European
Lithium Security
European Lithium Fundamentals
The fundamentals for a European lithium boom are in place. Coronavirus travel restrictions has focused the public into alternative purchases, with new car sales at record levels. Add in Government mandates to end internal combustion engine vehicles as well as EV take-up incentives, it’s not hard to see why Europe’s EV sector is booming.
Data from Benchmark’s Lithium ion Battery Database shows battery demand in Europe – the second biggest market behind China — is set to increase at an annualised rate of 40.1 per cent between 2020 and 2025.
As the sales of electric vehicles globally increase, so too will the demand for the raw materials required to construct EV’s and in particular, lithium ion batteries.
Major lithium producer, Albermarle, released a graph of its forecast for lithium demand as well as that of other market commentators, which showed a steep climb over the coming years, beyond the level of supply currently produced.
Lithium carbonate equivalent prices $/tonne (global weighted average)
Source: Benchmark Minerals Intelligence
For European carmakers, the rush is on to secure lithium, cobalt, copper, graphite and rare earth supplies to ensure they can meet this new demand.
European Governments are supportive of the move to remove dependence from China and are proactively assisting mining companies with regards to approvals and financing for new mines and processing plants.
This is all part of Europe’s bid to become the first climate-neutral continent by 2050. It’s not just words or ambitious statements from the EU. Its being backed up with €500 billion of direct investment in everything from renewable power to electric cars and agriculture. In fact, the €500 billion on climate-related activities represents almost a third of the seven-year €1.7 trillion budget.
This investment from Governments around the world is stimulating demand for electric cars and all of the input commodities used to build them.
S&P Global Market Intelligence expects global lithium demand to increase by 91 per cent from 2019 to 2024, reaching 536,000 metric tonnes of lithium carbonate equivalent.
Electric vehicles are expected to account for nearly three-quarters of that demand increase. Global passenger electric vehicle sales are expected to rise to 6.2 million units in 2024, about three times higher than in 2019.
In terms of EV commodity supply, despite lithium prices increasing significantly since mid-2020, as shown by the Benchmark Mineral Intelligence graph below, the level of investment has not kept pace with the price gains and increase in demand.
Reuters indicates that part of the reasoning for this is that many producers are locked into lower priced long-term contract prices. The problem for cobalt supply is that it is mainly a by-product of copper, meaning investment decisions are based on copper prices.
Benchmark Mineral Intelligence’s George Miller forecasts a lithium carbonate equivalent deficit of 25,000 tonnes this year and expects to see acute deficits from 2022.
“Unless we see significant and imminent investment into large, commercially viable lithium deposits, these shortages will extend out to the end of the decade,” Miller said.
Roskill’s analysts have a starker assessment, where they estimate lithium carbonate equivalent demand will rise above two million tonnes by 2030,a more than 4.5 fold increase from 2020.
European Metal’s Cinovec vertically integrated battery metals project in the Czech Republic which aims to be Europe’s first producer of battery grade lithium hydroxide and carbonate products is extremely well placed to fill the supply gap for European users.
