The world is set to experience a major shortfall in lithium supplies as early as 2025 thanks to surging demand for the metal. Lithium is a key ingredient in the development of batteries for electric cars, electronic devices, and energy-storage solutions for renewable energy sources such as solar and wind.
As countries ramp battery electric vehicles and renewable energy infrastructure development, demand for lithium is expected to surge over the next decade. However, according to Fitch Solutions research unit BMI, global lithium demand will surpass what the market can supply within the next two years. In a recent report, the research unit noted that soaring lithium demand in China will largely be responsible for the lithium shortfall. China is currently the largest electric vehicle market on the globe and accounts for more than one-half of global electric vehicle sales.
Predictions from BloombergNEF indicate that new passenger electric vehicle sales in China will account for 60% of global sales at 14.1 million units in 2023. Last year, electric vehicle sales in China accounted for around a quarter of total passenger car sales in the country compared to one in seven cars in the United States and one in eight cars in Europe, China’s largest competitors in terms of EV market share.
According to BMI’s report, Chinese demand for lithium will grow by 20.4% year-over-year from 2023-2032. Conversely, China’s lithium supply will grow by only 6% over the same duration, meaning that China will be unable to meet even one-third of its lithium demand. To put that in perspective, the entire globe’s lithium industry produced 540,000 metric tons of the metal in 2021.
Given that China is one of the largest lithium producers on the globe, the fact that it will be unable to meet even its own demand spells disaster for other countries that rely on Chinese lithium. The World Economic Forum predicts that worldwide lithium demand will be more than three million metric tons by 2030 as electric vehicle sales ramp up. Forecasts from S&P Global Commodity Insights show that electric vehicle sales will hit 1.8 million in 2023 before surging to more than 30 million units by 2030.
Deutsche Bank director of lithium and clean tech equity research Corinne Blanchard says a lithium supply shortfall is inevitable. While the bank predicts growth in global lithium supply, demand for lithium will expand at a significantly faster pace. Blanchard forecasts a 40,000–60,000 ton lithium deficit by the end of 2025, which will balloon to 768,000 tons as the decade draws to a close.
It may not all be doom and gloom for the energy transition. Extraction companies such as Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are ramping up their mine-development efforts in order to benefit from the bullish outlook for lithium and other green energy minerals.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
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