Will there soon be a surplus of lithium? (The Economist – June 9, 2022)


Probably not, despite what some analysts think

Lithium is not as glamorous as gold or platinum. But it has quickly become one of the world’s most important metals. It is a key component in batteries, so the surge in demand for electric vehicles and other battery-powered technology has led to a corresponding increase in demand for the stuff.

As supply has failed to keep up, prices have soared. The spot price of lithium carbonate, a compound that can be converted into lithium, rose by 477% in 2021, and a further 77% this year. But more recently several banks have predicted that the bull market for lithium was over and that its price would soon crash. Are they right?

Goldman Sachs, a bank, estimates that in 2021 481,000 tonnes of lithium carbonate and other lithium sources were produced—falling short of demand by 51,000 tonnes. But in the coming years the bank expects supply to increase rapidly, as mining companies start a host of projects in anticipation of booming demand.

Much of that supply, analysts think, will come from China. It may start to take greater advantage of its copious deposits of lepidolite, a mineral that produces lower-grade lithium, and so currently accounts for only a tiny share of commercial supply.

For the rest of this article: https://www.economist.com/the-economist-explains/2022/06/09/will-there-soon-be-a-surplus-of-lithium