While an already-weak lithium market was further stunted by the coronavirus earlier this year, adding insult to injury, industry experts are looking toward the future and say that although lithium may be down, it is most certainly not out; in fact, it’s headed for a strong comeback.
As a key supplier of rotary kilns and rotary kiln testing for advanced lithium processing and recycling, FEECO has been following the lithium market closely.
What Took Down the Lithium Market
Lithium was in the throes of a whirlwind market when it had the proverbial wind knocked out of it, sending prices plummeting. The downturn was initially a result of two key factors:
- An oversupply of the metal caused by new production outpacing demand
- A slump in electric vehicle (EV) sales in the world’s largest market, China, due to a cut in subsidies aimed at electric vehicle buyers.
Tariffs & the Coronavirus
The US-China tariff feud also caused a stir in the market. The industry was hoping for a recovery after the phase-1 trade deal came to fruition, but was instead hit with disappointment as the COVID-19 pandemic took nearly every market by storm and quickly catapulted the world into a global recession.
As the virus took hold, supply chains were thrown into upheaval, and operations were forced to reduce or halt production. Argentina was hit especially hard by the circumstances, according to Reuters, as the South American country was in the early stages of bolstering domestic production of the metal.
The oversupply of lithium, the slow in EV demand, and complications from the coronavirus, caused many operations to put a freeze on expansions, while other production plans were delayed or altogether abandoned. But while the lithium market has been on a decline in recent times, the factors driving its initial surge are still alive and well, even despite taking a hit from the coronavirus.
Why Lithium is Still Slated for Major Growth
While the lithium market was hit hard, things could have been worse (many other metals took a comparatively worse beating from the coronavirus) and experts are optimistic on what the future will bring, with an uptick in prices anticipated as early as 2023.
Optimism stems from the growing role lithium continues to play in advanced technologies as a lithium-ion battery – technologies that although stymied by the pandemic, will continue to push forward.
The focus around lithium has primarily been around electric vehicles (EVs), but electronics and energy storage also require significant quantities of the metal. For these reasons (and others), lithium was listed as a critical mineral by the US Department of the Interior.
EVs
Lithium-ion batteries, the battery of choice for powering electric vehicles, are the primary driver for lithium demand.
A new report from Allied Market Research anticipates that the lithium-ion battery market will surge at a CAGR of 18% between 2020 and 2027, landing on a valuation of $129.3 billion (up from just $36.7 billion in 2019), and taking lithium along for the ride.
While coronavirus may have thrown a wrench into the progress of vehicle electrification, the industry recognizes that the pandemic has merely pressed “pause” on things, delaying progress, but not stopping it.
“This pandemic further kicks the EV can down the road,” Seth Goldstein, lithium industry analyst for Morningstar, said in a comment to Reuters. Another industry expert emphasized that EV adoption is not pushed by economics, but rather, regulation and government incentives.
Energy Storage
Lithium-ion battery use goes way beyond electric vehicles; the transition to renewable energies relies heavily on the technology. Energy storage is a cornerstone of moving away from fossil fuels and achieving widespread renewable energy adoption, and as the most advanced technology, lithium-ion batteries will be essential in energy storage applications going forward.
The push for a renewable energy-based economy continues to strengthen. A new report from World Bank Group estimates that to meet the increasing demand for clean energy technologies that would be required to keep the world below a 2°C rise in temperature, the production of minerals such as lithium may rise almost 500% by 2050.
Electronics
Though on a physically smaller scale, electronics like smart phones, tablets, and laptops also rely on lithium-ion batteries. Demand for these devices continues to grow as developing economies advance and many in the world move out of poverty.
As reported by Mining.com, the lithium market is expected to experience shortages, which are anticipated to emerge after 2022.
New Sources Sought
As lithium continues to become more integral to meeting the demands of a more sustainable future, lithium producers have been exploring for new sources of the metal. This includes revisiting deposits of spodumene, a lithium ore, that has long been considered uneconomical to mine.
Currently China controls much of the lithium market, but supply chain weaknesses revealed by the coronavirus have incentivized the industry to diversify sources of the metal and the production of batteries.
Work is ongoing in several countries in an effort to develop domestic sources of lithium, as well as battery production.
Lithium-ion Battery Recycling
Not surprisingly, the lithium-ion battery recycling market is expected to see significant growth as the world clamors for more of the white metal, moving from a $1.5 billion 2019 valuation to a $18.1 billion valuation in 2030, according to research firm MarketsandMarkets.
The need to recycle lithium-ion batteries presents many challenges, but would be an important step in reaching a circular economy.
This has led to a flurry of testing activity around recycling lithium batteries, particularly when it comes to recovering the valuable components by thermal processing in a rotary kiln.
Conclusion
Despite many setbacks in recent years, the lithium market looks set for a strong recovery, with electric vehicles as the primary driver of demand, followed by renewable energy technologies and technological devices.
FEECO provides the industry’s most advanced custom rotary kilns, both for the decrepitation of spodumene, as well as for recovering metals from e-waste and batteries. We also offer a state-of-the-art testing facility where we can evaluate and develop processes through batch- and pilot-scale rotary kiln testing. For more information on our lithium and spodumene processing capabilities, contact us today!