Electric vehicles (EVs) are set to replace conventional fuel vehicles in the future. For example, the UK government announced in March 2021 that no new petrol and diesel cars will be sold from 2030 in the country, as they continue to work on meeting the world’s most ambitious emission target yet to cut emissions by 78% by 2035 compared to its 1990 level. A direct consequence of this shift in mode of transportations is the expected exponential growth of demand for lithium to produce lithium-ion batteries for these EVs. The European Commission forecast that Europe needs 18 times more lithium than current production by 2030 and 60 times by 2050, the commission has also added lithium to its 2020 EU Critical Raw Materials List for the first time.
Now this begs the question: have the world secured the future supply?
Currently, most of the world’s lithium are produced in Australia or South America, with China then processing them into battery grade lithium chemicals. Having a steady domestic supply is important to eliminate the uncertainty over future supply, prevent future high prices as the world demand increases, and in general, help governments and firms plan their investment better. Earlier this year (Feb 2022) the US government announced a full-scale and wide-ranging programme so as to reduce their reliance on Chinese lithium.
(Data source:
What about the other side of the pond, such as in the UK and the EU? Traditionally, lithium has been either found in minerals or brines. However, there are currently no mine production nor deposits of lithium in the UK. Instead, there are only two lithium exploration companies in the UK, British Lithium and Cornish Lithium -- both in Cornwall, with government funding. In August 2019, the Securing a Domestic Lithium Supply Chain for the UK (Li4UK) project was also started as a collaboration between the Cornish Lithium and the Natural History Museum. The project hopes to explore innovative ways for the country develop a sustainable domestic lithium supply chain.
It seems that the UK is on track for a steadier supply source. However, while the project offers a solution to lithium supply for the very long run, the current geopolitical situation might require a shorter-term solution. Germany has been in a very awkward position recently on whether to support the sanction against Russia, due to the country’s heavy dependence on Russia’s natural gas supply. Indeed, it has been discussed recently by the Department of Business, Energy & Industrial Strategy about the possibility of setting up a national stockpile of lithium amid to risk from a Chinese stranglehold on supplies.
The UK would not be alone if it goes ahead with such plan -- the US programme also calls for stockpiling lithium and extends to working with car manufacturers such as Ford and Volvo to recycle lithium-ion batteries. The state governments will also reinvest profits into infrastructure of the surrounding environment.
Similarly, the EU has also addressed the significance of having a resilient value chain. As such, inventories are needed to buffer for any sudden shocks. The European Investment Bank will also support projects that relate to the supply of raw materials such as lithium, in order to promote investments.
In that case, the government better start dialling the numbers and start networking with those upstream and downstream stakeholders in the lithium industry.
Reference:
British Geological Survey (2020) Raw Materials for Decarbonisation: The potential for lithium in the UK.
The White House (2022) FACT SHEET: Securing a Made in America Supply Chain for Critical Minerals
European Commission (2020) Critical Raw Materials Resilience: Charting a Path towards greater Security and Sustainability
Natural History Museum, Li4UK: Securing a domestic lithium supply chain for the UK, url: https://www.nhm.ac.uk/our-science/our-work/sustainability/li4uk.html
U.S. Department of the Interior U.S. Geological Survey (2022), Mineral Commodities Summary 2022.
Thumbnail source: https://www.shutterstock.com/image-photo/male-mechanic-changing-car-battery-engineer-1674691225