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Lithium production needs investment to keep pace with battery demand

Report says $42b will need to be poured into industry over next decade

Growing demand for lithium for batteries means the sector will need $42 billion of investment to meet the anticipated level of orders by the end of the decade, according to a report.

Lithium is used in batteries that power smartphones and laptops, but there is also rising use in electric vehicles which is putting additional pressure on supplies.

The report, Benchmark Mineral Intelligence, predicts that demand will reach 2.4 million tons of lithium carbonate equivalent by 2030, roughly four times the 600,000 tons of lithium forecast to be produced this year.

The lithium industry, it states, will need to receive about $7 billion of investment each year from now until 2028 to be able to deliver on that expected level of need by the end of the decade.

The situation is exacerbated by moves from Europe and North America to become less reliant on well-established lithium producing countries such as China and develop home-grown facilities where possible. This could significantly drive up the cost of lithium compared with getting the refined product from existing sources, according to Benchmark Mineral Intelligence.

Another report published by management consultants McKinsey last month came up with similar predictions.

It suggested that lithium orders could rise from half a million metric tons of lithium carbonate equivalent in 2021 to some three million to four million tons in 2030.

However, McKinsey believes the lithium industry will be able to provide enough of the product to supply the lithium-ion battery industry thanks to the introduction of new techniques such as direct lithium extraction (DLE) and direct lithium to product (DLP), while conventional lithium production is projected to expand by over 300 percent between 2021 and 2030.

Last week, lithium processing company Green Lithium announced it is aiming to build and operate a large-scale lithium refinery in the UK, making it one of the first centralised commercial lithium refineries in Europe. The new facility is intended to supply European electric vehicle and battery manufacturers with different battery-grade lithium products.

Green Lithium said it has signed a deal with Trafigura, a large global commodities trading company, under which it will supply the refinery with lithium feedstock. Trafigura also said it plans to invest in Green Lithium's development phase funding round.

The company said it intends to use process technologies that enable clean, low-carbon processing of high volumes of lithium ore in order to support net-zero targets.

Last year, car manufacturers including Tesla, GM, and Ford revealed they were investing in battery recycling to cut costs and help them deal with the risks involved in an erratic international supply chain.

Tesla's Elon Musk said at a shareholder meeting in October last year: "It pays to do recycling of batteries... You can either get your lithium and your nickel and various constituents from rocks, or from batteries. It's much better to get them from batteries."

Another UK organization, Cornish Lithium, is aiming to produce lithium but by extracting it from brine. The company said it wants to extract lithium from geothermal waters, and also power the extraction process with geothermal energy from the same source, as we previously reported.

According to McKinsey, investment is needed at each level of the lithium value chain in order to ensure supplies can keep pace with demand.

This means funding new technologies, such as DLE, exploring for new sources of lithium outside current lithium producing countries, and manufacturers giving long range warning of how much lithium they are likely to require. ®

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