Lithium Prices Explained

Lithium prices continued to cool down after the commodity registered its 2-year lows. Lithium miners and producers continuously expand their production capacity contributing to the ongoing surplus of raw materials. Adding bearish pressure is the U.S. (25%) and EU (38%) increased tariff announcements on imported Chinese EVs due to the alleged state support to China’s car manufacturing industry, which allows the country’s imported vehicles to be sold at lower prices.

Why are lithium prices fluctuating?

1. Supply and Demand

The surge in demand and prices for lithium primarily arises from the increasing adoption of electric vehicles, energy storage solutions, consumer electronics, and various other technological applications. Therefore, as the demand for these products grows, the need for lithium also rises, subsequently influencing its price.

2. Mining and Processing Costs

The price of lithium can be affected by shifts in the costs associated with mining and processing which vary due to factors like alterations in energy prices, labor expenses, advancements in extraction technologies, and changes in environmental regulations.

Thus, these fluctuations in costs impact the overall price of lithium.

3. Electric Vehicle Growth

The rapid growth of the electric vehicle industry significantly impacts lithium demand. As more countries and companies prioritize the transition to electric vehicles, the demand for lithium-ion batteries increases, impacting the price of lithium.

4. Government Policies and Regulation

Government regulations and incentives linked to electric vehicles, renewable energy, and energy storage can influence the demand for lithium. Incentives like subsidies and tax credits, along with regulatory mandates, can stimulate demand, subsequently affecting lithium prices.

Which variables impact the price of lithium?

• Supply and Demand
• Mining and Processing Costs
• Electric Vehicle Growth
• Government Policies and Regulations
• Battery Technology Advancement
• Currency Exchange

Where does lithium come from?

Lithium is a soft, silvery-white alkali metal.

The extraction of lithium involves mining or extracting lithium-containing ores and processing them to obtain lithium compounds suitable for various industrial applications, including lithium-ion batteries used in electric vehicles, consumer electronics, energy storage systems, and more.

Here are the three sources of lithium:

1. Lithium Brine – Lithium brine is used to refine and produce commercial-grade lithium.

The brine is originally found at seawater or groundwater, where it must be drilled or blasted for access, and processing the brine.

Additionally, brines are rich sources of several minerals including common salt, calcium, iodine, lithium, magnesium, potassium, and bromine.

Furthermore, lithium is a vital component in batteries for electric vehicles, smartphones, laptops, and various electronic devices.

The primary regions for lithium production from brines are South American countries like Chile and Argentina, as well as Nevada.

Brines can take a lot longer to process due to the evaporation required making for an inconsistent process compared to spodumene.

2. Spodumene – is a pyroxene mineral consisting of lithium aluminum inosilicate and is a commercially important source of lithium.

Additionally, it plays a crucial role in meeting the surging demand for lithium, particularly driven by the growth of electric vehicles and renewable energy technologies.

Generally, higher-grade spodumene tends to contain a greater lithium content compared to the majority of lithium brines.

3. Clay Deposit – lithium-rich clay deposits are one of the potential sources of lithium. These deposits contain lithium-bearing minerals, such as lithium micas and smectite clays.

Lithium from clay deposits can be extracted and processed for various industrial applications, including the production of lithium-ion batteries.

What are the uses of lithium?

Lithium holds significant importance in our society due to its crucial role in various modern technologies. These are some of the uses of lithium:

1. Batteries – Lithium-ion batteries are widely used in portable electronics, electric vehicles, and renewable energy storage due to their high energy density and longer life.

2. Aerospace Industry – Lithium compounds are used in aerospace applications, including lithium grease for lubrication and lithium perchlorate in oxygen candles on spacecraft.

3. Rechargeable Batteries – Apart from lithium-ion batteries, lithium iron phosphate and lithium-polymer batteries are used in various applications like medical devices, power tools, and more.

4. Aluminum Production – These metal compounds are used in the aluminum industry to improve the quality and efficiency of aluminum production.

5. Air Conditioning and Refrigeration – Lithium bromide is used in absorption refrigeration systems, providing cooling in air conditioning and refrigeration.

6. Ceramic and Glass Industry – Lithium compounds are used in glazes for ceramics and glass to impart color, enhance properties, and improve workability.

What is the future price of lithium?

The demand for batteries worldwide is rising due to the urgent need to combat climate change by shifting towards electric-powered transportation and cleaner energy systems. With the increasing shift towards clean energy and electric mobility, the demand for lithium-ion batteries is expected to soar, consequently driving up its market value.

For instance, India’s strategic push to secure vital mineral resources to support its clean energy plans made the country strike a deal with Argentina (lithium mining agreement). This initiative will drive the growth of lithium industries.

Thus, its rough price estimate will be around $29, 438 per ton in 2030. However, this value remains subject to change due to factors like demand and supply dynamics, technological advancements, and a potentially more competitive market. Overall, the Global market value of lithium is expected to reach 19 billion U.S. dollars by the year 2030.