Global Lithium Market by Product (Carbonates, Hydroxide, Others), by applications (Automotive, Consumer Electronics, Grid Storage, Glass & Ceramics, Others) Type (Lithium Carbonate, Lithium Hydroxide, Mineral Concentrates), End-Use (Ceramics and Glass, Batteries, Lubricating Greases, Continuous Casting, Air treatment, Polymer Production) and Region, Global Forecast 2020 to 2030

Lithium cost breakdown reflects that lithium materials make up around 10 to 20% of overall battery production costs. The rapidly surging price of lithium is expected to increase battery production costs by 10%. Powering demand for lithium batteries for use in different industries has doubled the price of lithium from 2016 to 2018. Meanwhile, the price of cobalt (other key raw material used in battery cathodes) has multiplied three times since January 2016 and has made these metals enter into the spotlight. It is analyzed that the global lithium production rose by 13% from 2016 to 2017, i.e., 43,000 tons to 49,000 tons.

Supply-Demand Scenario

As per the French Environment and Energy Management, lithium-ion batteries account for the largest share in the future development of the electromobility, however, its declining supply of lithium is expected to become an issue by 2020. Presence of a limited number of players in the lithium industry and their oligopolistic nature, geopolitical criticality of resources and need to explore untapped and potential economies are the key issues being faced by the industry and act as a challenge to the lithium supply. Among the top 10 lithium producers in the world, US-based FMC, Albemarle and Chile’s SQM are the three big lithium extractors in the sector accounting for a market share of more than 50% along with the other Chinese companies such as Tianqi and Ganfeng. Also, in 2016, Chile, Argentina, Australia, held approximately 80% of the global lithium production, with Australia being the major.

However, to cater to rising demand from industries, lithium players are expected to expand existing mines and look for the new mining locations. Also, when electric vehicle demand uptake hits its inflection point, demand is expected to highly appreciate and motivate industrialists for more supply. Additionally, government approvals such as those in Chile for mine expansions would “open the floodgates” for the lithium products. Furthermore, vulnerabilities could emerge on account of increasing competition among lithium end-use industries. China, one of the biggest lithium producers has placed a policy of security of supply, to favor its internal market by supplying the entire lithium to its domestic EV industry.

Commercially, lithium is widely used in the form of lithium carbonate on account of its application in a myriad of applications such as batteries, ceramics, glass, and others. Lithium metal, in higher volumes, is also consumed as the mineral concentrates, since it finds a number of applications in the production of glass, ceramics, and metal castings. Lithium carbonate accounted for nearly 60% of the market revenue in 2017. However, lithium is losing market share to lithium hydroxide, on account of its superior performance and increasing applications when compared to the lithium carbonate applications. Industry leaders such as Nemaska Lithium are presently venturing into lithium hydroxide as their main business on the back of its growing use among automotive sector. With the availability of lithium hydroxide being tighter than lithium carbonate, battery producers are competing with other end users over the selection of the ideal raw material.

Hygroscopic properties of lithium bromide and lithium chloride makes it suitable to be used as a desiccant for gas streams. Lithium bromide solutions are also deployed in the air conditioning systems of large buildings. Apart from its use for manufacturing glass & ceramics, lithium is being utilized in metallurgical industries as a flux to help reduce the energy costs, which in turn, is expected to further drive the global lithium market growth. Lithium enhances the fusing of metals at the time of soldering or welding. In applications of continuous steel casting, lithium lowers the viscosity, improves flow rates and assists in thermal insulation. Aforementioned factors are poised to drive the demand the lithium market size in the near future.

With an insatiable demand for energy and the need for mobility continues at a furious pace, the demand for lithium is also expected to buckle up by the end of this decade. Lithium is being witnessed as the key component in green energy storage technologies and is rapidly becoming a metallic commodity of crucial importance. Increasing awareness and the detrimental impacts of the conventional fuel-powered vehicles on the environment has encouraged automotive industries to explore sustainable sources of power for vehicles. This led to the introduction of the hybrid vehicles which run on combustion engines, requiring gasoline or diesel in combination with a battery-powered electric motor. Rising inclination towards a pollution free electric future has provided a robust boost to the global lithium market.

Falling prices of Li-ion batteries for EVs, uncertainty over the most suitable raw material, race among battery pack manufacturers and automobile companies to secure minerals necessary for battery manufacturing has primarily shaped the EV industry over the past few years. Also, manufacturers and suppliers such as automobile companies, investors, lenders, and battery pack companies are constantly eying the changes and lack of uncertainty in the downstream market due to disruptions in the upstream market (mining companies and lenders).

European government has recently placed certain directives to encourage the spread of electric vehicles. Some of them being the Clean Vehicle Directive 2009/33/EC and the Energy Efficiency Directive 2006/32/EC. Also, European lithium market and rapid adoption of EV’s is driven by the various government initiatives and lucrative incentive schemes such as the free road tax coupled with free charging infrastructures and stations.

Asia Pacific dominated the global lithium market in 2017 and held a market revenue of USD 1.75 billion. China is the largest lithium consumer with the presence of largest battery manufacturers and accounting for nearly 60% of the battery market. In order to sustain battery production, Chinese players are now hunting for the potential lithium sources outside the nation's boundary. In September 2017, one of the leading Chinese car manufacturer Great Wall Motor bought 3.5% stake of Australian lithium miner, Pilbara Minerals. As per this strategy, Great Wall will acquire 75,000 tons of battery-grade lithium carbonate per year for the next five years. With the aforementioned strategies, China is expected to suffice its growing lithium demand and maintain the long term market sustainability by partnering with battery manufacturers to stabilize lithium demand and supply.