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EV targets ‘impossible’ without changes to lithium pipeline

Battery makers are facing severe lithium shortages, underscoring the need to challenge China’s dominance in commodity supply chains, an Australian lithium producer has warned.

Lake Resources chairman Stuart Crow said Western companies and governments have failed to establish adequate supply chains for lithium, making the sudden boom in electric vehicle manufacturing unsustainable.

“There just won’t be enough lithium on the surface of the planet, no matter who’s expanding and who’s supplying, it just won’t be there,” he said. “Automakers are beginning to sense that battery manufacturers may not be able to deliver.”

Lithium-ion batteries play a crucial role for governments hoping to decarbonize their economies, and the West is working to ease China’s hold on lithium-ion batteries lithium supply chain and processing capacity in particular. The disruptions caused by the war in Ukraine and subsequent sanctions against Russia have also underscored the importance of security of supply.

Lake Resources’ share price more than doubled in March, giving it a market cap of A$2.5 billion ($1.9 billion) after the company signed a letter of intent with Japanese import-export group Hanwa over the Supply of 25,000 tons of lithium carbonate per year.

“Right now, China basically owns 70 to 80 percent of the entire supply chain for electric vehicles and lithium-ion batteries and therefore energy storage,” Crow said. “The West has been remarkably slow to adopt a strategy to try to support and secure a supply chain.”

Daniel Morgan, a mining analyst at investment bank Barrenjoey, said it was “impossible for them [EV production] Targets set by either automakers or governments must be met.” He added: “There’s a great fondness for aiming high, but where the rubber meets the road, it won’t happen.”

Australian Stock Exchange listed Lake Resources is developing a lithium production facility in Argentina. There, US company Lilac Solutions, backed by Bill Gates, is developing technology to extract lithium directly from brine, rather than via the more common evaporation method.

It plans to produce 50,000 tons of lithium carbonate annually by 2025 and is focused on building supply chains that bypass China.

Lake Resources’ plant in Argentina has not yet produced lithium carbonate itself, although it was constructed in 2015. Crow said this is due to the time it takes to develop lithium projects, which automakers had not adequately considered when setting up their EV production targets.

“The predictions for the [lithium] The deficit this year is fluctuating between 50,000 tons per year and 400,000 tons in a market expected to produce 450,000 tons per year,” he said. “Anecdotally, we hear stories of two very large battery manufacturers in the market trying to source 150,000 tons [each] of lithium hydroxide this year. And with a stockpile of 450,000 tons, that’s not going to happen.”

While the US wants electric vehicles to account for half of all car sales by 2030, the EU has proposed to ban sales of internal combustion engine cars entirely by 2035. Big brands like Volkswagen, Ford, Stellantis, General Motors and Toyota have all announced ambitious targets for increasing production of electric vehicles and phasing out gasoline cars.

The International Energy Agency estimates that global sales of electric vehicles need to reach 47 million per year by 2030 to ensure transport emissions are consistent with its “Sustainable Development Scenario” that “well below” global warming in line with the Paris Climate Agreement. would hold 2°C.

Mining giant Rio Tinto predicts that demand for lithium will increase by 25 to 35 percent per year over the next decade.

Barrenjoey’s Morgan said 28 million EV sales by 2030 is a more realistic projection, but even that wouldn’t be possible with the currently announced lithium projects. In fact, lithium production would need to increase six-fold by 2030.

“It’s eight years to 2030. We need to start hearing about new projects now,” he said, adding that it’s a “great time for miners.”

https://www.ft.com/content/7beef24f-29a2-4683-8b30-b076528416c1 EV targets ‘impossible’ without changes to lithium pipeline

Adam Bradshaw

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