Is lithium ‘crisis’ exaggerated?

• Global lithium demand projected to reach 3m tonnes by 2030
• But advancements in lithium-ion battery design could mean less lithium needed
• Critics argue lithium supply warnings aim to ‘discredit’ renewable energy and electric vehicles

Much has been written about how limitations on lithium supplies could potentially restrict the wider deployment of battery storage. However, is there a possibility that future lithium demand is being significantly overestimated?

It has been predicted that - with battery-use soaring due to the rapidly growing electric vehicle and energy storage industries - demand for lithium will reach 1.5 million tonnes of lithium carbonate equivalent (LCE) by 2025 and more than 3 million tonnes by 2030, according to the World Economic Forum.

To put this in context, the world produced 540,000 tonnes of LCE in 2021. Based on the World Economic Forum’s projections, production needs to triple by 2025 and increase nearly six-fold by 2030.

Will lithium mining have to increase?

Understandably, this has led to concerns that lithium will simply not be able to be mined fast enough to meet the rising demand. A report by the Geological Survey of Finland (GTK) concluded that current production of minerals such as lithium is not high enough to meet projected demand, while current global reserves are not large enough to meet consumption targets.

As a result, the argument goes, mining activity will have to increase substantially in order to source the elements needed for the types of batteries that are currently most widely used, that is lithium-ion batteries.

The GTK report said that current production rates of metals like lithium, nickel and cobalt are much lower than the level that will soon be required, though it acknowledged that this assumption was based on “very preliminary calculations”. “It is equally apparent that current global reserves are also not enough,” the report said. Consequently, this would mean that there would have to be a sharp increase in the number of mines in operation in a short period of just a few years. 

Opposition to mining

The problem is that there is certain to be considerable opposition to any increases in mining activity due to environmental concerns. Lithium mining, for example, can cause air contamination and soil degradation. The large amount of water used in lithium extraction has also led to water-related conflicts involving communities in Chile, for example.

It’s certainly a bleak scenario. And yet, there is an argument that projections showing future lithium demand are overestimating - perhaps by as much as 100 per cent - how much of the metal will be needed to satisfy, say, the electric vehicle and energy storage industries. It should be noted, of course, that batteries only account for 74 per cent of lithium use, as the graphic below shows.

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By definition, projections made now do not take into consideration potential advancements in lithium-ion battery technology. Indeed, the Rocky Mountain Institute (RMI), a US nonprofit aiming to “radically improve” America’s energy practices has stated that “technologies collectively doubling lithium-ion batteries’ energy density could enter production by 2025”. Essentially, the RMI’s argument is that “projections based on old energy densities substantially overstate needed mining”.

Battery cell density increasing

It’s certainly true that gradual improvements in lithium-ion batteries’ composition, manufacturing, design, controls, and recharging has meant that, over time, they have become able to store considerably more energy per unit of materials. For example, between 2010 and 2020, lithium-ion battery cell densities almost tripled. As the RMI has highlighted, lithium-ion battery cells’ 89 per cent price drop over the same period is “ due partly to their more-frugal use of materials”.

When digesting projections of future lithium demand, it’s important to keep in mind expected increases in lithium-ion battery density, and consequently the associated decrease in the amount of lithium required to manufacture batteries. It should be noted that battery performance improvements are frequently outpacing forecasts.

Attempt to discredit renewable energy and electric vehicles?

The RMI suggests that claims that indicate it is “immensely destructive if not impossible” to find enough minerals to make enough batteries to meet the need of a global fleet of electric vehicles are part of a campaign to “discredit renewable energy, electric vehicles, and other elements of the climate-saving energy transition”. It’s undoubtedly an assertion that would provoke vociferous debate. Meanwhile, some cynics would argue that manufacturers of storage systems that utilise alternatives to lithium-ion batteries have an interest in propagating theories about imminent lithium supply shortages.

Given the considerable environmental damage that can be caused by lithium mining, it is of course vital that any such activities are kept to a minimum. However, expected advancements in lithium-ion battery design mean that, in the coming years, demand for lithium could be significantly lower than current projections indicate.