Tight lithium market likely to ease up in near term, BNEF says
Near term lithium shortages are likely to ease up in the early part of the next decade, but supplies could tighten after 2024, according to a new report from Bloomberg New Energy Finance.
About 37% of all the lithium mined is used for batteries, and surging demand for the technology has attracted new entrants in a market traditionally dominated by a few large lithium miners.
BNEF expects lithium demand for batteries to rise 18-fold between 2016 and 2030.
Lithium is one of the key components of lithium-ion batteries, which dominate the surging energy storage market. Demand for the mineral has led to soaring lithium prices. Chinese spot lithium prices have gone from about $7,000 per tonne in September 2015 to over $20,000 per tonne earlier this year.
Despite the rising commodity prices, many analysts see continued declines in the overall cost of energy storage, including li-ion battery storage costs.
Navigant Research estimates lithium materials make up around 10% of overall battery production costs. So, all things being equal, a doubling of lithium prices would result in a 10% increase in battery production costs. In addition, Navigant says the commodity price increases can be absorbed by cuts elsewhere in the manufacturing process.
Rising demand for lithium-ion batteries is attracting new players in lithium mining. BNEF says that “junior miners” are rushing to meet demand with 30 projects in the pipeline. Strong demand for lithium is also attracting innovation in production, such as mining lithium from petroleum drilling operations.
- Bloomberg New Energy Finance End in sight to near-term lithium supply shortages
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