Global lithium demand could outpace supply in the coming
years, with the number of new projects expected to fall short
of expected consumption amid doubts on capital availability
and low prices, market participants said at
Fastmarkets’ 11th Lithium Supply & Markets
Conference, held in Santiago, Chile, in June.
Still, major companies in Chile and Australia seem to be best
positioned to increase capacity. As a result, new supply
could come from low-cost producers rather than marginal cost
"The market seems to be in capital starvation. The question
is if it is so deep that supply won’t be as great
as expected going forward," McKinsey & Co leader for
electric vehicles Ken Hoffman said.
"New projects, at least conceptually, will be coming from
producers at the lower end of the cost curve, particularly from
Chile," Morgan Stanley managing director Javier Martínez
de Olcoz Cerdan said. "They have [virtually] unlimited
resources [and capacity increases would come at] low cost, low
The country is aiming to maintain its current share of
global lithium output, at around 32%, and the
country’s Ministry of Mining estimates that
current projects around the world are enough to bring global
production to 1.5 million tonnes per year from 2027.
"We will need new supply after 2027 if demand expectations
do not materialize," Chilean vice-minister of mining Pablo
Terrazas said. "Chile is the main lithium producer in South
America [and] we need to take the lead and sustainably increase
This could mean that original equipment manufacturers (OEMs)
will want to get more involved, granting the capital needed for
this supply increase, Fastmarkets’ head of battery
raw materials research William Adams said.
"The environment has been looking so constructive
demand-wise for many decades, and low prices and depreciated
equity markets could mean there is not enough money coming to
the industry at a time when it is needed," he said.
The Chilean ministry of mining currently has three different
scenarios for world lithium demand and in most of them supply
would be tight.
A base-case of "medium demand" would mean consumption
hitting 1 million tonnes by 2027-28, Terrazas said.
In the bullish case, demand would total 1 million tonnes by
2024 and surpass 3 million tonnes in 2038.
The bearish scenario, meanwhile, contemplates 1 million
tonnes in 2034-35, reaching around 1.1 million tonnes by
Fastmarkets’ price assessment for battery-grade
lithium carbonate (minimum 99.5%) in main ports in China,
Japan & South Korean was $11-12.50 per kg cif on June 6,
the lowest level since at least August 2017. Prices were at
$13-15 per kg on December 27.