Lithium ‘charges on’… but these 4 challenges lie ahead for the battery metal

Lithium is widely found on earth, but to date, the market is still learning to grow and many challenges lie ahead.

Rising prices

Lithium and other battery metals and minerals are the bottleneck we must solve for the energy transition to go global.

Before gigafactories existed, the raw materials in batteries represented only 40% of costs.

Fast forward to today, these costs have pretty much doubled.

📊 Benchmark Mineral Intelligence

Concentration

Supply is highly concentrated in a handful of countries, and a variety of sources.

📊 FOX Business

Lofty projections

Bloomberg forecasted massive growth in both lithium mining & refining capacity for 2025, especially in China. Compare these figures with total production in 2020 (82,500 metric tons*) and 2021 (100,000 metric tons*), as noted by the USGS earlier this year, which converted into lithium carbonate equivalent equals 439kt and 532kt.

*metric tons of contained lithium, not LCE

📊 BloombergNEF (units in LCE)

Pipeline looks healthy yet…

The pipeline of lithium projects is stronger in Canada, Argentina, the US, Australia, China and Chile.

📊 Fitch Solutions

However, moving a project to production has a plethora of challenges, and in any case, most of these are years away from production.

Goldman Sachs and Credit Suisse have recently reported bearish stances, while JP Morgan sees both sides, and UBS sees strong demand for the metals fueling the energy transition (noted, without mentioning lithium specifically).

If you missed it, here’s a thread with the breakdown.

1/ Here we go again.$GS and $CS announced bearish views on lithium.

Stocks in the sector plummeted.

I spent hours reading news and reports to give you a well-rounded summary of what investors and experts say.

(and my thoughts at the end)

Buckle up:
— Paola Rojas 🐝 (@paola_rojas) November 18, 2022

That’s a wrap!

Stay tuned as I’ll be writing more about demand in the coming days.

For exposure, you may consider:

Lithium is used mostly for batteries for mobile phones, laptops, digital cameras and electric vehicles. Can be made into alloys with aluminium and magnesium, improving strength and making them lighter. A magnesium-lithium alloy is used for armour plating, while aluminium-lithium alloys are used in aircraft, bicycle frames and high-speed trains. Miners produce either carbonate or hydroxide which is then sold to refineries.

Keen to dig deeper? Here are some resources for you:

Want to see what I’ve been saying about it? From the serious to the funny and everything in between.

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Here’s the metal in the periodic table:

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