Monday, February 6, 2023

Large-scale industrial opportunities in Lithium production industry but limited medium-term supply

With the conversion to electric or hydrogen vehicles under greater scrutiny than ever, lithium is making its mark as a strategic raw material of vital importance. The first lithium mine is due to come open in France in 2027. Like copper and a number of other ores, production and demand for white metal depends largely on macroeconomic trends and global growth opportunities. However, although most metal prices have dropped since early summer, the price of lithium is holding up and is still high. This trend is especially noteworthy given that the client sectors, in particular the automobile industry, have very mixed short-term prospects. A key role, high demand and a supply that is not keeping paceLithium is a vital component for decarbonising the economy: the batteries used in electric vehicles are made mainly of white metal. This resource, which is difficult to replace, returned to the fore in the early 2000s due to the challenges involved in storing energy. Supply is currently too limited to meet demand and is under duress owing to a lack of investment. Western economies have paid little attention to their mining supplies for many years. In addition, the fact that the low-carbon mobility sector is backed by governments seems to protect lithium from the ups and downs of global growth. Lastly, worldwide demand should continue to rise in the medium and long term with the transition to low carbon.Highly-concentrated resources and production chain
Argentina, Bolivia, and Chile are responsible for 58% of the world’s resources – a much higher concentration than for other base metals. By way of comparison, 13 countries account for 75% of the world’s identified copper reserves. Furthermore, global lithium production is also very concentrated, dominated by the triumvirate of Australia, Chile and China, which accounted for 90% of global production in 2021. The value…

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