Benchmark Minerals with some home truths on future lithium supplies

5 July 2019

The managing director of Benchmark Minerals Intelligence, Simon Moores, was interviewed on Al Jazeera News recently about future lithium supply, and how that will impact on projected battery production for electric vehicles.

Benchmark are well known in the industry as specialist price reporting analysts for the lithium battery supply chain. We recently saw Simon come out fighting following the LME’s decision to use Fastmarkets to provide a reference contract price for lithium

Here, Simon provides a really good overview of why having an accurate price for lithium going forward is so critical for future investment in the sector.

YouTube video

Commenting on the question about if there’s enough lithium to meet the ever-increasing projected demand to supply electric vehicle batteries, he stated: “Lithium isn’t rare. The question is getting it out of the ground in economic quantities. At the moment the lithium industry has gone through a surge in exploration and development, but right now there’s not as much investment going into the lithium industry to go beyond 2025.”

He also discusses how investors holding back because they’re finding it hard to assess accurate prices going forward, because of the way lithium is traded as a speciality chemical. As lithium moves from a niche to a mainstream product, different ways of pricing lithium will have to be developed in order for the industry to advance.

A key point around recent price fluctuations in lithium is that the price for battery grade material has remained relatively high.

A looming lithium supply problem on the horizon

At the moment the, the demand for lithium will outstrip supply in the mid to late 2020s, yet it typically takes 8-10 years to develop a lithium mine from scratch. The investment into the next round of lithium mines and production simply isn’t happening, leaving us with a predicted massive shortfall.

Made in China

Another contributing factor is that dominance of China in the lithium space. China controls nearly half of global lithium production and 60% of battery production, this has to be seen as a security concern, especially in light of the recent rare earth elements (REE) threat during the Trump/China trade spat.

The US is currently looking very exposed in terms of security of lithium and finished battery production in the future. Benchmark estimates 1.9 terawatt hours of battery capacity will be in production by 2029, which when mapped to number of electric vehicles works out as 35 million. 67% of those batteries are projected to come from China, with about 8% in the US. Of that US figure, the majority (5 of the 8%) is due to Tesla.

The US appears to be starting the race a very long way behind China, will they have enough power in their Tesla to catch-up?

Find out more about Benchmark Mineral Intelligence  We also recommend signing up to their newsletter on their website if you’re interested in the battery metal sector.

Read more from MiningIR about lithium and battery metals, incluing our article on lithium supply and the electric vehicle value chainBloomberg’s electric vehicle projections going out to 2040, and the challenges in determining a true price for lithium.

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MiningIR hosts a variety of articles from a range of sources. Our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.
James Hyland, MiningIR