Increased demand and tight supply for battery raw materials incentivises new production
The demand for various materials of lithium batteries has increased significantly. As the supply response lags demand raw material prices have all increased substantially.
Driven by the demand for batteries, lithium prices have rallied in 2021 and are now at record-high levels, amidst a sharp acceleration in demand and a global supply struggle. With the biggest car maker in the world, Volkswagen, committing to half its cars being electric by 2030, demand for lithium is set to continue soaring and with it a range of new projects dramatically changing the shape of the Lithium cost curve by 2025.
Even with these new projects coming online, we are expecting the global lithium market to tighten from 2022 as the momentum towards decarbonisation and robust demand from the electric vehicle sector absorbing the worlds low cost lithium production.
Australia is world’s biggest producer and exporter of lithium, and our recent analysis shows Australian producers will continue to lead the supply response with projects including Finniss (Core Lithium), Marble Arch (Global Lithium) and Kathleen Valley (Liontown) at advanced stages of development.
Going forward, if higher battery metals prices are sustained, this could influence additional lithium supply and even preferred battery chemistries – but not EV adoption overall.