On the back of rising global EV demand, lithium prices soared in 2021; this long-term above-average price tag stayed elevated throughout 2022 as demand investors paid more and more attention to the global development of the EV secular trend.
In particular, there was a strong demand from Chinese battery producers which focus on the production of lithium-iron-phosphate (LFP) batteries, which use lithium carbonate. LFP batteries are used by cars with shorter-range options, low-cost EVs. A 2nd category of LFP batteries incorporate a higher level of nickel cathode type, i.e., nickel-cobalt-manganese (NCM), batteries which offer a higher density, are more expensive, and have a higher travel range. The essential difference lies in the fact that these batteries require lithium hydroxide instead of carbonate.
One can expect that the lithium price will stay elevated (between USD65k to USD 75k a tonne) well into 2025 as there is no new supply chain going online in the near future. On the contrary, as demand stays high in Europe and in the United States of America, will increase even with a potential recession.
According to the US Geological Survey, it is estimated that the global reserve of Lithium stands at 22 billion MT, of which 9,2 billion MT are located in Chile, and about 5.7 billion MT in Australia. The remaining part is spread out across the globe, but with Argentina, Brazil, and China holding major smaller deposits. Australia’s lithium comes from primarily hard-rock deposits, while Chile’s comes from lithium brines. Chile is part of the Lithium Triangle alongside Argentina and Bolivia, although those two countries have a lower annual output.
A wide variety of analysts are bullish on the market as electric vehicles continue to prosper, and lithium demand from that segment alone is expected to continue to rise. These experts believe the lithium story’s strength will continue over the next decades as producers struggle to meet rapidly growing demand. However, unlike many commodities, investors cannot physically hold lithium due to its dangerous properties. Those looking to get into the lithium market opportunity, will most likely consider key players such as Albemarle, Sigma, SQM, Tearlach, Tyranna, Latin Resources, and Cygnus Gold.