Napkin Mathematics: Lithium

Do We Have Enough Lithium For The Clean Energy Transition?

Contents

1. Lithium Production

2. Production Capacity

3. Lithium Reserves

4. Lithium Demand

5. Assumptions

6. Mid-Forecast

7. Best-Case Forecast

8. Worst-Case Forecast

9. Concluding Remarks

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Lithium Production

As I’m sure many will immediately notice from last week’s piece, from the top six lithium mines globally, the longest expected mine life is 2049.

How do we manage lithium production past 2049? It’s a finite resource. As soon as we’ve used it up, it's gone.

Unfortunately, we have more prevalent questions to explore, closer to the present day. Do we have enough lithium for the next decade? BMI is one of many research groups that predict a supply deficit by 2025, i.e. lithium demand will outweigh lithium supply.

Key questions arise from this:

1) Do we have enough production capacity to produce the expected demand for lithium? Will we have enough expected production capacity through the expansion and construction of developing lithium mines?

2) Does the world possess lithium reserves that could supply the global market?

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Production Capacity

We see Australia is the largest lithium producer with 61,000t in 2022. Chile with 39,000t and China with 19,000t aren’t far behind. After this, however, production sharply drops off.

Figure 1 - Visual Capitalist - https://www.visualcapitalist.com/visualizing-the-worlds-largest-lithium-producers/

Total global production in 2022 was estimated to be 130,000 metric tonnes.

Figure 2 - https://www.statista.com/statistics/606684/world-production-of-lithium/#:~:text=Lithium%20mines%20produced%20an%20estimated,2022%2C%20a%20peak%20in%20production.

Total Lithium Mine Production in 2022 = 130,000 tons.

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Lithium Reserves

This describes the amount of discoverable lithium available for extractions that are economically viable.