Lithium Fever: The New Oil Has Every Chance to Offend People and the Planet Just Like the Old One

This silver-white metal, also known as white gold, is very light and strong – lithium – stores a large amount of energy and is found in the batteries of electronic devices from toothbrushes, computers, mobile phones to electric cars, so the demand for it is constantly increasing. In 2016, according to data from the German Raw Materials Agency (DERA), 43,000 tons of lithium were produced worldwide, in 2022, 130,000 tons, and by 2030, production could quadruple.

Electric cars are the reason for the increasing global demand for lithium, as about eight kilograms are needed for a battery that powers them, which weighs three hundred kilograms. With the growth of production and sales of electric cars, the demand for lithium-ion (Li-ion) batteries could reach 9,300 GWh by 2030, which is 1,600 percent more compared to 2020.

For example, due to the increase in electric car sales, the demand for automotive lithium-ion batteries worldwide rose by about 65 percent in 2022 compared to the year before. Meanwhile, demand in China grew by more than 70 percent, and in America by about 80 percent. America also differs in terms of the average size of electric car batteries, which is 40 percent larger than the global average, all due to the higher share of SUV vehicles in electric car sales in that market compared to other major markets.

Who Will ‘Grease the Mustache’

Alongside the growing demand for lithium, its total global reserves have also been increasing in recent years as new deposits are being explored. The largest global reserves of lithium, more than 50 percent, are located in South America in Chile, Argentina, and Bolivia. The rest is in Australia, China, and America. Lithium is found in rocks and in brine, and it is estimated that there are about 200 billion tons of lithium in the oceans, while lithium deposits in rocks and saline lakes amount to about 98 million tons, of which about 26 million is exploitable in the coming decades.

Although it is most abundant in Chile, the largest global producer of lithium is Australia, Chile is second, China is in third place, and America produces very little and imports large quantities. In Europe, since 2021, explorations of lithium deposits have been underway in Finland, Ireland, Germany, the Czech Republic, Austria, Serbia, Spain, and Portugal, but potential investors are still assessing whether and how profitable converting European deposits into lithium mines would be. The value of the global lithium market is currently estimated at $7.5 billion and is expected to double by 2030 as demand for electric vehicles and data storage batteries grows, and it can be said that lithium is the new oil.

The Race Has Begun

There are several major lithium producers in the world, the largest being the Chilean company Sociedad Quimica y Minera de Chile S.A. (SQM) and Albemarle based in America (part of Rockwood Lithium since 2015). SQM’s production accounted for 20 percent of global lithium production in 2022, while Albemarle’s share was 16 percent of the total lithium produced worldwide. However, as demand for lithium continues to rise, more and more producers are entering this market, including oil and gas producers, as lithium is found in the water of oil fields.

The importance of lithium is also shown by the fact that America, like other expensive and hard-to-access raw materials, has designated it as critical for national security and domestic production and is seeking to increase domestic lithium production through two tax incentives, one of which is financing for electric vehicle manufacturers but only when a certain percentage of such materials in the batteries of those vehicles comes from the U.S. or countries with which that state has trade agreements.

The percentage of tax incentives will continuously increase over the next few years, starting from 40 percent for electric cars sold by 2024 to 80 percent for those sold after 2026. Such financing will significantly boost domestic lithium producers and increase demand for American lithium.

American oil producers could soon capitalize on the demand for lithium as water from oil fields contains high levels of dissolved lithium. Additionally, new technologies are rapidly being developed to overcome current problems with lithium extraction from brine. Faster and more efficient extraction of lithium from brine on oil fields will allow oil and gas companies easier entry into the growing lithium market. Simpler lithium production will also enable a faster energy transition, not only for cars but also for other devices powered by energy from Li-ion batteries.

New Technology

Currently, there is a fierce battle in the global lithium market among large mining companies, oil companies, and also technology startups for the transformation of the lithium industry through DLE technology, direct lithium extraction from brine across Europe, Asia, America…, which has sparked investor interest.

According to Alec Lucas from Global X Lithium & Battery Tech ETF, DLE technology could increase resource sustainability as it is portable, can recycle large amounts of water, and limits the use of hydrochloric acid. By 2030, 13 percent of the total amount of lithium in the world will be produced through DLE, according to projections from metal supplier Fastmarkets. Companies that produce lithium using DLE technology will be able to deliver batteries for electric cars in a few hours or days, instead of the several months it currently takes.

“The world needs vast amounts of cheap lithium for the energy transition, and DLE has the potential to meet that goal,” said Ken Hoffman, head of the battery materials research group at McKinsey & Co. On the other hand, projects for extracting lithium from geothermal water, which do not negatively impact the environment, are being developed in Germany, France, and the United Kingdom. Vulcan Energie, a German-Australian company, is preparing to exploit lithium from geothermal water, intending to produce four thousand tons of lithium in southern Germany by 2025.

Possible Substitutes

However, all of this is still not enough to meet the demand for lithium, which is why its price continues to rise and was six times higher at the beginning of 2023 compared to the period from 2015 to 2020. Demand exceeds supply, and the semiconductor shortage is causing problems for electric vehicle manufacturers, who need ten times more chips than for other cars. According to estimates from consulting firm Alix Partners, semiconductor shortages will persist into 2024.

Therefore, in recent years, alternatives to lithium-ion batteries have been developed, one of which is the sodium-ion (Na-ion) battery.

This battery contains cheaper materials than lithium-ion batteries and is currently the only sustainable battery that does not contain lithium. It was developed by the Chinese company CATL and is estimated to be 30 percent cheaper than lithium batteries. However, Na-ion batteries do not have the same density as Li-ion batteries, with a density of 75 to 160 Wh/kg compared to 120 to 260 Wh/kg for lithium batteries, meaning they can store less energy than lithium ones.

For this reason, sodium-ion batteries could be suitable for city cars, which have a shorter range, or for stationary storage, which could be more challenging to set up in locations where charging is less accessible. Currently, there are about thirty factories planned or under construction for the production of sodium-ion batteries with a capacity greater than 100 GWh, and almost all are in China. Although these batteries are much smaller than lithium ones, which have a production capacity of about 1500 GWh, some manufacturers like Seagull by BYD have already announced Na-ion electric cars with a range of up to 300 kilometers, priced at around twelve thousand dollars, which will be available for sale later this year.

Consequences for Human Health

In addition to lithium-ion batteries, which accounted for eighty percent of its global consumption in 2022, lithium is also found in other products. Lithium is used in industrial grease (lubricants) as well as in glass, ceramics, metallurgy, nuclear fusion, and also in medicine. Lithium carbonate is an essential component of medications for bipolar disorder, stabilizes mood, and affects the reduction of suicides, which are least common in parts of the world where it is most abundant. However, it also has a downside: if high doses of lithium are found in drinking water, it can cause autism.

For this reason, Beate Ritz, a professor of neurology, epidemiology, and environmental health at the UCLA Medical School, warned that the increasing use of lithium through battery landfills could negatively affect groundwater, and thus human brain health. Ritz studies how environmental exposure affects neurodevelopmental disorders and neurodegenerative diseases and has decided to investigate the possible connection between lithium and the risk of autism after discovering that very little research has been conducted on humans regarding how lithium affects brain growth and development.