Demand For Lithium Drive Prices To The Moon

by Sloan T. Wilson, The Chicago Times

December 14, 2021

NEW YORK — Lithium prices are climbing at the fastest rate in years, sparking a rush to secure supply and raising concerns about long-term shortages of a critical component in rechargeable batteries that power everything from electric vehicles to smartphones.

Demand is increasing as Tesla Inc. and other manufacturers increase electric car sales.

Meanwhile, supply has been hampered by limited investment in new projects as a result of the current bad market, as well as supply-chain bottlenecks.  While there is enough of lithium in the globe, turning it into battery-grade compounds is a time-consuming and costly process.

The rally is raising concerns about battery producers and automakers acquiring enough material to fulfill demand for electric vehicles and other battery products.  Many businesses are also dealing with rising prices for other raw materials and critical components such as computer chips.

China, the world leader in lithium chemical processing and battery manufacture, is a source of concern for US officials and businesses looking to establish a local supply chain but failing to compete with China’s low costs and technical knowledge.

Environmental objections and permission delays are other challenges for enterprises such as Lithium Americas in Nevada and Piedmont Lithium Inc. in North Carolina.  Environmental concerns are limiting supply of commodities ranging from oil to copper, which is helping to boost prices across the board.

The problem for lithium producers is that it takes many years and significant expenditure to get projects off the ground, resulting in mismatches between rapidly rising supply and demand.

Koch Strategic Platforms, a subsidiary of billionaire Charles Koch’s conglomerate Koch Industries Inc., spent $100 million earlier this month in Standard Lithium Ltd., a startup that is collaborating with a German firm to manufacture lithium compounds in Arkansas.

According to some analysts, the influx of money into the industry will eventually drive-up supply and chill the surge.  According to Citigroup analysts, demand will outstrip supply this year and next until production surpasses consumption in 2025.