In a bid to increase investments into the growing lithium processing sector, Tesla CEO Elon Musk called upon entrepreneurs to consider a foray into the business.
In an earnings call last July 20th, Musk declared that those entering the business have nothing to lose, even referring to the lithium sector as a most lucrative industry.
Musk’s call for investments into lithium production is a timely one. The currently limited availability of the material has made its price soar considerably over the past year. In China alone, the price of refined lithium carbonate rose by nearly 450% in 2021.
However, this isn’t because the raw material is scarce; but more of the limited capacity to deliver pure battery-grade lithium due to the lack of processing facilities.
A Necessary Caveat
In fact, while lithium mining is quite easy, the refining process poses a number of challenges, particularly where investment and infrastructure are concerned.
Indeed, Musk himself admits that refining lithium requires a great deal of machinery and operations tend to be difficult to scale.
As a result, both investors and producers balk at the prospect of spending on digging up new mines or building additional refineries.
For one thing, people are still recovering from the tidal wave of investments that resulted in a serious drop in the price of the metal two years ago. For another, numerous suppliers needed to decrease their output or put other initiatives on hold.
The resulting price cut also caused a number of operations to shut down.
Who’s in the Lead?
China presently accounts for over 50% of the total global output for lithium processing with holdings in some of the world’s largest lithium deposits.
Tianqi Lithium Corporation, in particular, made the first delivery from its newest facility in Australia last May.
However, lithium production firms in other countries are also stepping up their game.
Robyn Denholm, Tesla’s chair of the board, declared that Australian producers ought to target the expansion of their manufacturing capacity as well as the construction of new refining facilities to meet the increased demand for electric vehicle batteries.
Tesla, in particular, is augmenting its own lithium production capabilities. The EV company is building a cathode facility on Texas, along with other lithium refining initiatives in Argentina and Chile.
Tesla executives also noted that the prices for other materials used in EV production are going down, thus raising the possibility that the industry will reap the benefits in the near future.