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EVs Drive Lithium’s Red Hot Rally

Lithium Parrafin
Lithium Parrafin
Cost of Lithium increased due to demand infographic provided by graphic news Duncan mil

Elon Musk’s Tesla Inc. and three of China’s automakers -- BYD Co., Xpeng Inc., and Li Auto Inc. -- have raised vehicle prices.

“Price of lithium has gone to insane levels!” Musk tweeted last month, “Tesla might actually have to get into the mining & refining directly at scale unless costs improve.”

Demand has outstripped supply, pushing prices up by 558 percent since June 2021. Last year industry needed 504,000 tons, outstripping the supply of 497,000 tons, and S&P Global Market Intelligence predicts demand will jump even higher to 641,000 tons in 2022, while supply is forecast to trail at 636,000 tons.

Australia is the world’s largest producer of lithium, producing 53 percent, followed by Chile (25%), China (14%), and Argentina (6%). The quickest way to increase supply is for these countries to raise production capacity. Australia’s Pilbara Minerals Ltd. plans to boost production at its Pilgangoora mine in Western Australia by more than 50% later this year.

Another potential source of lithium is from recycling old batteries -- this could eventually supply up to 16% of demand, but large-scale recycling will not start until 2030, according to BloombergNEF.

“Basically, there’s just not enough batteries to be recycled right now,” said Ken Hoffman, senior expert at McKinsey & Co. “There is no great way to recycle a battery today,” Hoffman added.

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