Tomorrow Investor

Lack of Lithium May Set Back the Shift to EVs


An Australian lithium producer has sounded the alarm regarding the impact of an ongoing shortfall in the supply of the material on the production of electric vehicles (EVs).

In light of the growing demand for EVs across the globe, Lake Resources chair Stuart Crow stated that the inability of both western governments and vehicle manufacturers to source reliable lithium supplies outside of China has rendered the nascent EV manufacturing sector unsustainable.

Crow believes that there won’t be enough lithium anywhere in the world to supply the increasing demand and that battery makers will not have the means to produce a sufficiency in the coming years.

While western governments and companies have tried to weaken China’s iron grip on sources of raw lithium, their efforts have not been fruitful. Likewise, the ongoing conflict between Russia and Ukraine and economic sanctions imposed against the former have seriously hampered supply chains within the region and disrupted the energy supply of various nations.

The Scramble for Alternative Sources

Currently, China supplies 70% – 80% of the lithium needed to produce EV-specific lithium-ion (LiOn) batteries. However, the price demanded by the Chinese government for raw lithium prompted mineral-rich / mining-centric countries like Australia and South Africa to seek alternative sources, particularly within their territories.

For its part, Crow’s Lake Resources recently signed a memorandum of understanding with Japanese import-export company Hanwa to produce 25,000 tons of lithium carbonate annually. The company also signed an agreement with leading US carmaker Ford to supply lithium for its EV production arm. 

The material will be sourced from Lake Resources’ overseas facility in Argentina, which will extract lithium from brine using state-of-the-art refining technology developed by a US firm backed by tech mogul Bill Gates.

As a result, the company’s share price doubled in March of this year. Its market capitalization currently stands at US$1.9 billion.

Analysts Doubtful

Despite this development, financial analysts remain pessimistic regarding the ability of nations and private companies to hit their lithium production targets anytime soon.

For his part, mining analyst Daniel Morgan from the Australian foundation investment firm Barrenjoey expressed his opinion that it would be impossible for the EV production sector to meet the targets set by both manufacturers and governments concerning clean energy in transportation.

Indeed, market watchers predict that the global lithium deficit for this year will range between 50,000 to 400,000 tons, completely throwing off the projected target of 450,000 tons per year.

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