It’s a mineral that the world seriously needs at a time when the world needs to drastically cut down greenhouse gas emissions for the sake of the environment. Everyone wants a piece of it, especially companies specializing in the production of rechargeable batteries for electric vehicles and other appliances.
Lithium, a silvery white metal considered the third-lightest element in the world, has become a serious commodity over the past several years. But despite the escalating demand for it, underinvestment in potential alternative sources has led to a shortage that is seriously impacting the clean power sector today. The ongoing pandemic has seriously impeded rapid replenishment of stocks, and so has the ongoing conflict in the Balkans which has also affected the supply of other minerals required in battery production like cobalt, graphite, and nickel.
In recent months, however, the price of lithium has skyrocketed by nearly 500% thanks to a shortage generated by a growing demand for the mineral. It has been so bad, that China, producer of 80% of all lithium-ion batteries used the world over, has cornered local suppliers as well as manufacturers in a bid to decrease prices.
And the bad news just keeps coming, as analysts are predicting the possibility of a perpetual deficit, as well as an extreme price rally thanks to a doubled price forecast for the remainder of the year.
Why is Lithium So Important?
Given the rapid increase in investments into the electric vehicle (EV) sector which have, in turn, pumped up the demand for lithium, the consequences of not immediately replenishing the global supply will have serious consequences.
For example, at today’s market rates, the cost of producing a lithium-ion battery for an electric car could tack on an additional $1,000 to its tag price – something that will keep vehicles running on clean energy well away from the reach of most consumers.In fact, the ongoing lithium crisis may reverse the recent trend of decreasing prices on EVs and it may also set back global emission targets by at least five years.
What Needs to be Done?
Right now, over half of the world’s lithium deposits are in South America, specifically in Argentina, Bolivia, and Chile. In which case, the most obvious solution is to seek out new deposits of the mineral. China, in particular, announced that a large deposit of spodumene – the mineral from which lithium is derived – was discovered in Tibet, one that may hold over a million tons of lithium oxide.
However, because of environmental and societal concerns from local communities, it may take a considerable amount of time before China can start digging in.
Also, while it’s relatively easy to find lithium, lithium mining firms are unable to get ample investment to work with. Likewise, while EV and battery plants can be built in two years or less, building a proper lithium processing facility may take up to a decade.
As challenging and daunting as the situation may seem, companies continue to seek ways to address the issue, including the recycling of lithium-ion batteries for raw materials to upcycle.