Global Lithium Supply May Fall Short of Electric Vehicle Demand, Warns Industry Producers

US: Producers of Lithium are becoming increasingly concerned that inflation, staffing shortages, and delays in mine permitting may impede their ability to meet the world's ambitious electrification timelines by supplying enough of the battery metal.

Once considered a niche metal mainly used in ceramics and pharmaceuticals, Lithium has now become one of the most sought-after metals in the world due to the ambitious electric vehicle (EV) plans of major automakers such as Stellantis and Ford.

The pace at which internal combustion engines could be replaced by electric vehicles, a crucial objective of the green energy shift, is at risk. The chairman of Lake Resources, Stu Crow, has issued a warning regarding a potential crisis where battery companies may face a shortage of Lithium feedstock, which could threaten their security.

The current panic within the Lithium industry seems to contrast with the intense efforts being made to secure supplies. Lake Resources is the most recent Lithium company to report a project delay, informing that its Kachi Lithium project in Argentina will face a three-year setback in terms of first production due to logistical issues such as power supply.

Albemarle, the leading Lithium producer worldwide, is experiencing a rapid expansion across Asia, Australia, and the Americas. However, despite its growth, it anticipates that global demand for Lithium will surpass supply by 500,000 metric tons in 2030. Although other producers and consultancies have slightly different predictions, all of them raise concerns of an impending shortage. Eric Norris, head of Albemarle's Lithium business, acknowledged this.

Last year, 45 Lithium mines were operational across the globe, with 11 anticipated to commence operations this year and seven in the following year. However, this growth rate is far below the requirements highlighted by consultants to maintain a sufficient global supply. These growth predictions are based on an optimistic outlook, despite the challenges that mining companies face in hiring technical talent, rising costs and extended wait times for critical equipment.

The construction of additional Lithium mines will not address the shortage of facilities capable of producing specialized types of the metal required for batteries. As a result, automakers may have to settle for substandard Lithium, which reduces the range of an electric vehicle's battery. Sarah Maryssael of Livent, which supplies Tesla and is scheduled to merge with competitor Allkem later this year, emphasized that there is a significant difference between natural Lithium and the one utilized in batteries.

Tara Berrie, an executive at electric vehicle manufacturer Rivian, warned that investment in Lithium supply must continue to avoid further delays to the already extensive timelines. This statement comes amid reports of a frenzied race for Lithium, exemplified by Mitsui's potential $65 million agreement with Atlas Lithium. The deal aims to secure a Lithium supply from a Brazilian mine project that Atlas is yet to finalize its plans for.