Lithium is the lightest solid metal on Earth, third in the table of chemical elements. It is used in rechargeable batteries to store energy and for the operation of wireless electrical and electronic devices, such as smartphones and electric cars.
It is increasingly in demand as a raw material for the digital and ecological transition to a fossil-free society, and the crucial role of lithium-ion batteries, primary industrial application, has been recognised with the 2019 Nobel Prize in Chemistry, to researchers John B Goodenough, M. Stanley Whittingham and Akira Yoshino.
Automotive has overtaken electronics as the main consumer of lithium in 2015, and now accounts for around 30% of requirements. The battery of an electric car can hold approximately 8 kilograms of lithium, as well as various other metals and minerals.
Where it is located
Lithium can be obtained from brine deposits in ponds or salt lakes, through an evaporation process, or from rocky ores such as spodumene or petalite, mined by inspecting and drilling mines.
90% of lithium extraction is concentrated among three countries (2021):
- Australia 52% (55,416 t)
- Chile 25% (26,000 t)
- China 13% (14,000 t)
- Argentina 6% (5,987 t)
The global reserves amount to 22 million tonnes (Mt) (2021).
Chile holds 9.2 Mt, Australia 5.7 Mt and Argentina 2.2 Mt.
Global lithium mining exceeded the 100,000 tonne mark for the first time in history in 2021 (105,984 t), four times more than in 2010. 74% of all this lithium ended up in electric batteries, in 2010 it was 23%.
Automotive and energy policies have driven lithium prices up by 550% in a few months between 2021 and 2022. Lithium hydroxide, from $14,500/t on average, reached $65,000 in March 2022 (lithium carbonate $75,000). One year later (February 2023) it was trading at around $79,000/t on the Metal Exchange in London.
China holds 80% of the world's lithium refining capacity for batteries and has acquired resources and reserves worth $5.6 billion in Chile, Canada and Australia over the past decade. In 2021, Chinese companies alone bought 6.4 Mt of lithium, almost as much as all companies in all of 2020 (6.8 Mt).
Production of lithium carbonate (Lce, refined lithium) was 0.54 Mt in 2021 (+32%) and demand will increase year on year by 25%, to 3.3 Mt in 2030 (McKinsey). With the current production capacity, however, an estimated 2.7 Mt can be reached, so new sources of extraction will have to be found.
If the sustainable development goals set by the Paris Agreements are met, total lithium demand in 2040 could increase by up to 51 times compared to 2020 (IEA) and up to 43 times (859,000 tonnes) specifically for the automotive industry. By then, 90% of all lithium would be used for clean technologies, including electronic devices, household batteries and other means of transport. The world will need to produce 2 billion electric cars in the Net Zero 2050 scenario, available reserves currently cover just under 2.5 billion batteries.
In 2022, the price of lithium-ion batteries increased (+7%) for the first time since 2010. The use of innovative formulas such as lithium-iron-phosphate is 20% cheaper, but the cost effect along the supply chain and the pressure on raw materials has caused a +27% increase on the battery pack, whose average price today is $151/kWh, compared to the previous $138/kWh.
- The incidence of cells on the total battery price is 83%, thanks to technological developments and improved design, which have shifted the traditional 70-30 ratio. Rising raw material costs could wipe out the benefits of progress that has reduced the price of batteries over the past decade
- The concentration of supply chains on individual countries such as China could delay the energy transition or make it more expensive, but the excessive diversification of technological options would risk blocking the benefits of trade
- Lithium mining has environmental, water and atmospheric impacts. In the case of salt ponds, consumption is estimated at 1.8 million litres of water for one tonne of lithium, while mining lithium implies an average emission of 9t of CO₂ per t of Lce produced.
- New mining and refining capacities should stop the price rise in 2024 and favour a drop below $100/kWh in 2026
- Some countries and researchers are studying unconventional approaches to extract lithium from geothermal water, oil brines, lithium clays and even from seawater.
- Recycling is another possibility, projected at 6% of production in 2030 (McKinsey)
“The fast penetration of the electric car, in an increasingly diversified ‘green’ mobility, will be the real needle of the scales for considering lithium as the ‘new oil’ in the ecological transition, if this will be effective,” explains Riccardo Ruffo, Professor of Physical Chemistry of Materials at Bicocca University of Milan. “The real question revolves around mining capacity, which many analysts believe is misaligned with growing needs: it takes four to five years to build a gigafactory, and 15 to 20 years for a mining plant.”
“The technology has helped reduce the price of batteries, which used to be $1,000/kWh. The EU has set a development target of $70-80/kWh, but the economies of scale in this supply chain make it worthwhile to build only large factories. Therefore, huge investments are needed and the supply chain is in the hands of multinational processors and gigafactories. With demand now exceeding supply, the drop in costs seems to have reached the bottom of the barrel.”
“There are three possibilities to reduce the pressure on this resource, through research: first, to develop lithium metal batteries (which perform better but are unstable) to improve the ratio between the amount of raw material used and the need for energy; second, to turn to chemicals other than lithium, such as sodium, magnesium or aluminium. In the future, we will not have the same rechargeable battery technology for every application, and sodium appears to be a good candidate where size or energy density is not a primary requirement, such as energy storage for power grids or data backup, but not for automotive (sodium has a 70-80% yield compared to lithium). Third is recycling, which the European Union supports with project funding and urges with stringent regulations.”