A materials shortage is around the corner as the global lithium-ion market attempts to match demand from the energy storage, EV and consumer markets with supply, according to analyst firm Benchmark Minerals.
By 2020, benchmark analyst Casper Rawles forecasts, demand from the lithium-ion battery sector for all uses will cause a tipping point where demand from the market will have grown to the point where supply will struggle to keep up.
The materials that are more susceptible to deficits are the critical minerals transitioning from small markets, with privately traded contracts and undeveloped supply chains, to much larger volume and developed markets.
“This is certainly the case for cobalt, but lithium is another industry where we foresee a problem with supply meeting demand in the future,” said Rawles.
“At the moment Australian Spodumene projects have been able to help fill the gap between supply and demand enough to keep up with demand, and are typically higher cost. Brine sources take longer to bring online than hard rock and even still production problems can persist. Once getting into production it’s another challenge to produce the battery grade material — an additional, specialized processing step.
“This is why we have seen over a tripling of prices in both markets, lithium experienced its price increase slightly before cobalt, but both markets have experienced similar rises. We track the prices of battery grade chemicals for both lithium and cobalt and importantly we forecast that the higher prices will remain in both markets for some time.”
The market for lithium-ion is only set to grow, California as the US’s biggest energy storage mover could see the state’s three investor-owned utilities procuring 1.325GW by 2020 under proposals by the California Public Utilities Commission in 2014. Other states have their own targets, of which Hawaii’s is the most disruptive with plans to be free of fossil-fuel power by 2040.
Not-for–profit power consultants Smart Electric Power Alliance’s recent National Energy Storage Market report found that 622MW of storage had been deployed in the US this year to date — with market research firm IHS claiming there will be 6GW of installed global capacity by the end of the year.
Add to that the number of cheaper EVs — the Tesla model 3, the Chevrolet Bolt and the new Nissan Leaf, to name but three — all with 60kWh packs coming to the market (never mind the demand for lithium-ion cells from the consumer markets) and according to Benchmark the lithium-ion industry will grow to 170GWh in the next three years, up from 70GWh in 2016.
To meet demand a slew of cell-making projects are being built or are planned in Europe, North America and Asia.
Benchmark began actively tracking the wave of new or expanding battery megafactories — plants with a 1GW or greater capacity — three years ago. At the time there were just two of these plants planned, now it tracks 17 that are due to be in production by 2020, representing a rise of nearly 250GWh in capacity.
Rawles said: “We are not suggesting the plants will be operating at full capacity, but it highlights the shift the industry is going through.
“Whether these plants get built or not, the shortage of critical minerals in the lithium-ion battery supply chain is driven by real demand. At Benchmark, 12-18months ago one of the questions we were regularly asked was “are EVs the future of transportation” that is no longer the case, we are now asked “How quickly will electrification happen”.
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