Battery manufacturers are confronting a severe lithium shortage, highlighting the need to challenge China’s dominance of raw material supply chains, an Australian lithium producer has warned.
Stuart Crow, chair of Lake Resources, said western companies and governments had failed to build adequate supply chains for lithium, making the sudden boom in electric vehicle manufacturing unsustainable.
“There simply isn’t going to be enough lithium on the face of the planet, regardless of who expands and who delivers, it just won’t be there,” he said. “The carmakers are starting to sense that maybe the battery makers aren’t going to be able to deliver.”
Lithium-ion batteries play a critical role for governments hoping to decarbonise their economies, and the west is working to loosen China’s grip on the lithium supply chain and processing capacity in particular. Disruption from the war in Ukraine and subsequent sanctions imposed on Russia have also underlined the importance of supply security.
Lake Resources’ share price more than doubled in March, giving it a market capitalisation of A$2.5bn (US$1.9bn), after it signed a memorandum of understanding with the Japanese import-export group Hanwa to deliver 25,000 tonnes of lithium carbonate a year. On Monday, the company announced it had signed another non-binding offtake deal with US carmaker Ford.
“Right now China owns basically 70-80 per cent of the entire supply chain for electric vehicles and lithium-ion batteries, and therefore energy storage,” Crow said. “The west has been remarkably slow to adopt a strategy to try and assist and secure a supply chain.’
Daniel Morgan, a mining analyst at investment bank Barrenjoey, said it was “impossible for the [EV production] targets being made by either carmakers or governments to be met”. 1–1e added: “There’s a great love of throwing out lofty targets, but where the rubber hits the road it’s not going to happen. ‘
Lake Resources, which is listed on the Australian Securities Exchange, is developing a lithium production plant in Argentina. There it will use technology developed by US company Lilac Solutions, backed by Bill Gates, to extract lithium directly from brine, rather than via the more common evaporation method.