By IER (Institute for Energy Research) - January 26, 2022
Many key battery materials, such as lithium, cobalt, and nickel, are in short supply and prices are escalating. Prices of lithium carbonate have quintupled in China from a year earlier and the sustained high costs will eventually be passed onto car makers. Two areas with significant lithium resources—Chile and Serbia—are having issues with lithium production from environmentalists.
Recently, Serbia revoked Rio Tinto’s lithium exploration licenses and environmentalists there are pushing for a moratorium on lithium mining. Environmentalists in Chile are calling for a pause in new mining contracts for lithium because of water rights issues and extraction methods and a new constitution is being written that may change the mining sector.
The entire fundamental transformation of our economy to electric transportation is dependent upon lithium and the batteries from which they are made. So, too, is the intermittent energy policy being pushed by governments because renewable energy requires backup.
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Robust global demand for lithium is outstripping supply and pushing lithium prices to a record in recent years. Lithium futures recently jumped 171 percent to a record $38 per kilogram. In China, cash prices of lithium hydroxide monohydrate are trading around a record 262,500 yuan ($41,387.47) per metric ton, up by more than 400 percent from a year ago.
Not only are lithium mines in the United States having trouble opening, such as the Thacker Pass lithium mine in Nevada, but Serbia recently revoked its license for a mine that Australia’s Rio Tinto was to develop and Chile may have problems in the future as a new government takes over in March and a new constitution is being written that could change its mining sector.
Experts expected the world’s shortage of lithium to last for another three years at least, but with the cancellation of the Serbia mining project, the shortfall could last even longer. When demand exceeds supply, prices increase, as is the case with lithium, which could end the spiraling down of electric vehicle battery prices, making the green energy transition even harder to achieve.
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