Record High Lithium Prices Threaten The EV Boom

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Record High Lithium Prices Threaten The EV Boom
By Tsvetana Paraskova - Jan 13, 2022, 6:00 PM CST
  • Lithium prices soared to record highs at the start of 2022 and there is no sign of the price rally stopping in the near future
  • As a key component of batteries, the rising cost of lithium could derail the decades-long decline in battery costs, which would threaten the EV and energy storage boom
  • This could push back projections of price parity between EVs and conventional vehicles by two years
Soaring demand for key energy transition minerals and supply chain issues have propelled lithium prices to record highs, threatening to unravel a decade of steady declines in battery costs. Lithium prices hit a record high at the start of 2022, and analysts say that the rally still has legs to continue even higher. The surging price of one of the battery pack’s key metals is already exerting enormous cost pressure on battery production, while demand continues to soar as nearly every major carmaker is developing electric vehicles (EVs) and aiming to significantly boost zero-emission car sales this decade.

Yet, the highest-ever price of lithium—with no signs of a near-term slowdown—is raising the cost of battery packs after a decade of continuous cost declines. This year could see the first rise in battery prices since 2010, potentially undermining global efforts to speed up the adoption of EVs and clean energy technologies, analysts say. Carmakers could pass on the higher battery pack prices to consumers, pushing back the expected date of price parity between EVs and conventional vehicles by two years.

Lithium Prices Soar To Record

On December 31st, the price of Battery Grade Lithium Carbonate EXW China exceeded the threshold of $40 per kilogram, or $40,000/ton, for the first time ever, according to data from Benchmark Mineral Intelligence. Lithium carbonate prices within China reached a high of $41,925/ton at the end of 2021.

Benchmark lithium carbonate prices in China jumped by nearly 500 percent throughout 2021, Benchmark Mineral Intelligence’s chief executive Simon Moores said.

Early transactions from 2022 suggest that “lots of legs” are left in this rally, noted Caspar Rawles, Chief Data Officer at Benchmark Mineral Intelligence.

Related: Study: The Uptake Of EVs In Europe Is About To ExplodeIn the week to January 6, lithium carbonate prices in China continued to rise as consumers restock ahead of the Chinese New Year festivities at the end of January and early February amid persistently tight supply. This pushed prices higher in other regions, too, such as Europe and the United States, Fastmarkets said last week.

The prospects for the coming months and years are also very bullish because new supply projects have faced some challenges.

“Customers are realizing that new supplies are very difficult to bring on,” Tony Ottaviano, chief executive at Australian lithium miner Liontown Resources, told Bloomberg.

It’s unlikely that lithium prices would crash soon, unlike in previous commodity cycles, Gavin Montgomery, Research Director, Battery Raw Materials at Wood Mackenzie, told Nikkei Asia.

“We’re entering a sort of new era in terms of lithium pricing over the next few years because the growth will be so strong,” Montgomery said.

In other words, industry executives and analysts believe that lithium prices will stay high for years to come.

Lithium Price Surge Raises Battery Costs

That’s a boon to lithium producers, but a bane of battery pack prices, which had dropped a staggering 89 percent between 2010 and 2021.

Lithium-ion battery pack prices were above $1,200 per kilowatt-hour in 2010, but they had dropped in real terms to $132/kWh in 2021, BloombergNEF’s annual battery price survey showed in November.

Li-ion battery prices dropped by 6 percent from $140/kWh in 2020 to $132/kWh 2021, but they could rise to $135/kWh in 2022 in nominal terms due to higher raw material prices, BloombergNEF said.

According to the research provider, even low-cost chemistries like lithium iron phosphate (LFP), which is particularly exposed to lithium carbonate prices, have felt rising costs throughout the supply chain in recent months. Since September, Chinese producers have raised LFP prices by between 10-20 percent, BloombergNEF has estimated.

If other technology improvements cannot mitigate the higher cost of raw materials, the point of breaking below the critical threshold of $100/kWh battery pack price could be pushed back by two years from BloombergNEF’s current expectation of 2024.

High Battery Prices Could Slow EV Rollout

“This would impact EV affordability or manufacturers’ margins and could hurt the economics of energy storage projects,” the research provider said.

Higher battery price “creates a tough environment for automakers, particularly those in Europe, which have to increase EV sales in order to meet average fleet emissions standards,” said James Frith, BNEF’s head of energy storage research and lead author of the report.

“These automakers may now have to make a choice between reducing their margins or passing costs on, at the risk of putting consumers off purchasing an EV,” Frith added.

Related: Russia’s Natural Gas Threat Is Far From Subtle

If legacy automakers cannot secure battery packs at relatively affordable prices, they would lose in the global race to produce EVs as affordable to consumers as similar conventional models, Sanshiro Fukao, a senior fellow at the Itochu Research Institute, told Nikkei Asia.

High raw material prices and tight markets for metals key to the energy transition could mean more expensive EVs than initially expected and some carmakers failing to meet their ambitious EV targets, Fukao added.

“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realising those ambitions,” Fatih Birol, Executive Director of the International Energy Agency (IEA), said last year.

