 302 kt LCE from sales of EVs increased by +100%, moving the market into a deficit and contributing to the price
of lithium increasing by +437% from the start of this year. Leaders and policymakers have often failed to grasp the complicated challenges that come with producing more metal.

A lack of upstream investment has resulted in producers being caught short and ill-equipped to deal with surging raw material demand, leading to astronomical price increases.

At first, a range of unconventional lithium sources appears to offer promise in meeting this demand. However, our assessment is that these resources and novel recovery methods are unlikely to reach
commercial production in the timelines envisaged.

While offering attractive recovery rates, it remains to be seen whether direct lithium extraction can be scaled to the levels required to have any impact and unlock the low-grade resources within geothermal brines, oilfield brines and seawater. In our view, their current upside potential is limited and unlikely to be enough to address supply shortages.

Focus on increasing efficiency and recovery at traditional sources

Instead, the market must remain focused on increasing efficiency and recovery at traditional sources. Current recovery rates are poor – typically 60-70% and 30-50% for hard rock and brine,
respectively. Moreover, improving recycling infrastructure will create circularity in a market that prides itself on its green credentials.

Significant investments have been made in the recycling space by companies across the supply chain, including raw material producers such as Glencore, and automotive companies such as Mercedes-Benz, with some in the market calling for further integration, but there is more work to be done.

Ultimately, the dream of mass adoption of EVs may not be possible over the next decade if metal shortages persist and costs remain high. Governments and industry should work together in the
long-term to manage these pressures by investing in the efficiency of traditional sources, improving recycling infrastructure and creating a regulatory environment that enables innovation, not hinders

Otherwise, the EV and renewables markets will suffer, leaving climate goals at risk of remaining a far-flung ambition.

Jordan Roberts is Battery Raw Materials Analyst at Fastmarkets, the cross-commodity price reporting agency covering the energy transition, agriculture, forest products, metals and mining


Featured Articles

What's Apple’s Promise on Clean Energy and Water Investment?

Tech giant Apple is working to increase its sustainable output, supporting more than 18GW of clean energy use & billions of gallons in water savings

Data Centre Demand Putting Pressure on Energy Capabilities

Utilities in the US are predicting a tidal wave of demand for data centres thanks to the boom of AI, which, in turn, will dial up the need for electricity

Q&A with Hitachi Energy’s EVP & Head of North America

Anthony Allard, who heads up Hitachi Energy as Executive Vice President and Head of North America, shares why the grid is holding us back from clean energy

OMV Takes Strides in Energy Efficiency & Emissions Reduction


Q&A with RAIN Alliance President and CEO Aileen Ryan

Technology & AI

Who is Greg Joiner, the new Head of Shell Energy?

Oil & Gas