More demand, less supply. It’s in the books. Some analysts predict lithium shortages could occur as early as 2025. Others, however, predict a longer duration of the crisis driven by increased demand compared to the reserves available so far. Lithium is a crucial component of electric vehicle batteries, for which demand is increasing as an important part of plans to combat climate change.
In any case, although it was not highly expected that lithium prices would remain at the level of $80,000 per ton recorded last November in the Chinese market, the gradual collapse of the prices of this essential mineral for the energy transition surprised to analysts, according to the information platform BNamericas. Lithium was trading at $23,000 per ton on September 28, a drop of more than 70% in less than a year. The relatively stagnant Chinese economy and falling sales of electric vehicles, which are also interrelated, are cited as causes of the price decline.
The weight of China and Latin America
China leads the production of batteries for electric vehicles, being responsible for more than half of the global processing and refining capacity of this mineral, which gives it a disproportionate influence on the price. But Latin America also plays an important role. The fall in prices is fundamentally explained by an increase in supply driven by greater brine production in China. According to the Geological Survey of Brazil”Chile, Australia, Argentina and China together hold around 95% of the world’s currently known lithium reserves. In addition to China and the US, lithium deposits are found in of brine in Bolivia, Chile and Argentina. Lithium pegmatites are found in Australia, Austria, Brazil, Canada, China, Congo, Czech Republic, Finland, Germany, Mali, Namibia, Peru, Portugal, Serbia, Spain, United States and Zimbabwe”.
There are also analysts who point to the start of operations of Sigma Lithium’s Grota do Cirilo rock project in Brazil. According to the news website. Brazil Minerals, “Sigma Lithium Resources Corporation has started earthworks at the Grota do Cirilo hard rock lithium project in Minas Gerais.” Expectations of “more production, in the short and medium term, in Argentina, Brazil and Africa” also influence the BNAméricas analysis.
Some analysts, however, understand that the events in China are not the main factors in the collapse of prices, because China “is imposing itself in all global electric vehicle markets, even in Europe. Furthermore, being the main manufacturer of batteries in the world, a lower “The price is convenient to make production cheaper,” according to the president of the consulting firm ESK Market IntelligenceJorge Alee, quoted by BNamericas.
More than half of the world’s lithium, a metal used in batteries for electric vehicles, is found in Latin America, in the Chilean triangle (on April 21, Gabriel Boric, president of the country with the largest reserves in the world, announced plans to create a production company state), Argentina and Bolivia, which concentrates around sixty percent of the known reserves. Recently, delegations from the United States and the European Union (the latter, at the highest level, with Ursula Von Der Leyen) traveled to the region, in part to secure the resources that will be necessary in the energy transition and diversify European strategic supplies. , moving away from China.
Last year, the Financial Review stated that “few people are better positioned for the electric vehicle revolution than billionaire Julio Ponce Lerou”. He has been retired for years, but this former son-in-law of the late dictator Augusto Pinochet is still known in Chile as “the king of lithium”. And Ponce has never been richer: the group of shareholders he leads “has seen their 25% stake in SQM, the world’s second largest lithium miner, quintuple in the last seven years” with record profits, increasing the value of their stake. for five billion US dollars.
However, in the land of Uncle Sam…
John Goodenough, winner of the 2019 Nobel Prize in Chemistry for his work developing the lithium-ion battery that transformed technology with rechargeable energy for devices ranging from mobile phones and computers to electric cars, has died at the age of one hundred. Without seeing the vast “New lithium deposit in a volcanic crater along the Nevada-Oregon border”a discovery that awaits final confirmation, but that has at least one company, according to the Washington Post, saying that it hopes to begin extracting this source in 2026. However, “American policymakers have been nervous, both because lithium is scarce and because the United States does not appear to have large reserves of its own.” The large known reserves are not found in North America, but in Chile, Bolivia, Argentina, China and Australia. If this finding is validatedsays the newspaper of the North American federal capital, “US investment in electric vehicles will no longer be so tied to national security concerns.”
It’s not enough to curb demand that lithium-ion batteries, found in many popular consumer products, are once again under scrutiny in the US, following a massive fire this year in the Bronx, New York. , which are believed to have been caused by the battery that powers an electric scooter. In 2022, according to the cnnNew York City firefighters “responded to more than 200 electric scooter and bicycle fires, resulting in six deaths.”
The discovery of almost six million tons makes India the seventh largest lithium resource in the world. The Geological Survey of India (GSI) “has for the first time established the availability of inferred lithium resources of 5.9 million tonnes in the Salal-Haimana area of Reasi in the Union Territory of Jammu and Kashmir”, reported the Geological Survey of India. (GSI) said in February. Indian Times.
It should also be noted that the demand for lithium is very large. From time to time, there is news of significant lithium reserves in Afghanistan, and the Taliban are already selling these mineral rights, mainly to China, reveals the Washington Post. However, Afghanistan is not exactly the most favorable place for trade and mining, for obvious reasons. But the example “illustrates how powerful the elasticity of supply is.”
Where anything goes… lithium is worth a lot
In September, the SaharaReporters told us that, in Kakanfu, Kwara State, Nigeria, Hundreds of illegal miners, under the influence of hard drugs, with weapons and explosives, were digging underground in search of lithium on a large scale, without any supervision and with few security measures. Here, security agents and local authorities accept bribes to turn a blind eye – and also to help – this illegal activity, according to sources and evidence found by the website He Informant 247. Deaths and injuries are common, and mining activities expose local communities to varying levels of toxic chemicals and severe environmental degradation. The children left school to join the activity. This journalistic investigation, led by the site’s director, Salihu Ayatullahi, also “located and revealed one of the largest buyers and sponsors of illegally mined ore: a powerful Chinese-owned company that, over the years” has been accused of tax evasion.
Europe wants to reduce dependence on China
Europe risks becoming as dependent on China for batteries and fuel cells as it was on Russia for energy before Moscow’s invasion of Ukraine, according to a European Union report, according to the document that was the base for the October 5 summit in Granada, Spain. , on Europe’s economic and energy security. The document, prepared by the Spanish presidency of the European Union, states that due to the intermittent nature of renewable energy sources such as solar or wind, Europe will need ways to store energy to achieve the goal of net zero carbon dioxide emissions. . until 2050. This goal could trigger demand “for lithium-ion batteries, fuel cells and electrolyzers, which is expected to multiply between 10 and 30 times in the coming years,” the report states.
Source: TSF
