3 Lithium Insights for Today’s Investors
3 Essential Insights for Lithium Investors
The lithium market is experiencing rapid growth, with the critical mineral witnessing a 30% rise in consumption in 2022. But what is causing this lithium boom?
In the above infographic, iShares takes a look at three insights that are shaping the future of the lithium landscape.
1. Soaring Demand Until 2050
The rapid global shift toward clean energy has set the stage for a surge in lithium demand.
Projections from the IEA show that demand for the so-called white gold is expected to increase tenfold by 2050 in the Net Zero Emissions scenario.
| 2022 (kt) | 2050P (kt) | |
|---|---|---|
| Electric Vehicles | 69 | 1104 |
| Grid Battery Storage | 4 | 75 |
| Other Uses | 57 | 135 |
The reason for this explosive growth comes primarily from lithium’s pivotal role in lithium-ion battery technologies.
2. Lithium’s Dominance in Battery Technology
Lithium-ion batteries are a central piece of the decarbonization puzzle, and could account for approximately 95% of demand by 2030.
These batteries are used to store electricity generated from renewable sources like solar and wind power and are also the dominant technology powering electric vehicles.
3. Lithium Supply Challenges
As the world shifts toward clean energy technologies, lithium supply and demand dynamics are entering uncharted territory.
Forecasts suggest that demand for lithium could outstrip supply as early as 2030.
| Year | Demand (million tons of LCE) | Supply (million tons of LCE) |
|---|---|---|
| 2020 | 0.4 | 0.5 |
| 2025P | 1.4 | 1.8 |
| 2030P | 2.9 | 2.8 |
| 2035P | 4.6 | 3.5 |
Lithium carbonate equivalent (LCE) represents the lithium content in compounds, expressed in terms of lithium carbonate. This form is a primary processed variant of raw lithium, utilized in batteries and various other applications.
The projected supply-demand imbalance can be attributed to various factors, including reduced production caused by delays in establishing new mines due to technological challenges and financial limitations, as well as geopolitical complexities within the market.
Navigating the Lithium Frontier
As the world gears up for a net-zero emission future by 2050, lithium has a key role to play in this transformation.
Investors looking to gain exposure to lithium may want to consider an ETF that seeks to track an index composed of companies primarily engaged in lithium mining and/or manufacturing.
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