Lithium has a better claim than most commodities to be the “new oil.” It even comes with the latest geopolitical baggage.
Prices for the lithium-based chemicals that go into rechargeable batteries have soared this year as electric-vehicle sales have revved up, particularly in China. The average price for lithium carbonate, one of the two key compounds used by battery manufacturers, reached $14,386 a metric ton in August, according to Benchmark Minerals, up from $6,124 in December.
The jump follows a slump. Carbonate prices peaked above $17,000 in early 2018 before falling in a classic commodity boom-bust cycle. A wave of early investment flooded the market before electric vehicles really took off. Then came the pandemic, delaying the recovery.
Now a fresh cycle is under way, backed by flagship EV launches, huge battery-plant investments and bullish forecasts of lithium demand. In its base case, IHS Markit expects the size of the market to more than double by 2025 from the forecast 2021 level.
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