Tomorrow Investor

Experts Say Battle for Lithium to Run Well Into 2030


Industry watchers warn that the increasing demand for lithium may soon overwhelm current supplies. Within this year alone, major automotive companies made investments in several lithium startups to ensure that they will have a constant supply of the metal for use in the production of electric vehicle (EV) batteries. Given the current demand for cleaner, more environmentally-sound modes of transportation, this is rapidly becoming a challenge for all concerned.

According to Kent Masters, chief executive officer of the world’s biggest publicly-traded lithium company Albemarle, any attempts to unlock additional sources of lithium may be in vain as he sees the market gridlock lasting for the next seven or eight years.

Masters’ forecast is a timely one: the price of pure lithium and lithium compounds have gone up eightfold over the past two years, peaking at $70,000 per ton in April of this year. But while the price of the metal has stabilized in recent weeks, even lithium producers and users are feeling the pinch of a potential recession that has already affected the prices of other commodities.

As a result of the increased demand for lithium, Albemarle has revised its earnings forecast for this year thrice. The company also expects to increase its production and improve its cash flow much quicker than expected.

Pessimism from Different Perspectives

But not everyone appears to be optimistic about the increased interest in lithium or the rapid growth of the lithium mining and production sectors. Analysts at Goldman Sachs, in particular, have pointed out that the price of the metal is bound to drop now that several advances have been made concerning extracting lithium more efficiently and less expensively from brine.

For his part, Albemarle’s president for lithium Eric Norris remarked that hopes of an increased supply might be dashed as many producers remain unable to keep up with a constantly increasing demand. Indeed, lithium companies are known to deliver around 25% less than the amount normally promised to clients in any given year. For the most part, this is due to both unexpected delays and malfunctioning technology.

Likewise, a July 2022 report from the International Energy Agency (IEA) pointed out that the lithium sector needs to open 60 new mines by 2030 to meet each of the world’s governments’ goals towards decarbonization, green transport, and sustained reliance on renewable energy sources. In which case, for automakers, battery producers, and lithium companies alike, the race is on.

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