There is a lithium shortfall for gigafactories announced, and a good way to understand it is that it takes at least five to seven years to build a lithium mine. With all the money in the world, you can build one in five years. But it takes 24 months to build a gigafactory, so that’s the disconnect. And still the automakers are announcing all these battery plants. At the same time, they should be announcing new lithium mines—or new lithium-refining capacity, at least, if they didn’t want to get into mining—because they go hand in hand. But that’s not happening yet. And as a result, any of the EV goals between 2026 and 2030—it’s a red alert. Most of these guys won’t even meet a fraction of their EV targets because of that.
Listen to an interview reported by Morning Brew Interview with Simon Moores, CEO of Benchmark Mineral Intelligence in December 2021. (listen here)
While there is plenty of lithium on the planet, it isn’t being extracted and refined quickly enough to keep up with the rapidly growing demand for batteries. By 2030, there’s projected by most to be a lithium deficit between 455,000 and 1.7 million metric tons each year.
However, I suggest this projection is too low. There is about 37kg of LiCO3 equivalent lithium in an EV battery, and 80 million cars currently manufactured globally. If a conservative 50m EVs are expected into production by 2030, the total demand for EV batteries would be 1.7 million Tonnes. I suggest the majority of vehicles will be EV, or 80 to 100m EVs. Include the production or conversion of trucks, buses and rail. Current production is about 0.22m tonnes. Lithium mining will be 30 times to 40 times increase, as there will be lithium for grid and household storage. We have to decarbonise the world to reduce CO2 emissions and batteries provide intermittency control in a renewable energy solution.
That is a lot of mines. Eg Lake Resources using DLE technology projects 25 kTpa (kilo Tonnes per annum). It would need 40 new mines equivalent capacity. There are about 150 companies on the ASX in this area (View the Google Sheet here)
Have lithium costs affected the price of lithium-ion batteries over the last few years?
Batteries have been going down in price and manufacturing costs the last 5 years, since the creation of Tesla’s Gigafactory: scale allows to make them cheaper.
Raw material costs have been low, but what’s happened in the last year is raw material costs, especially lithium, are rising significantly. Lithium is the big one here. And at the same time as these battery costs keep dropping, raw materials are a much bigger proportion of the pie—the cost pie. So lithium prices have gone up and they’re now impacting battery cells.
What does it mean when you say there’s a lithium shortage?
So the “structural shortage” is what the commodity industry calls it. That’s when there’s literally not enough capacity in the industry to meet that demand. This year was the year where supply got tight and then it has just fallen into shortage in the last few months. It’s a very clear shortage, a structural shortage. It’s kind of no going back.
Lithium Shortfall for Gigafactories – are automakers aware?
It’s funny, I think OEMs are quite a unique beast in this sense. The OEMs only plan to build battery plants. They don’t think about the raw materials. And that’s because they don’t come from that world. The traditional automotive supply chain is built to serve them, and they’re used to having everything available. So they announce new plants, but they do not announce the supply chains.
But the difference now with the supply chain for electric vehicles—it’s being built from scratch and doesn’t exist at the scale they need, so they don’t think about the raw materials, and we call this the great EV raw material disconnect. Two years ago, they weren’t even thinking about batteries. They are thinking about batteries now, which is good. But they’re still not thinking about raw materials. And that’s a huge risk to anyone that’s really making EVs beyond 2025 or 2026, which is nearly everyone.
Will lithium production increase in the coming years?
The next big one that’s scheduled to come on stream next year—and it’s the first big lithium chemical operation in maybe 15 years— it’s Lithium Americas in Argentina. Back in 2011, they started it. It’s now 2021, and it’s just about coming on stream.
