A global lithium shortage could occur as early as 2025.

The world could face a lithium shortage as demand for the metal rises, with some analysts predicting that this could happen as early as 2025.

BMI, a research unit of Fitch Solutions, was among those forecasting a lithium supply deficit by 2025. In a recently published report, BMI attributed the deficit to high demand in China that exceeds supply.

– “We expect an average annual growth of 20.4 percent year-on-year just for lithium demand for electric vehicles in China during 2023-2032,” the report states.

In contrast, Chinese lithium supply is expected to increase by only 6 percent during the same period, BMI says, adding that this rate cannot meet even one-third of the projected demand. China is the third-largest lithium producer in the world, which is a key component of electric vehicle batteries.

In 2021, the world produced 540,000 metric tons of lithium, and by 2030, the World Economic Forum predicts that global demand will exceed 3 million metric tons. According to forecasts from S&P Global Commodity Insights, electric vehicle sales are expected to reach 13.8 million in 2023, but will subsequently rise to over 30 million by 2030 (if lithium is available).

– “Lithium shortage is a real problem. We anticipate supply growth, but unfortunately, demand will grow at a much faster pace,” says Corinne Blanchard, director of lithium and clean technology research at Deutsche Bank. By the end of 2025, Blanchard sees a ‘modest deficit’ of around 40,000 to 60,000 tons of lithium carbonate, but predicts a broader deficit of 768,000 tons by the end of 2030.

Other analysts do not see a deficit occurring so quickly, but still predict a shortfall by the end of the decade. According to an energy research firm, hundreds of lithium mining projects are currently in the exploration phase, but the complexity of geology and the lengthy permitting process still pose challenges.

Due to this complexity, there are currently only 101 lithium mines in the world. Susan, vice president of Rystad Energy, says that lithium supply could be sufficient globally in the coming years; however, she notes that regional imbalances will still be inevitable, emphasizing that regional mining and processing capacities in the U.S. and Europe will not be able to keep pace with demand for EV batteries.

Lithium carbonate prices surged to a record high of nearly 600,000 yuan (about 76,000 euros) per ton in November 2022, more than 12 times higher than prices in January 2021. Lithium miners generally require ‘10 years or more‘ to become fully operational and for lithium to be extracted and processed, says Austin Devaney, chief commercial officer at Piedmont Lithium.

– “We believe that there will ultimately be enough lithium to meet electrification demands initially, but in the near future, we expect supply constraints that could extend for several years,” Devaney said.