Shaping the Demand and Supply Mechanics of Lithium

Lithium-ion batteries are lightweight, energy-dense, and considered safe—making them the go-to choice for electric vehicles, where every pound affects efficiency. 

Their importance in electric vehicles and energy storage has driven demand to new heights. What’s remarkable is the speed of that growth: global demand is projected to rise 3.5 times between 2023 and 2030. 

“Exponential demand will likely continue at least for 15 years before it plateaus,” Pablo Busch said, a post-doctoral student at Stanford University.  

Meeting future lithium demand requires accurate estimates of both demand and supply. Yet, most models predicting cumulative lithium demand are inadequate and don’t account for the complexities at play, like lead times in mine openings and physical limits to production rates, Busch mentioned.  

Working under the advisement of Dr. Alissa Kendall, the Ray B. Krone endowed Professor of Environmental Engineering at the University of California, Davis, Busch developed a sophisticated multi-objective cost optimization model that takes a nuanced look at the problems part of his doctoral research.  

A more comprehensive model  

“Most research on lithium availability concentrates on the demand part of the equation, so we decided to also evaluate the supply side,” Busch explained.  

Estimating if we have enough lithium to meet demand is not just about counting reserves. The real question is how much of it can be accessed and made available. 

“Even if you have enough water in the tank, meeting demand is not just about having enough. It’s about being able to extract it fast enough,” Busch said.  

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However, ramping up production quickly is not easy. The lead time from initial discovery of lithium minerals to extraction can take up to 16 years. In addition, mining itself has significant negative environmental concerns related to water, energy, and land use.

Opening a new mine involves weighing both extraction costs and scale. A smaller site might seem simpler to start, but a larger one usually has a stronger long-term payoff, assuming depletion rates near 2 percent. 

Decisions about where to open a mine extend beyond financial considerations. Political instability and poor governance can present major challenges. To address this, Busch and his team referenced a World Bank index that once measured the ease of doing business across countries, factoring in the permitting process and other regulatory hurdles.   

What are the alternatives? 

Opening a new mine is not a decision to be made lightly, which is why Busch also evaluated other factors that can either decrease demand for lithium or find alternate ways to meet it.  

For instance, sodium batteries might decrease the pressure on lithium supplies,however,the technology is not mature yet. To add on, it has a lower energy density than lithium-ion batteries, which means it’s better suited for applications where volume isn’t an issue, just like batteries for grid energy storage. 

Recycling could also make a substantial dent, argued Busch. Since EV technology is still new, there is not enough stock of failed batteries for recycling to factor into the picture in a significant way.  

“What we’re seeing right now is that lithium is actually not being recovered because it’s not economically feasible to recycle it, as primary lithium remains cheaper than lithium coming from recycling,” Busch said.  

That balance, however, could tilt in favor of recycling over the coming years. Busch would like to see a more concerted push toward lithium recycling.  

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“We’re recommending that recycling could be a better alternative if some policy incentives were put into place, and if some economies of scale and technological innovation could drive down the costs of recycling,” Busch said.  

Recycling offers a key advantage for nations that lack natural mineral reserves by creating domestic sources of lithium. Europe, with its limited deposits, has responded through ambitious recycling targets.

The EU Battery Regulation calls for the recovery of 50 percent of lithium from waste batteries by 2027 and 80 percent by 2031, along with a requirement that new industrial, SLI, and EV batteries include at least 6 percent recycled lithium by 2031. 

A hybrid strategy might work best 

Busch and his team used extensive modeling to understand how future demand might shape lithium supply. They found that if trends towards larger battery packs in electric vehicles continue, >85 new deposit openings may be needed by 2050.

Moderating battery size and achieving robust battery recycling at global scales can substantially decrease new lithium deposit openings, with the very best case leading to just 15 openings by 2050.

“We see a strong push from governments and industry to open new mines to get the supply chain going. We hope to see the same enthusiasm for recycling,” Busch said. 

Poornima Apte is a technology writer based in Walpole, Mass.