“Left unaddressed, these potential vulnerabilities could make global progress towards a clean energy future slower and more costly – and therefore hamper international efforts to tackle climate change,” Birol noted.

By Tsvetana Paraskova for Oilprice.com

https://oilprice.com/Energy/Energy-General/Record-High-Lithium-Prices-Threaten-The-EV-Boom.html
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ldjessee

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Guess those that signed deals, locking in prices and tonnage into the future, were very smart…
 

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How the U.S. fell behind in lithium, the ‘white gold’ of electric vehicles
PUBLISHED SAT, JAN 15 20229:00 AM EST

Jeniece Pettitt@JENIECEP



The United States has a lithium supply problem. Nearly every major automaker has announced a transition to electric vehicles, Tesla delivered almost one million cars in 2021, and a handful of new electric vehicle companies like Rivian and Lucid are rolling new models off the line.
In order to power all of these EVs, we will need batteries — lots of them.

Electric vehicle growth will be responsible for more than 90% of demand for lithium by 2030, according to Benchmark Mineral Intelligence. But lithium is also in our phones, computers, ceramics, lubricants, pharmaceuticals, and is essential for solar and wind energy storage.

“It’s like the blood in your body,” said Lithium Americas CEO Jon Evans, “It’s the chemistry behind how lithium-ion batteries work. It remains the common denominator in all the battery technologies, even that we’re looking at now for next generation batteries. So it’s truly a critical element.”

This vital mineral in rechargeable batteries has earned the name “white gold” and the rush is on.
The price of lithium is soaring, up 280% since Jan. 2021, and establishing a domestic supply of lithium has become the modern-day version of oil security. But today, the U.S. is far behind, with only 1% of global lithium being mined and processed in the U.S., according to the U.S. Geological Survey.

More than 80% of the world’s raw lithium is mined in Australia, Chile, and China. And China controls more than half of the world’s lithium processing and refining and has three-fourths of the lithium-ion battery megafactories in the world, according to the International Energy Agency.

But until the 1990s, the U.S. was the leader in lithium production.

“The lithium industry started in the U.S. and had a good run for 50 years,” said Erick Neuman, the international business manager for with Swenson Technology. “We do have a lot. The challenge is, can we produce what we need at an economical and competitive price? That’s hard.”

Lithium is not a scarce element. The U.S. holds almost 8 million metric tons in reserve, ranking it among the top five countries in the world, according to the USGS.

But there is only one operating lithium mine in the U.S., Albemarle’s Silver Peak in Nevada.
Last June, the administration released a blueprint for jumpstarting domestic lithium production and refining as well as battery manufacturing, and set a national EV sales goal of 50% by 2030.
There are several domestic lithium projects in the works in Nevada, North Carolina, California and Arkansas, among other places.
107001977-1642222599263-LA3.jpg

A Lithium Americas worker processes lithium at the company’s Reno, Nevada R&D lab.

Controlled Thermal Resources is developing a lithium project at the Salton Sea in California, which will extract lithium out of brine pumped up via geothermal energy plants in the area. The Salton Sea was once a hot tourist destination, but has become one of the worst environmental and public health crises in modern history as drier conditions caused a lot of the lake to dry up. The state of California is trying to transform the area, calling it “Lithium Valley” and it hopes to generate the revenue needed to revive the area.

Last summer, GM announced a multi-million-dollar investment in Controlled Thermal Resources, and has secured first rights to purchase the domestically produced lithium for its EVs.
Piedmont Lithium wants to revive an old lithium mining area in North Carolina, near Charlotte. Piedmont signed a deal in 2020 to supply Tesla with lithium sourced from its deposits there, but the project has hit delays due to permitting.

Lithium Americas plans an open-pit mine at Thacker Pass, which is located within an extinct supervolcano about 200 miles north of Reno, Nevada, and is one of the largest lithium reserves in the U.S. The site will handle both the mining and the refinement of the lithium and it is in the final permitting phase.

But no one wants a mine in their backyard, and Thacker Pass and other projects have been stalled by lawsuits and opposition from environmentalists, permitting delays, and opposition from Native American tribes in the area.


https://www.cnbc.com/2022/01/15/how-the-us-fell-way-behind-in-lithium-white-gold-for-evs.html
 

ldjessee

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Also trying to figure out why people are not screaming about all the minerals & metals imported…
How about the cobalt used to refine crude oil… the tons and tons of it used? Is child labor used to get that cobalt?
 

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Tesla has big deals in North America for lithium supply as well as China:

Mine startup Piedmont Lithium lands deal with Tesla - Charlotte Business Journal (bizjournals.com)

Lithium prices aren't going to threaten the EV boom, lithium is extremely common and Tesla has been planning for huge growth for many years. The real reason why lithium prices aren't a problem is because lithium material costs are a very small portion of the cost of a battery. This means lithium prices could double from here and yet it would only push up the price of a typical car battery a very small percent, which, in turn, would drive up the price of the car far less than 1%. That's not nearly enough to "threaten the EV boom". Pure FUD.

Markets are very responsive to rising prices creating lucrative opportunities and thus production increases ASAP which typically results in over-production and a price collapse.
 
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