Rapidly Growing Demand, Supply Lag
The world is on the brink of a significant lithium shortage, with predictions of a deficit as high as 300,000 tons of lithium carbonate equivalent by 2030, according to data compiled by Columbia University. In a worst-case scenario, this shortfall could exceed 750,000 tons. The demand for lithium carbonate has been growing annually between 250,000 and 300,000 tons and is expected to increase tenfold by 2050, as per forecasts by the International Energy Agency.
Geographical and Financial Challenges
One major hurdle in boosting lithium carbonate production is the unviability of reserves in certain countries like Bolivia. The limited geographic distribution of lithium production is a concern, despite the metal’s abundance in the earth’s crust. Higher concentrations of lithium in certain regions lead to lower capital expenditure per ton of production.
Market Dynamics and Geopolitical Factors
The market is further complicated by the slow pace of supply growth and the dominance of lithium deposits by Chinese companies and U.S. conflicts with China. Australia, Chile, and China currently account for 90% of global lithium production, with Zimbabwe and Bolivia contributing to a lesser extent. Other regions, including Mexico, contribute only 1% to the global supply.
China’s Dominance in Lithium Market
Chinese companies are actively financing lithium mines in various regions, notably Africa, Australia, and Latin America. China’s influence in the lithium supply chain is significant, despite its own resource limitations. The United States is progressing in lithium production but at a slower pace, with only one operational production site in Nevada and three more projects expected this decade.
Processing Capacity and Future Projections
China also leads in global lithium processing capacity, holding 65% of the world’s infrastructure. Chile and Argentina follow with 29% and 5%, respectively. Australia, a major producer, exports 98% of its lithium to China.
Columbia University’s forecasts suggest that China will likely strengthen its control over lithium production, with the United States and Australia seeing increases but not enough to challenge China’s dominance. China is expected to triple its current capacity and maintain a dominant position in lithium processing.
Implications for Global Battery Market
This looming lithium shortage and geopolitical dynamics surrounding its production and processing have significant implications for the global battery market, particularly for electric vehicles. The dependency on lithium for battery production underscores the urgency for diversification of supply chains and exploration of alternative battery technologies. 
