The only way is up for lithium demand. Electric vehicle (EV) demand will continue to drive the lithium market forward: EV penetration will reach 15% in 2025, and we expect to see it rise to around 35% by 2030. Add to that mix growing demand from applications such as energy storage systems (ESS), 5G devices, and Internet of Things (IoT) infrastructure.
The main takeaway here is that the EV market faces many decades of strong, compound growth. For any supply chain that relies on getting raw materials out of the ground, it is going to be a supreme challenge to keep up with year after year of high compound growth.
For example, 25% growth on 300,000 tonnes LCE, means an extra 75,000 LCE is needed the following year and the year after that an extra 93,750 tonnes, on top of the previous year’s 75,000 tonnes, is needed. And, in this example we are only talking 25% CAGR, but growth in the early years could be a lot faster.
Two factors determine the price of lithium, and first we need to consider abundance. There’s only as limited supply of this element, because it only makes up 0.0007 percent of the Earth’s crust. Chile produces most of the element for the world market, with Australia coming in second. In the US you can only find a single mine in the whole country. It doesn’t occur naturally in elemental form, either.
What these things all mean is that the demand for lithium-ion batteries will rise even further. The price of lithium carbonate is up by 47% from 2015 and the year 2017 will see increased sales of pure electric cars. Add the fact that Li-ion batteries are also used for mobile devices such as smartphones, tablets, laptops, and other wearable devices, and the demand for the commodity will surely increase as well.
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Supportive long-term lithium fundamentals
The energy storage revolution is generating high demand for lithium, with some analysts forecasting demand increases. Battery giants are scaling up lithium-ion production with mega factories and actively acquiring raw materials through long-term offtake agreements.
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