Can the World Produce Enough Lithium?

There is a new gold rush in the mountains of Nevada and Chile and elsewhere. This time it is a white powdery substance called lithium that is creating a politically and environmentally fraught situation as EV battery-makers rush to lock in supplies for this once obscure element.

The supply of lithium is on the increase and is expected to about triple this decade, but the production of EVs increased by 55% alone last year, which probably means demand will outstrip availability real soon. This would really put the brakes on the hemp-trouser-wearing brigade’s desire to see us all in soulless EVs.

The crunch in supply could come as early as 2025 with shortage of both lithium and cobalt predicted. Unless there is a major increase in investment in production, according to The International Energy Agency forecast, supply bottlenecks that will potentially throttle the life out of the surge of EV production.

Companies such as General Motors and BYD Auto are ignoring the middle man and taking a direct stake in the miners who are getting the modern era’s white gold out of the ground, a rare step for an industry that has been obsessed with outsourcing for the past few decades. Others are focussing a little more downstream on the refining process or more commonly, the technology to recycle from dead batteries.

Running out of affordable lithium could be described as a major obstacle to the government’s plans to force us all into EVs in the near future. If we are to ramp up EV manufacturing in the next 10 years to millions of units a year, then the volume of the supply and of course the really bad environmental impact the mining of it leads to must be dealt with.

Paul Jacobsen, GM’s Chief Financial Officer, thinks that “(they) are already at risk of not being able to get enough.” He firmly believes that they have “got to have partnerships with people who can get (them) the lithium in the form and volume that (they) need.”

Others are not standing idly by either. Ford has already signed contracts covering the next 11 years and the likes of VW and Honda are looking at recycling the waste of others to reduce their dependency on freshly mined ore.

On top of this, it would seem that lithium has emerged as yet another strategic resource and has pitted the likes of Washington and Beijing against each other, straining US-China relationships. But the likes of Canada have ordered Chinese companies to sell lithium mining assets in that country.

At home, the US has problems. The very Nevada mine that the Biden administration is heralding as a major component of their Clean Energy Agenda is the subject of a federal court case brought by Conservationists and American Indians who claim it may poison water supplies or destroy nesting grounds for birds like the sage grouse.

Car makers are spending vast amounts of money to secure the future supply of this new age white-gold but traditional miners are a little more conservative and may wait until they are sure that the car industry will not switch to an alternative battery utilising a different technology. Even if they go all-out now it still takes a long while to even get permission to open a mine let alone open one.