Two trends are emerging as the dynamics of global lithium supply continue to evolve. Firstly, amid intensifying competition for critical materials in the global battery metal value chain, top lithium producers seek to consolidate their position by investing in or acquiring lithium assets. Secondly, a wave of national lithium strategies sees increasing state involvement in lithium production, bringing about new risks and opportunities.
Australia, Chile, and China account for over 90% of global output, aligning with a high concentration of known reserves in those countries. However, high reserves do not necessarily translate into high production. Factors such as mining infrastructure, capital, and regulatory constraints play a crucial role. The gap between reserves and production highlights the importance of investment and policy in shaping a country’s position in the lithium market.
With strong demand for lithium battery applications, investments in high-quality lithium assets are rising. Lithium projects in Zimbabwe have attracted over $1 billion since 2021, mostly from Chinese firms. Although average lead times for mining projects take four to seven years, such supply expansion prevents prolonged market tightness and price volatility.
Other countries with these critical materials, such as Chile and Mexico, are increasing strategic control over their lithium resources in an attempt to boost economic growth. However, complex regulations could reduce the attractiveness of the lithium sector to foreign investments, delaying mining projects that risk missing out on the green energy boom.
Brine evaporation and hard rock mining are the primary industrial methods for lithium extraction. Brine evaporation has been linked to increased regional water stress, drought risks, and ecological degradation. Meanwhile, hard rock mining is more carbon-intensive and uses more water to process into lithium hydroxide. Considering the environmental and social risks, some states intervene by mandating a shift towards new production technologies with a smaller environmental footprint.
Countries adjusting national policies for lithium production might cause temporary supply bottlenecks. Until more sustainable and scalable extraction technologies are developed and widely adopted, lithium production will remain a resource-intensive and high-carbon-emission process.
In light of current challenges, alternatives to lithium mining should be considered to increase lithium supply and promote material security. Lithium recovery through innovative battery recycling is one such alternative. For an equivalent amount of lithium, recycling batteries uses only a fraction of energy compared to mining, costs lesser (depending on the method employed), and return critical materials to the battery value chain. It is expected that recycling could offset ~7% of lithium demand by 2030.
The imperative for miners, manufacturers, and recyclers to co-create a more sustainable and resilient lithium supply is now. A balanced mix of mined and recycled lithium will help stabilize supply and prices, and collaboration will help all players comply with environmental standards. Together, we can make lithium supply more secure and sustainable.
—-----
NEU Battery Materials is an LFP battery recycler that produces battery-grade lithium using our proprietary technology with lower cost and lower environmental impact. We supply recycled lithium globally and help different value chain players meet regulatory standards and embrace sustainability. Get in touch to learn more.