Report finds lithium industry will need $42 billion investment to meet demand

May 17, 2022

A recent report from Benchmark Mineral Intelligence found that if the world is to meet the demand for the crucial battery-making material an investment of as much as $42 billion will be needed for the global lithium industry by the end of the decade.

The data and market-intelligence provider found that the lithium sector will require $7 billion of investment each year from now until 2028. That would help it meet forecast demand of 2.2 Mt/a (2.4-million stpy) by 2030, which is four times higher than the 544 kt (600,000 st) that’s estimated to be produced in 2022.

North America and Europe are working to reduce their dependency on Chinese imports of lithium and other critical minerals. However, development of domestic supply chains could require around twice as much capital than relying on getting the refined product from the Asian powerhouse, Benchmark said.

China has enjoyed a stranglehold over the lithium supply chain, bolstered by economic clustering, a high level of expertise, and lower labor and energy costs.

“If you want lithium with as little ESG impact as possible, the solution may cost more outside China,” analyst Cameron Perks said in the report.
In the United States, the Biden administration has been pushing to accelerate production of key battery metals, with more than $3 billion in grants to help process elements including lithium. Meanwhile, Canada has also earmarked up to C$3.8 billion ($2.9 billion) in this year’s budget to build a domestic critical metals supply chain.

Bloomberg reported lithium, which is central to the clean-energy transition, has surged more than 400 percent in China over the past year, as supply struggles to keep pace with the electric-vehicle boom. Tesla. CEO Elon Musk has made a public appeal for more investment in lithium mining, and said that the car giant might consider mining or refining it directly after prices rose to “insane levels.”

The shortfall of raw materials to produce batteries is limiting the production of EVs, meaning While lithium’s major producers have large investments planned, those alone will not be sufficient and new mines are needed, the note added.

Automakers could step in and “they have more than one reason to do so,” according to Perks. “Unlike investors, they are not just looking for a return from profits generated by lithium. They are looking to secure supply for their batteries.”

 

 

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