Automakers face a decade-long battle to secure the lithium needed to help power the electric vehicle revolution as demand threatens to outstrip supply, one of the world’s biggest producers has warned. metal
The use of lithium in electric car batteries has put the raw material at the center of a global competition that has pitted the world’s biggest carmakers against each other and drawn governments as they all race to boost and safeguard supplies.
Automakers from Stellantis to BMW have invested in lithium start-ups this year, underscoring the pressure the industry faces as more of the world moves to electric vehicles. Last week, General Motors said it would pay Livent, another producer, $200 million up front to secure the raw material.
Kent Masters, chief executive of Albemarle, the largest publicly traded lithium producer, said the market will remain tight despite efforts to unlock more metal.
“It’s systemic over a fairly long period of time,” Masters said of the challenge facing the industry. “For seven to eight years it stays pretty tight.”
The forecast by Charlotte, North Carolina-based Albemarle, which counts Tesla and other major automakers as clients, comes after a more than eightfold increase in the price of lithium compounds since early 2020.
Although the price has stabilized near the record $70,000 a tonne hit in April, lithium’s use in batteries has allowed it to escape the recession-driven slump that has plagued many other commodities in the last months
With the market hot, Albemarle has raised its earnings forecast three times this year, hoping to ramp up production and turn cash flow positive faster than expected.
Some banks and research houses, however, are less optimistic about the outlook for lithium prices, with Goldman Sachs analysts pointing to technological advances that could generate more supply in a couple of years.
A key material in electric batteries along with nickel and cobalt, lithium can be extracted from brine, hard rock and clay. One technology that some are betting on is direct lithium extraction, a technique that removes the metal from the brine without relying on evaporation.
But Eric Norris, president of Albemarle Lithium, said hopes for a supply surge overestimated producers’ ability to meet demand from automakers that has become “broader, deeper and more certain “.
“The ability to execute capital projects is not widely found,” Norris said, adding that lithium companies have historically delivered up to 25% less production than promised in a given year due to chronic delays and technical setbacks.
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Lithium mining projects typically take six to 19 years from an initial feasibility study to actual production, the longest of any technology involved in electric batteries, according to a report by the International Energy Agency. Energy last month.
The world needs 60 more lithium mines by 2030 to meet all national governments’ decarbonisation and electric vehicle plans, the IEA said.
A shortage of semiconductor chips has been the main constraint for car companies over the past 18 months, but as they step up their electric vehicle ambitions, securing lithium is becoming a growing concern.
“There is a serious challenge with the availability of lithium,” said Chris Berry, founder of House Mountain Partners, a battery metals adviser. “That $70,000 [per tonne] the number is catchy.”
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