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February
18
2022

Rising Lithium Prices Could Derail The EV Boom
AG Metal MIner

As the price of lithium has skyrocketed over 400% in the past year, the demand for lithium-ion batteries appears more intense than ever. Lithium has earned the ‘white petroleum’ label due to its dramatic need for supplies from the rise of battery giga-factories, electric vehicles, powerwalls and energy storage businesses. Battery makers including Tesla, Panasonic and LG Chem, have to budget for the rising cost of lithium.  Batteries that go into electric cars require lithium. More battery makers will need to expand production to keep up with demand from electric cars.

“The demand for lithium-ion batteries is higher than ever,” said Chris Berry, President and strategic metal consultant at House Mountain Partners.  “Lithium’s lightness helps it store a lot of energy which is very useful for electronics.”  As the price has jumped to nearly $50,000 per ton, some battery manufacturers have raised prices.

Despite microchip shortages and changing demand from customers, the clean energy revolution appears well underway. Volvo Cars committed to putting one million electrified cars on the road by 2025. In addition, 50% of its sales volume will come from fully electric vehicles. France plans to end sales of all gas and diesel cars by 2040. Whereas Germany has mandated that all new cars will go electric by 2030.

High grade lithium seems hard to find

The quest for EV manufacturers to get access to high-grade lithium appears challenging. The United States and other countries continue to look to disentangle their clean energy supply chains from China. China currently serves as the leading lithium producer. Thus, an urgency to look in safe geopolitically friendly lithium-rich countries such as Chile has become important.

The business of extracting lithium today in Chile features Albemarle, a U.S.-based company that also controls the largest lithium operations in Australia. The other player includes Sociedad Química y Minera de Chile (SQM), Chile’s largest lithium mining company. Chile’s Salar de Atacama, the largest salt flat in the country, has held the bulk of current exploration for lithium. The leading junior mining companies operating in the Chilean lithium mining market include Calgary based Lithium Chile and my company, Vancouver, BC-based Wealth Minerals.

Lithium Chile’s property portfolio consists of 68,800 hectares in Chile. Wealth Minerals’ lithium portfolio includes over 50,400 hectares in Chile. This includes the Atacama salar which has the world’s highest grade and largest producing lithium brine deposit.

Moving from Discovery to Production

The process of turning lithium into the chemicals that power batteries is not easy.  Refining lithium involves chemical processes that can cause water and soil pollution, without proper controls. It can take many years for a new lithium-mining operation to produce battery-grade materials.

While the production of the raw material, lithium remains essential to technology, it also impacts the environment.  With hard rock deposits and salar brines as the primary sources of lithium,  lithium processing through conventional tactics such as evaporation ponds has become inefficient. That process produces less than half of the lithium extracted.  Pollution, high-water use and land use changes serve as other challenges lithium miners face.  So, as EV makers source lithium, they should remain mindful that their production sources have committed to environmentally sustainable mining practices.

Organizations like Initiative for Responsible Mining Assurance and Responsible Minerals Initiative provide the tools and resources focused on minerals supply chain due diligence to produce a comprehensive standard. These organizations provide information to ensure that EV makers vehicles are truly ‘clean-energy’ vehicles.

Lithium miners as good corporate citizens

Lithium mining companies need to implement best environmental practices at all levels of their operations.  That includes building projects together with the communities near operations. Moreover, it also includes protecting nature and using the best available techniques and technologies to develop assets. The success of a lithium mining business directly ties to the success and stability of the company’s host communities. The miner must always focus on its reputation as a responsible partner in resource development.

Our collective future requires clean air and a pathway to an environmentally-sound planet. A ‘bet’ on clean energy through investments in renewable energy, represents a wager that will deliver a cleaner planet. One that will thrive for current and future generations.

By AG Metal MIner

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends, strategies, and trade policies that will impact how you source and/or trade metals and related metals services, MetalMiner provides unique insight, analysis, and tools for buyers, purchasing professionals, and everyone else for whom metals and their related markets matter.

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