Lithium
Market insights by Abhijit Mhalsekar
Market Insights
Lithium can be sourced from either spodumene or brine. Spodumene, a hard rock mineral, is considered the richest source of lithium, with Australia having the highest number of spodumene reserves. Time duration to market from spodumene minerals is shorter compared to brine, allowing Australia to be one of the top producers of Lithium. Additional mineral resources are found in various other countries including Brazil, China, India, and the Democratic Republic of Congo.
Brine deposits (known as salars) are concentrated mainly in Latin America, including Chile and Argentina, and these countries contribute to the total global production of Lithium. Other brine deposits can be found in Bolivia, China, and the United States.


Mineral resources and brine deposits are extracted and converted using chemical processes into compounds such as the lithium hydroxide, lithium carbonate and lithium carbonate. Lead times from hard rock mining to production are 3-5 years, whereas it takes about 7 years or more to productionize lithium from brine operations. Lithium carbonate can be converted to lithium hydroxide with additional processes but this adds to the cost of production.

Brine deposits (known as salars) are concentrated mainly in Latin America, including Chile and Argentina, and these countries contribute to the total global production of Lithium. Other brine deposits can be found in Bolivia, China, and the United States.

Mineral resources and brine deposits are extracted and converted using chemical processes into compounds such as the lithium hydroxide, lithium carbonate and lithium carbonate. Lead times from hard rock mining to production are 3-5 years, whereas it takes about 7 years or more to productionize lithium from brine operations. Lithium carbonate can be converted to lithium hydroxide with additional processes but this adds to the cost of production.

The surge in demand has been intensified by the adoption of batteries by the automotive industry to meet the expectations set by the Paris Agreement. 
Many of the automotive majors have announced ambitious targets to decarbonize their supply chains, which are centered around reducing emissions from well-to-wheel (WTW). Even before the automotive industry stepped-in, lithium found its application in electronic portable devices (laptops and mobiles) and (power) tools. The ceramics and glass industries use mineral concentrates in their applications.
Increase in spot prices of lithium has been attributed to current consumption along with anticipated rise in demand for lithium due to increased demand for electric vehicles.

Demand for lithium is expected to be in excess of 400,000 tonnes which will lead to a deficit in the lithium supply starting from 2021. This deficit will only push the prices of lithium higher moving forward. According to the IEA the demand for lithium for the EV and storage sectors is predicted to be 164kt and 383kt under the stated policies scenario and the sustainable development scenario, respectively, by 2030.

Market analysts estimate EV sales (including BEV and PHEV) to be approximately 6 million units for 2021 which is nearly double the units sold in 2020. Tesla, the first automotive company to reach 1 trillion dollars in market capitalization, leads the sales in the EV market (Hertz recently placed an order for 100,000 units) followed by Volkswagen and GM. The highest number of EV sales were recorded in China (1.3 million) in the first half of 2021 followed by more developed markets such as the EU, the UK (1.17 million), the US and Canada.

MARCH, 16 / 2021
Abhijit Mhalsekar
ESG Research Analyst

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