Lithium prices extended their yearlong rally as surging demand spurs a shortfall of the key battery material.
Prices have more than doubled in the past year, according to a Benchmark Mineral Intelligence index of lithium carbonate and hydroxide. Demand for the materials used in EVs and renewable-energy storage has soared and, while miners are seeking to boost supply, there is not enough to meet consumption.
“The financing for lithium projects is still too little, too late,” said Cameron Perks, a minerals analyst at BMI in Melbourne, Australia. “The market deficit is already occurring.”
A lengthy slump since 2018’s peak meant investment in the sector slowed, while the pandemic has exacerbated supply constraints. On the demand side, the green energy transition has accelerated the adoption of EVs and global lithium consumption is estimated to grow five-fold by the end of this decade, according to BloombergNEF.
“As prices increase now, there will be unknown yet-to-be-announced projects and expansions that will help to increase supply to meet demand. That is almost a certainty. What is not certain is just how many unknown projects there are out there,” Perks added. “There is also a possibility that not enough lithium can be mined, then it could risk a slower EV roll-out.”
Prices are climbing across the supply chain. Pilbara Minerals’s second auction of spodumene concentrate -- a partly-processed form of the material -- attracted a top bid of $2,240 a ton for a cargo of 8,000 tons, up from $1,250 in its inaugural tender in July. China lithium carbonate has almost doubled in just two months, and lithium hydroxide is up more than 70 percent in the period, according to Asian Metal data.