The demand for lithium has boomed in recent years, particularly with the global push towards electric vehicles (EVs).
What was once an element with limited applications, lithium’s use in rechargeable batteries has caused an explosion in demand. Since 2021, the pricing of lithium carbonate has increased more than 400% and continues to rise. The supply is not keeping up with demand, as the global shift to electric vehicles continues to push demand. Lithium is also a major component in power storage for alternative energy. As the world continues to shift towards non-fossil fuel energy sources, lithium batteries are necessary to store the energy produced by solar and wind.
Globally, there has been a major shift towards sustainability, which includes a move away from single-use batteries. Lithium is used in the electrolyte solutions of rechargeable batteries, allowing ions to travel between the nodes in batteries. This results in stored energy and delivery of power. Wireless devices, including laptops, tablets, cell phones and gaming peripherals are major users of lithium-ion batteries. The market has shifted to include more products like weedwhackers, lawn mowers, even boats and more now use lithium batteries.
The demand for lithium has risen by more than 10% last year and is expected to continue to climb, leaving many worried about shortages.
Impact on the Chemical Industry
The tight lithium market affects far more than the battery industry. Shortages may have an impact on the lubricants and greases manufacturing process. In lubricants and greases, lithium grease is the most widely used, as it can be used as a multi-purpose grease. This is due to the water resistance properties and ability to work with elevated temperatures. It also has good stability and is useful in a variety of applications at home and in the industry.
Other alternatives like calcium-based greases do not work well with temperature changes. Sodium-based greases lack effective water resistance properties. Overall lithium greases are superior to other multi-purpose greases in the market. Lithium greases make up approximately 70% of the global grease market, making a lithium shortage worrisome.
That said, the lubrication and grease industries make up only about 3% of the overall lithium demand. Manufacturers will need to keep a close watch on inventories and market availability, but lithium shortages may not have as significant of an impact on lubricants and greases. The larger impact is likely to be on pricing. The increased demand of lithium, expected to reach up to 24% greater than supply by 2035, may drive prices to record highs. That level of increase could easily become unsustainable, forcing the lubrication and grease industries to adjust formulations.
U.S. Ramping Up Lithium Production
In the United States, only one mine is currently extracting lithium. Located in Nevada, the Albemarle Silver Mine Peak is working to double output by 2025. This is a great start, but still not enough to meet increased demand. Another mine, operated by Lithium Nevada, is expected to be operational sometime this year. The Thacker Pass mine is expected to eventually produce upwards of 25% of the world’s lithium. Though there are plans to open more mines, it will be at least two years before any new sites are operational. As a result of only having one currently operational mine, much of the lithium used in US manufacturing is imported. Importing adds significant cost and time to the manufacturing process, making domestic production a necessity.
Demand for lithium is not expected to subside in the foreseeable future. With the production boom in EVs, as well as the global push for alternative energy sources, lithium batteries will continue to drive demand higher for decades to come.