Electric cars: Lithium price explodes and supply doesn’t follow demand

The price of lithium is “so crazy that we may have to go into mining and refining” with Tesla: In a tweet, Elon Musk indicated his desire to invest in strategic minerals, shaking the entire auto industry, but also the mining sector.

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So far, auto manufacturers have directly purchased the products and parts they need. Today, they realize that this is not enough and that they have to control the resource part, especially for batteries,” Christophe Poinsot, Deputy Director-General of the Bureau of Research Geological and Mining (BRGM) explains to AFP.

In 2035, electric cars are expected to replace gasoline engines in Europe.

And in the middle of all the strategic metals for car battery manufacturing, lithium, nickel and cobalt in particular, “there is an element that is absolutely essential over the next 10 years, and that is lithium,” asserts Yves Gigurel, full professor of raw materials economics chair at the National Institute of Arts and Crafts (CNAM) and director Participant of the annual CyclOpe Raw Materials Directory, published on Wednesday.

Mining production for this essential element, currently concentrated in Australia and Latin America, is unable to keep pace with the astonishing rise in global demand.

Dozens of huge battery factories have been announced all over the world, and each battery needs about 5 kilograms of lithium.

In 2021, the price of lithium carbonate spot contracts in the United States doubled to $16.72 per kilo, Cyclops reports.

Similarly, for lithium hydroxides, the growing demand for car batteries, prices almost doubled (+97%) to reach US$18.82 per kg.

Under different scenarios, lithium demand could quadruple or even sixfold in 2030 compared to 2021, to more than 500 kilotons per year, according to a report from the International Energy Agency.

Other than the manufacturers, the nations themselves are engaged in the logic of securing these strategic minerals for the ongoing energy transition.

In Luxembourg, the European Council devoted to competitiveness under the French presidency should address this issue in particular on Thursday, by invoking the possibility of creating a strategic stockpile, or by paving the way for battery recycling in order to “keep” materials in operation. Old Continent.

For builders, the April 8 announcement by US manufacturer Tesla chief Elon Musk “does not mean that they themselves will become mine operators,” Mr. Poinsot rules.

This means that from a capitalist standpoint, they will probably go up to the capital of a miner or mining operator, to secure their supply chain. There is already a Tesla who is watching,” he analyzes.

Thus Volkswagen and BMW entered the capital of North Volt, the Swedish group of electric batteries.

In addition to several battery plants across Europe, the new European giant is planning to build a large lithium refining plant near Lisbon, with the oil tanker Galp.

The Stellantis Group (born from the Fiat-Chrysler and Peugeot-Citroën merger), but also Renault and Volkswagen signed contracts with the German Vulcan mine project, for lithium supplies.

Volkswagen also plans to create a joint venture with the Belgian group Umicore, which specializes in materials for clean mobility, to supply cathode materials (one of the battery elements) to the European group’s factories.

Renault also joined in March a consortium of Veolia and Solvay that established a pilot plant to improve the recycling of metals used in battery cells, such as nickel, lithium or cobalt, an essential alternative to extraction.

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