Australia is the world’s biggest producer of lithium and accounts for an estimated 30 per cent of known resources. Most lithium in Australia, however, is exported as spodumene concentrate, rather than refined battery-ready material.
Lithium producers across Australia and worldwide are scurrying to increase capacity — reopening mothballed mines and developing new projects — driving an estimated 36 per cent increase in lithium supply in 2022, according to Bank of America.
However, the increase will be insufficient to keep pace with near-term demand. “Hence, we expect spot pricing to remain elevated,” Mr Gabb said.
Morgan Stanley analyst Rachel Zhang said lithium supply tightness was expected to remain during the first half of 2022 before some “loosening” was possible in the second half as new supply came to market. “That said, considering normally better lithium consumption in the second half, tight market balance is still likely then,” she said.
Despite the need for more lithium mines to electrify the transport sector, which presently accounts for about one-fifth of planet-heating greenhouse gas emissions globally, community opposition to new mines built amid concerns about environmental damage could constrain supply even further.
Rio Tinto, Australia’s second-biggest mining company, has been facing an intensifying backlash against its plan to develop the $US2.4 billion ($3.3 billion) Jadar lithium mine in western Serbia. Last month, campaigners filled Belgrade’s streets in protest, leading to local authorities suspending an allocation of land for the project.