Lithium, a risky business?
The current dominant technology of EV batteries is the lithium ion constellation but more and more questions have lately been rising considering the raw materials used. What would be the impact of the rising demand for lithium on the market, for instance?
Rising prices due to the rising demand, or even a shortage of lithium, are the first concerns regarding the rising production of EVs and EV batteries. Various studies already pointed out that mere geologically, the rising demand would not result in a shortage of lithium, since lithium is an abundant material.
But a few
Geopolitically on the other hand, the supply security of lithium becomes more precarious, since the production of lithium depends on but a few countries. At the moment the main lithium source of the world is Australia, which produces 40% of the global lithium supply. Additionally, half of the world’s lithium supply comes from Argentina and Chile, who geologically could be joined by Bolivia. Moreover, these three countries of the lithium triangle in South America are gaining more interest of their own and foreign market players keen to exploit the lithium reserves, since the three countries together possess the world’s largest lithium reserves.
The dependency on but a few countries creates concerns around security and political issues, which might influence the price as well, and result in commercially risky price volatility. Moreover, since all industrial actors, from battery producers to car manufacturers, depend on these countries, the competition between them might create an additional impact on the price.
In this regard, the French Environmental Agency and of the Energy Matrix (Ademe) warns to keep an eye on the commercial policy of China, where specific measures to secure supply have already been put in place, which could eventually favour its internal market, to the detriment of the other importing countries.