World faces lithium shortage for EV batteries

A lithium battery pack and power connections in an electric vehicle (EV)

Lithium is in hot demand due to rapidly growing production of electric vehicles (EVs) that use lithium-ion batteries, but there is a global supply shortage of the metal, with western countries racing to develop new mines to compete with China.

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Lithium is currently produced from hard rock or brine mines, with Australia currently the world’s biggest supplier. The Serbian government last week cancelled licenses for a major lithium project owned by Anglo-Australian miner Rio Tinto Plc, which industry experts said is likely to prolong the supply shortage to mid-decade.

It currently takes at least five to seven years to build a lithium mine, and at the moment production cannot keep up with demand, it seems.

Total global lithium production, measured as lithium carbonate equivalent, was forecast in December at 485,000 tonnes in 2021, increasing to 615,000 tonnes in 2022 and 821,000 tonnes in 2023, according to the Department of Industry.

Credit Suisse analysts had more conservative forecasts, however, placing 2022 output at 588,000 tonnes, and 2023 at 736,000 tonnes. It forecast demand outpacing supply growth, with demand at 689,000 tonnes in 2022 and 902,000 tonnes in 2023, with about two-thirds of that for EV batteries.

Lithium carbonate prices have rocketed to record highs over the past year due to strong demand from Chinese battery makers.

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Global lithium producer Allkem said it expected pricing in the half-year to June to jump to around $20,000 a tonne at point of loading—up approximately 80 per cent from the half-year to December 2021.

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