DAC Insights: Lithium… The New Gold Rush
DAC LITHIUM MARKET OVERVIEW
Lithium is an essential mineral used to manufacture lithium-ion batteries, and it is a key component in producing electric vehicles (EVs), renewable energy storage, and portable electronic devices. Lithium production increased globally by 21% in 2021 to approximately 100,000 tons, excluding U.S. production.[1] As a result of constrained supply and a rapid increase in demand, Lithium Hydroxide (LiOH) prices rose to $27,400 per ton in November from $9,000 per ton in January 2021.
The production of this mineral comes from mining and lithium-rich brine, with the latter making up about 75% of world production.[1] The process begins when Lithium contained in saline-rich groundwater is pumped into a succession of solar evaporation ponds. After several months, the remaining Lithium concentrate is then processed in chemical plants, with the end products being Lithium Carbonate (Li2CO3) and Lithium metal (Li). More than 50% of the Lithium produced today is used for battery production, and this demand is expected to grow dramatically with the adoption of EVs and renewable energy storage.
WORLD LITHIUM PRODUCTION (METRIC TONS)
| COUNTRY | 2021 PRODUCTION |
| Australia | 55,000 |
| Chile | 26,000 |
| China | 14,000 |
| Argentina | 6,200 |
Although Lithium can be found all over the U.S., today, Lithium mining and production are limited to a small number of brine fields in Clayton Valley, Nevada, and surface mines in North Carolina. Unfortunately, the exact U.S. Lithium production volumes are proprietary and are currently unavailable.
Our conclusion is that the rising adoption of electric vehicles (EVs) and an increase in the demand for
portable, solar and renewable power storage will drive future Lithium demand. According to the most
recent forecast data, the global Lithium market is expected to grow from 1.5 million tons in 2025 to
3.2 million tons in 2030. [2] However, along with the considerable increase in demand, the question remains how the global markets will source an adequate supply of this essential mineral and at what price.
[1] Source: U.S Geological Survey/Lithium.
[2] Source: IHS Markit 12/21.
The information contained herein has been compiled from sources Dividend Assets Capital, LLC (“DAC”) believes to be reliable, but no warranty, expressed or implied, is being made that the information is complete or accurate. DAC does not render tax advice. DAC recommends consulting a tax adviser on matters related to the information contained herein
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