There is growing concern about whether there is enough lithium to keep up with rising demand that has been mostly driven by the rapid growth of the electric vehicle market.
Moody’s expects that a shortfall in supplies of lithium, as well as other metals used in batteries, is likely to slow down the production of batteries for electric vehicles. This pressure is increasing just as the demand for electric vehicles is on the rise.
Most of the world’s supply of lithium is concentrated underground in three South American countries: the “lithium triangle” of Chile, Argentina and Bolivia. Chile alone has more lithium than any other country in the world—an estimated 7.5 million metric tons.
Until recently, access to those rich deposits has been difficult. Argentina and Bolivia have been considered unpredictable countries with policies unfriendly to business and investment. And Chile has historically kept strict control over its lithium output: current Chilean law prohibits lithium production above 80,000 metric tons.
Demand for the metal is predicted to grow by 600,000 to 800,000 tons over the next 10 years. Chilean lithium mining giant SQM anticipates that the global lithium industry will need $10 to $12 billion of investment over the next decade to meet surging demand brought about by the electric vehicle boom.
Chile may be loosening its control over its metal deposits in response to global demand. The country’s new president, Sebastian Piñera, was sworn in earlier this year on a pro-economic growth mandate that included cutting mining restrictions. In response, mining firms from around the world are ramping up their environmental research and are moving to rapidly acquire mining assets in the country. For example, Chile recently granted a lithium production and export license to MSB, a joint venture owned by Chilean and international lithium companies. For years before, SQM had a monopoly on lithium mining in the country—which now seems to be over.
Electric vehicle manufacturers are also responding to the anticipated shortage in lithium. GM and Honda are teaming up to develop battery technology that would leapfrog today’s lithium-ion batteries. As well, several electric vehicle manufacturers are reported to be developing solid-state options, including Hyundai, Nissan and BMW.
Battery technology is considered one of the deciding factors for success in the electric vehicle market. With electric car production anticipated to increase more than thirty fold by 2030, the demand for lithium is only going to grow—and South America’s “lithium triangle” nations stand to benefit from supplying the metal to a demanding world.
Read more about developments in battery technology at Lithium Batteries and the Destructive Dendrite Debacle.