As the electric vehicle (EV) market grows, lithium—a crucial element in EV batteries—is set to experience massive demand. This surge in demand presents both opportunities and challenges for the mining industry, particularly in scaling up production while ensuring sustainability.
The role of lithium in the energy transition
Lithium is key to the global transition to clean energy, especially for electric vehicles. While EV adoption has temporarily slowed, the long-term outlook for lithium demand remains robust. Mining companies must figure out how to meet future demand sustainably, as lithium is a finite resource.
Lithium can be extracted from two primary sources:
- Brine deposits: Lithium-rich saltwater is pumped into evaporation ponds. As the water evaporates, lithium is concentrated and processed into lithium carbonate or lithium hydroxide.
- Hard-rock mining: Lithium is extracted from ore using traditional mining methods, processed into concentrate, and refined into battery-grade materials. This method is more energy-intensive but can yield higher-grade lithium more quickly.
A staggering surge in demand
Brian Menell, CEO of TechMet, a company focused on lithium investments, highlights the immense scale of future lithium demand. Tesla’s goal to produce 20 million electric vehicles annually by 2030 would require seven times the current global annual supply of lithium. Menell also notes that GM, Ford, VW and Chinese manufacturers are likely to further increase the demand for lithium.
This unprecedented demand presents major opportunities for the mining sector, but it also raises significant sustainability concerns.
The challenge of sustainable mining
Menell emphasizes that mining is inherently unsustainable, as it involves extracting finite resources and has environmental impacts. However, he believes the mining industry can adopt better governance and environmentally responsible practices to meet demand without sacrificing environmental integrity.
Geopolitical shifts in lithium production
While Australia leads global lithium production, other regions are seeking to become key players. In the UK, British Lithium is extracting lithium from Cornwall’s granite, aiming to supply local battery manufacturers, including Tata Motors‘ new battery plant. The company uses an innovative extraction method that results in lower carbon emissions and lower water consumption compared to traditional hard-rock mining and brine extraction.
Market transparency and pricing mechanisms
As lithium demand grows, the market lacks transparency. Robin Martin of the London Metal Exchange (LME) highlights that most lithium is traded through long-term agreements, leading to volatile prices. The LME is working to introduce index-based pricing and sustainability standards to stabilize prices and ensure supply security for car makers and battery producers.
Recycling: A crucial part of the lithium supply chain
Battery recycling is emerging as a key part of the solution to the lithium supply challenge. The Hydrovolt plant in Norway, a joint venture between Northvolt and Norsk Hydro, recycles used EV batteries and recovers up to 95% of critical materials. Similar initiatives are underway in other regions, including the UK, where Glencore and Britishvolt are planning to build a battery recycling facility to recover lithium and other key materials using 100% renewable energy.
Balancing extraction and recycling
The lithium industry faces the challenge of balancing resource extraction with sustainability. As recycling technology advances, it will play an increasingly important role in supplementing primary lithium sources.
Brian Menell concludes, “Lithium is the oil of the 21st and 22nd centuries. It’s the cornerstone of the global energy transition, and it will dominate the technological landscape for the next century.”
The industry’s ability to meet demand sustainably will be crucial in ensuring the success of the EV revolution and the global energy transition.
