Even if Demand Rises, Peak Lithium is Far Off

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This is part two of a series on the potential of lithium for energy storage and the investor reaction. See part one first if you missed it.

California is said to have ordered its electricity firms to offer 1.3 gigawatts of non-hydroelectric storage capacity within five years, more than double the 0. 5GW of batteries plugged into grids around the world today.

It remains to be seen how popular Tesla’s “Powerwall” electricity storage devices will become, but as the price comes down through competition and technology improvements they will prove popular in countries where solar panels can supply domestic power economically such as Australia and the southern US, or where power supply is intermittent as in India or South Africa.

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So, the market is looking good for lithium even though the technology still needs considerable improvement to achieve truly large-scale uptake. As the Argonne National Laboratory in Chicago is quoted in the Economist as saying, large-scale batteries need to offer hundreds of miles of driving range, be rechargeable in minutes instead of hours, and provide power at costs comparable with natural gas before they can take off. In the meantime, though, supplies of lithium are not, as was the case with rare earths, held in the stranglehold of one country. As this graphic courtesy of the Economist shows, supplies are already well established from several stable, developed mining countries.

Lithium_sources

Source: US Geological Survey.

Lithium minerals have been used for years in the ceramics and glass industry according to the US Geological Survey, so extraction is not a new technology and nor is the supply chain undeveloped.

Rapid growth in demand, should it occur, could provide a squeeze on supplies and a rise in price, but the world is not short of lithium and additional supply is very price and demand dependent. Meaning if prices rose, supply would too.

Australia and Chile are the two largest producers but next door Bolivia holds even more deposits than Chile and, indeed… China.

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Destined to be a major producer of batteries and both producer and consumer of devices using lithium, China is already a significant source and holds substantial naturally occurring reserves. So, lithium prices clearly have more upside potential than down, but is the world going to run out of it? Will supply limit the technology or drive prices to unsustainable levels? Can any one supply source restrict supply in a rare earth monopolistic move?

No, highly unlikely. I’d rather be in lithium than say nickel, today, but we shouldn’t worry we are at peak lithium.

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