USA Battery Factories
|Rank||Company||Location||Start Date||Capacity GWh||Expanded||Notes|
|1||Panasonic-Tesla||Gigafactory 1, Nevada, US||2016||35||39||by 2021|
|2||LG Energy Solution (LG Chem)||Holland, Michigan, US||2013||3||24||By 2028|
|3||Envision AESC||Smyrna, Tennessee, US||2012||2||8||By 2028|
|4||Imperium3||Imperium, New York, US||2019||3||15|
|5||SAFT||Jacksonville, Florida, US||2011||1||1|
|6||A123 Systems||US Plant 1, Michigan, US||0.15||0.15|
|7||A123 Systems||US Plant 2, Michigan, US||0.15||0.15|
|8||Samsung SDI||Auburn Hills, MI, US||production and sales|
|9||Ultium (GM-LG Chem)||Lordstown, Ohio, US||2022||30||30|
|10||SK Innovation||2nd Plant, Georgia, US||2023||11.7||12||US ban on SKI for 10 years except for VW and Ford puts plants in doubt|
|11||Do Floride Chemicals DFD / KORE Power||10||10||Energy Storage applications|
|12||SK Innovation||Commerce, Georgia, US||2022||9.8||20||US ban on SKI for 10 years except for VW and Ford puts plants in doubt|
|13||Tesla||Austin, Texas, US||2022||100||CY, MY, M3|
|14||Tesla||Gigafactory 2, Buffalo, New York, US||2020||2||4||Energy Storage applications|
|15||Tesla||Fremont, California||Fremont, California||10||Vehicle, expansion planned|
|16||Akasol – Gigafactory 2||Detroit, Michigan, US||2021||0.4||2||by 2023|
|18||Microvast||Clarksville, Tennessee, US||2022||2|
European Battery Factories
|Rank||Company||Location||Start Date||Capacity GWh||Expanded||Notes|
|1||LG Energy Solution||Wroclaw, Poland||2018||45||70|
|2||SK innovation||Komarom, Hungary, Plant 1||2020||7.5||7.5|
|3||Samsung SDI||Goed, Hungary||2020||2.5||20||by 2028|
|4||Envision AESC||Sunderland, UK||2010||2.5||2.5|
|5||Leclanche||Willstatt, Germany||2020||1||2.3||by 2024|
|6||AMTE Power||Thurso, Scotland||2022||1||5|
|9||Liacon||Ottendorf-Okrilla, Dresden, Germany||2019||0.3||0.3|
|11||Samsung SDI Battery Systems||Premstatten, Graz, Austria||2015||Former plant of Magna Steyr|
|12||AMTE / BritishVolt||Blyth, near Newcastle, UK||2023||35||35|
|14||BMZ / Terra & others||Karlstein, Germany||?||34||34|
|15||Morrow Batteries||Arendal, Norway||2024||8||32|
|16||Listrom||North Rhine Westphalia, Germany||?||30||30|
|17||SK innovation||Ivancska, Hungary, Plant 3||2024||5||30|
|18||Zorlu / GSR Capital||Turkey||2022||25||25|
|19||Tesla||Gruenheide, Germany||2021||Gigafactory 2022|
|20||Northvolt Zwei||Salzgitter, Germany||2024||16||24|
|22||CATL||Erfurt, Thuringia, Germany||2022||14||100|
|24||Northvolt Ett||Skelleftea, Sweden||2021||8||40||by 2024|
|25||Inobat||Voderady, Bratislava, Slovakia||2021||0.1||10|
|26||SK innovation||Komarom, Hungary Plant 2||2022||9.8||16|
|27||Automotive Cell Company (SAFT/Stellantis)||Hauts-de-France, France||2023||8||24||by 2030|
|28||Automotive Cell Company (SAFT/Stellantis)||Kaiserslautern, Germany||2024||8||24||by 2030|
|29||Samsung SDI||Plant 2, Goed, Hungary||2021||7.5||7.5|
|30||Farasis Energy||Bitterfeld-Wolfen, Germany||2022||6||16|
|32||Lithops / FAAM||Teverola, Napoli, Italy||2021||0.2||2.5||(military, industrial and storage applications)|
|33||FREYR||Mo I Rana, Norway||2022||40|
|34||GSR Capital||Trollhättan, Sweden||2020?||25|
|35||Panasonic||Norway||Not yet announced||MoU with Equinor & Norsk Hydro|
|36||Blackstone Resources||Braunschweig, Germany||Initially 100m battery cells|
|37||Akasol – Gigafactory 1||Darmstadt, Germany||2021||2.5||5|