Lithium producers warn global supplies may not meet EV demand

This week, Lake Resources became the latest lithium company to announce a project delay, pushing back first production from its Kachi lithium project in Argentina by three years. It cited power supply and other logistics concerns.

Albemarle, the world’s largest lithium producer, is growing rapidly across the Americas, Asia and Australia. Still, it expects global lithium demand to exceed supply by 500,000 metric tons in 2030. Various consultancies and other producers have slightly different projections, but all warn of a looming shortage.

“It’s a big challenge,” said Eric Norris, head of Albemarle’s lithium business.

There were 45 lithium mines operating in the world last year, with 11 expected to open this year and seven next year, according to Fastmarkets. That pace is far below what consultants say is needed to ensure adequate global supply.

Those growth projections assume a best-case scenario, even as mining companies face difficulty hiring technical talent, rising costs and delay times for crucial equipment.

Even if more lithium mines are built, there are not enough facilities to produce specialized types of the metal for batteries. Automakers may be forced to accept lower-quality lithium, which decreases an EV battery’s range, executives said.

“There’s a big difference between lithium that comes out of the ground and lithium that goes into a battery,” said Sarah Maryssael of Livent, which supplies Tesla Inc. and is set to combine with rival Allkem later this year.

No longer a niche event

Once a niche event attended by industry die-hards, the Fastmarkets conference has grown rapidly alongside breakneck lithium demand. Roughly 1,100 attended this year, nearly triple 2019 levels and up 68 percent from last year.

Exxon Mobil and other oil companies sent contingents as part of their foray into the battery metals sector.

Banking giants JPMorgan, Goldman Sachs, BMO and others also attended, their interest fueled by an expected wave of lithium takeover deals and rising demand for hedging and other financial instruments.

“Our strategic investment and M&A pipeline is extraordinarily strong,” said Rahim Bapoo, managing director of BMO’s critical minerals practice.

In one example of the rampant hunt for lithium, Mitsui is on the verge of signing a $65 million deal with Atlas Lithium to guarantee supply from a Brazilian mine project that Atlas hasn’t finished designing.

“Investment has to continue, otherwise there will be more delays to (lithium) timelines that are already massively long,” said Tara Berrie of EV maker Rivian Automotive Inc.