The Impacts of Lithium Prices Surging
Lithium prices are skyrocketing in 2021 due to the demand for lithium-ion batteries in electric vehicles and household electronics.
In October 2021, prices for lithium carbonate reached over 165,000 yuan per ton, the highest it has been since April of 2018. Year-to-date gains have been extended to 254%.
Lithium uses and applications
Lithium and its compounds have several industrial applications, including the manufacture of lithium batteries and rechargeable lithium-ion batteries, heat-resistant glass and ceramics, lithium grease lubricants, flux additives for iron, steel, and aluminum production.
- 65% of Lithium is used in battery production, including cars, Electric Vehicles (EVs), and household goods
- 18% is used in ceramics and glass applications
- 5% are used in lithium grease lubricants
As the demand for lithium products increase, all eyes turn to the top lithium-producing countries, as these regions and their mining companies will hold a significant role in pricing the market. This is especially true as the EV market is rapidly growing in demand and may threaten to trigger a shortage in the future lithium supply.
Which countries produce the most lithium?
The latest data from the US Geological Survey shows the world’s top lithium-producing and reserve countries. In 2020 alone, global lithium mine production was 82,000 metric tons. The top seven lithium-producing countries of 2020 are displayed below:
Current demand for lithium has prompted Chinese mining companies to purchase South American lithium-rich mining operations. One notable deal is that of Zijin Mining Group, a major gold and copper producer in China, announcing its entry into the lithium sector with the $770 million USD purchase of Canada’s Neo Lithium Corp, which houses its mining operations in the South American “Lithium Triangle”, an area of land that accounts for over 40% of the world’s lithium reserves.
Country Lithium Mine Production (metric tons) Reserve (metric tons)
Australia 40,000 2,800,000
Chile 18,000 9,200,000
China 14,000 1,500,000
Argentina 6,200 1,900,000
Brazil 1,900 95,000
Zimbabwe 1,200 220,000
Portugal 900 60,000
In terms of manufacturing output, China accounts for 40% of the global market share in terms of market capitalization. According to a report by Bloomberg, China accounted for 73% of total global lithium cell manufacturing capacity, with the United States being in second place with 12%.
The table below shows the current top lithium-producing firms by market cap. Data current as of August 9, 2021:
|Company||Company Country origin||Market Cap. (Billion US$)|
|Jiangxi Ganfeng Lithium||China||40.23|
Skyrocketing Lithium Demand and Pricing
Sales of EVs are projected to rise globally by 90% this year, as compared to 2020, to more than six million vehicles sold. The top three markets for EVs – the US, EU, and China – will each see a 150-200% growth in overall sales.
As the demand for EVs and consumer electronics rises, shortages of raw lithium materials have been driving their prices upwards. From January to September of this year, lithium carbonate prices rose by 352%, and lithium hydroxide prices rose by 320%.
How to deal with fluctuating prices of materials
When the market starts to fluctuate wildly, it’s important to gain an in-depth look into the supplier responses and notifications regarding raw materials impacting products and their lifecycle statuses. Finding alternatives and finding inventory from other authorized distributors can help keep manufacturing costs down.
SiliconExpert’s data and intelligence software can help you implement these safeguards and help you proactively identify risks in supply chain. Our supply chain module helps our customers combine factors of geo-location and known risks to determine an overall supply chain risk score for a known part number and supplier, to help mitigate harmful impacts from future events.
Learn more about our supply chain risk manager!