Market dynamics, power industry evolution, and Resilience
Notwithstanding market fluctuations in the early 2020s, analysts agree that the demand for lithium will remain extremely strong for years to come. However, although lithium supplies are expected to be in slight surplus until 2028 or 2032 – depending on the market analysis update – we still have to account for pressure on prices and profitability.
While the electric vehicle sector continues to drive demand – mainly in China, Europe, and in the US, the market is diversifying with a growing drive from the energy storage sector. The large-scale storage systems supporting energy transition through the integration of renewable energy sources and grid resiliency represent a market poised for growth.
Contrastingly, in the short term, new tariff policies and trade restrictions could significantly impact global supply chains, particularly hurting relationships with Asian manufacturers.
In this context, administrations’ focus on domestic manufacturing and processing capabilities could create new opportunities: from expedited permitting for critical projects, to leveraging cost-efficient extraction technologies, or encouraging the development of recycling capacities.
Supply chain transformation driven by technology and innovation
The need to keep producing lithium batteries at a large scale requires the whole industry to be resilient and less dependent on market turbulence. The changes we’re seeing in the market are two-fold.
First, new players come in and introduce cutting-edge technologies such as brine lithium extraction technologies, also known as direct lithium extraction (DLE). The focus on these new methods is intensifying as they prove to be more cost effective and environmentally sustainable compared to traditional hard rock mining. This shift could fundamentally change the economics of lithium production and create new opportunities for domestic supply.
On the other hand, lithium recycling is anticipated to become another critical pillar of a sustainable and circular supply chain. Fostering urban mining could help alleviate pressure on the industry by creating a significant and strategic source of diversification, while helping governments meet their clean energy targets. Although recycling of critical assets such as lithium has not yet achieved a consistent level of maturity, some technologies will soon allow to selectively extract lithium from the black mass and efficiently recover valuable metals to give them a second life.
The coming years will be critical. While the current combination of change and uncertainty may have affected key extraction markets such as Argentina or Chile, it forces the mining industry to accelerate the adoption of cutting-edge technologies to meet growing demand.
History has shown that with great challenges come great opportunities, and now may be the time to do just that by offering effective, sustainable solutions tailored to the challenges of the future. The industry is at a crossroads, and it is up to its members to choose the right direction.