Lithium demand5 Feb 2022 10:15
FT
A shortage of lithium salts essential for producing batteries for mobile devices and electric vehicles is putting the energy transition at risk.
Over the past 18 months, the prices of lithium carbonate and lithium hydroxide have risen at absurd rates, and the squeeze has only accelerated since the beginning of this year.
In January 2021, according to S&P Global Platt’s, lithium carbonate cost about $9,600 per tonne. At the end of this January the same material was quoted at more than $50,000 per tonne. That is panic buying, not rational price discovery.
This is a consequence of demand that has been strongly supported by regulations and consumer choices in Europe, the US and China, and supply that is constricted by under-investment in recent years. While there is some lithium on the way from new or expanded mines in Australia, the US, Brazil and elsewhere, other sources that had been anticipated in Chile and Serbia are being shut down or curtailed by local opposition.
“Technology”, or the use of different battery chemistries and more efficient use of available materials, is constrained by physics or weight requirements. Even intensive engineering and project development will not readily bridge the gap in lithium requirements until 2030, 2035 or 2050, or whatever policy target is picked.
Magical thinking will not help. As Christophe Pillot, a batteries consultant and the director of Avicenna Energy in Paris, says, there is no equivalent in batteries of ‘Moore’s Law’, which states the number of components that can be crammed on to an integrated circuit doubles every year.
“Energy density, battery lifetimes charging time and so on improve, but there will be no revolution in the next five to ten years. There will be, say, 5 per cent annual improvements in performance, and that will take work.”
Governments in the US and Europe are keen to have clean-looking battery cell factories, but the mining and refining of metals is less camera ready. The new Chilean government is insisting, reasonably, that using virtually irreplaceable fossil water to produce more lithium salts in the Atacama Desert is environmentally and socially unsound.
The ready response of environmentalists in rich countries is that batteries should be made with recycled materials. However, scrap must be collected and made ready to be remanufactured; losses are inevitable. Even theoretically, that does not increase the total amount of required battery
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