Meeting the Raising Lithium Demand

Shift in Lithium Supply Chain

In the 1990s, the United States was the leading lithium producer, responsible for producing more than one-third of the global output in 1995. However, Chile later surpassed the U.S., experiencing a significant production surge in the Salar de Atacama, one of the world’s most abundant lithium brine reserves. Subsequently, Australia also witnessed a substantial increase in lithium production and currently contributes 47% of the world’s total output.

As for China, it ranks as the world’s third-largest lithium producer. The country has not only focused on developing its domestic mines but has also strategically invested around $5.6 billion in lithium assets in countries like Chile, Canada, and Australia over the past decade. Moreover, China now houses nearly 60% of the global lithium refining capacity for batteries, highlighting its dominant position in the lithium supply chain.

Largest Lithium Production Countries

The global lithium-ion battery market was valued at US$52 billion in 2022. This figure is expected to reach US$194 billion in 2030. Given the huge market potential in lithium production, Australia and Chile have stood out as the top producers of lithium. Together, they account for almost 77% of the total global production in 2022. China comes third, accounting for about 14.6% of the global production.

Australia, being the world’s foremost lithium producer, utilizes hard rock mines to extract lithium directly, primarily from the mineral spodumene. This method offers distinct advantages, as spodumene allows for more flexibility in processing, enabling the production of either lithium hydroxide or lithium carbonate. Moreover, hard rock mining provides faster processing and higher-quality output, given that spodumene generally contains higher concentrations of lithium compared to other sources. This approach has contributed significantly to Australia’s prominent position in the global lithium market.

Chile, Argentina, China, and other major lithium producers, however, employ brine extraction methods to obtain lithium. Extracting lithium from brine offers several advantages, including lower production costs and a reduced environmental impact. It is considered more environmentally friendly compared to other extraction methods. However, it also comes with its own set of challenges. One significant challenge is related to water availability, as brine extraction requires substantial amounts of water, which can strain local water resources. Additionally, the process may have environmental impacts on local ecosystems due to the alteration of water levels and the potential discharge of chemicals.

The following visual from Benchmark Minerals provides a breakdown of the carbon impact associated with various types of lithium extraction, highlighting the positive environmental aspects of brine extraction.

The Need for New Production

In 2021, the global production of lithium carbonate equivalent (LCE) amounted to 540,000 tonnes. However, this figure is expected to dramatically increase in the coming years. By 2025, the estimated demand for LCE is anticipated to reach 1.5 million tonnes, and by 2030, it is projected to exceed a substantial 3 million tonnes. This growth underscores the significant role lithium plays in supporting the expanding green energy and electric mobility sectors.

Bolivia, Argentina and the United States are the countries with the largest lithium reserves to date. Although not being the largest lithium production countries at the moment, the reserves will serve as a good fixed deposit for these countries in years to come when the reserves from other countries become exhausted. As the demand for batteries and electric vehicles continues to rise worldwide, there is a projected surge in the need for lithium for sure as the crucial component in battery manufacturing due to the boom in electric vehicles and other clean technologies that rely on lithium batteries.