China is the dominant player in processing it into battery grade chemicals, controlling nearly 60% of the world's lithium processing.
The spot price of lithium is currently $60,500 per tonne, but it will not remain there for long due to two primary factors. Who doesn't like electric vehicles? Everyone wants to live in a more environmentally friendly world. This is where lithium comes in as the primary component for electric vehicle batteries and will be at the forefront of driving the Sustainable transformation. This has made lithium the hottest market right now, and investors are jumping on board.
Most of the the world's lithium is mined in a few mines in Australia, Chile, China, and Argentina. Although Australia is the leader in raw lithium supply, you should be aware that China is the dominant player in processing it into battery grade chemicals, controlling nearly 60% of the world's lithium processing. Extraction of lithium is a difficult process that requires a large amount of water and energy from either mineral rocks or enriched brine deposits. According to Jefferies Group analysts, lithium supply will grow 34% in 2023, 14% in 2024, and 8% in 2025.
But things are changing; more countries are unwilling to be affected by global supply chain bottlenecks and have begun investing in local mines. One such example is when Biden announced $3 billion in grant plans for 20 companies that manufacture and mine key minerals such as lithium. Additionally, you can see that businesses like Trafigura Group and Glencore Plc, which formerly focused primarily on the copper and oil markets, have shifted their attention to the more lucrative lithium market. According to some analysts, the future of non-Chinese lithium supply will come from the North American market. Despite the growing supply of lithium, analysts predict a 37% shortfall in lithium supply by 2030, according to a study conducted by KU Leuven.