Lithium Boom: Tesla Drives the Change

The market landscape for lithium continues to develop promisingly despite some challenges. The U.S. and Canadian lithium sectors are preparing for a surge in 2024, supported by several construction projects aimed at strengthening domestic lithium supply. A report by S&P Global highlights that despite declining prices and activity, especially in Asia, long-term demand fundamentals remain strong, driven by the global transition to electric vehicles (EVs) and energy storage. While lithium prices saw a decline in 2023 after peaking in 2022, the long-term outlook for the EV market remains promising. According to the report, EV sales are expected to rise to 30.81 million units by 2027, with lithium prices stabilizing between $20,000 and $25,000 per metric ton. Despite the cyclical nature of the industry, current prices are sufficiently attractive to attract investments, particularly with regulatory support in countries like Canada. Industry experts such as Rahul Sen Sharma emphasize that setbacks in large-scale transformations are common, and the lithium market is no exception. Jean-François Béland from Ressources Québec compared the importance of lithium in the 21st century to that of coal and oil in previous centuries, underscoring the central role of lithium in the electrification of transportation. According to the International Energy Agency (IEA), lithium demand in the net-zero emissions scenario will increase tenfold and could reach 1,700 kilotons (kt). Developments in battery storage further support the market, with lithium demand for storage projected to increase tenfold by 2050. Alternative technologies such as sodium-ion and vanadium flow batteries could slightly influence lithium demand, but the metal's role in battery production remains dominant. Solid-state batteries could also create new demand for lithium metal by 2040. On the supply side, lithium production has increased significantly, with current global production at 190 kt, mainly from Australia and Latin American countries like Chile and Argentina. Global supply is expected to reach 450 kt by 2030, but further investments will be necessary to meet future demands and particularly accomplish climate goals. Benchmark Mineral Intelligence forecasts that demand for lithium-ion batteries will almost quadruple by 2030, reaching 3.9 terawatt-hours. The company expects a lithium surplus by 2029; however, the supply of environmentally friendly and socially responsible lithium is currently insufficient to meet the demand. Sustainable sourcing of lithium is not enough to satisfy the growing demand. By 2026, only 45% of lithium demand is expected to be met by recycled or sustainably sourced lithium, which could drop to 35% by 2030. In this light, direct lithium extraction (DLE) is gaining importance as a more efficient and sustainable alternative. According to BloombergNEF, DLE is expected to contribute significantly to lithium supply by 2030, potentially surpassing traditional evaporation methods, provided it is commercially successful. Lithium can be extracted from hard rock such as spodumene and lepidolite, as well as from brine. The main challenge of the evaporation method is its slow processing, which can take up to 18 months. DLE, by contrast, can reduce this period to two weeks, utilizing land and water more efficiently. Despite the price decline in lithium, investments in DLE continue as it enables a faster and more sustainable extraction from brines. Benchmark predicts that DLE will account for 14% of global lithium supply by 2035, particularly from brines, geothermal, and oil fields. However, DLE faces challenges such as high costs, scalability issues, and inflation, which have increased project expenditures. DLE offers higher recovery rates (80-90%) compared to traditional evaporation methods (20-50%). Major oil companies like Exxon are investing in DLE due to its similarity to oil extraction. Despite its potential, DLE alone will not be able to solve the structural deficits in the lithium market in the short term.