Lithium, a key component in the energy transition towards low-carbon power options, is facing a fluctuating market as supply and demand dynamics shift in the global landscape. With its unique energy storage capabilities, lithium has become a crucial mineral for the advancement of battery technologies, especially in the electric vehicle market.
According to a report by the Department of Industry, Resources, and Sciences, lithium consumption is expected to increase by 16 per cent annually, reaching 2.3 million tons by 2029. However, an oversupply of lithium in the market led to a decline in prices last year, prompting industry players to curtail production and projects.
Despite the current surplus, the market is expected to rebalance in the coming years, with a forecasted moderate rebound in lithium prices by 2024 and 2025. The report predicts that prices will return to their 2022 highs after 2029, driven primarily by the growing demand from the electric vehicle market.
New battery technologies, such as lithium-manganese-iron-phosphate batteries and sodium-ion batteries, are also expected to impact the demand for lithium in the future by reducing the amount needed for energy storage. However, potential challenges from rising trade barriers and supply chain concerns could pose risks to the growth of the EV market and the demand for lithium.
As global lithium production is projected to triple by 2030, with Australia, Chile, and China leading the production, the market dynamics for lithium are expected to undergo significant changes in the coming years. Despite the current challenges, the long-term outlook for lithium remains promising, highlighting its crucial role in the ongoing energy shift towards sustainable power options.
