1. What has been driving the rising lithium prices recently? What are your price projections?
The push towards electrification of vehicles (EVs) and renewable energy requiring grid-scale lithium battery storage is fuelling a massive demand for lithium, with the commodity hitting record prices. over the past year. Supply has tightened, especially in the context of future projection of demand as more EV and battery manufacturing comes online. While demand projections will no doubt increase, the price will soften over time as further supply comes online. Over the next three years, it is expected that prices will come down from the current highs, however, they will remain very economical for producers and companies that continue to develop potential resources, especially those outside China. Companies that are exploring in regions like North America and Europe, closer to developing supply chains, will realize an upside even in the face of a stabilizing market. Next year I expect that prices will remain high, around US$40,000/t for Lithium Hydroxide, and will begin to soften further in 2024 and 2025 as more producers outside China come online.
2. What is the role of China in this?
China today is critical to the lithium market as the largest producer. Production from China will no doubt have an impact on the price as supply and demand fluctuate. However, there is considerable pressure and support from Western governments to develop the domestic production of lithium. As supply chains decouple and move closer to production centers in the West, prices will fluctuate accordingly. China is currently far ahead of the rest of the world in EV production and has considerable use for lithium, but as the West looks to develop its own sources, this will impact the Chinese lithium market.
3. The US and some European nations want to build their own supply chains for critical metals in a geopolitical fight with China. How feasible or possible is this in the medium term, especially in processing metals and making batteries?
With the considerable government and private investment in developing lithium and battery supply chains in North America and Europe, it is very feasible that the production will be built out in the medium term. It is almost every day that another major company invests in a lithium-ion battery plant, EV plant, or lithium mining/refining operation in North America, there is considerable capital flowing into the space.
4. Zimbabwe and DRC have recently emerged as key source markets for lithium and cobalt, but some mining sites are yet to be developed. How important is Africa in the critical energy metals industry?
Africa is critical in supplying all minerals necessary to address the EV revolution and many of the other technologies needed to address climate change. The high-grade deposits found in Africa are the most economical in the world, as well as presenting the least impact on the climate and the lowest greenhouse gas emissions.
About the author
Zayn Jaylan, CEO and Director at Infinity Stone Corp, a company that is searching for hidden gems to power the Green Revolution. Infinity Stone’s mission is to be a one-stop-shop, single source supplier for the critical energy metals being used in the clean energy revolution.
By Zayn Jaylan, CEO and Director at Infinity Stone Corp