Lithium shortage slams brakes on electric car revolution
AS the richest person on Earth, Elon Musk knows a thing or two about making money.
So when he urged budding entrepreneurs to get into the lithium business, eager followers will have taken note.
‘Do you like minting money? Well, the lithium business is for you,’ he said on an earnings call for the electric car giant Tesla last week.
Despite Tesla racking up profits of £2.5bn in the first three months of the year, lithium is giving Musk a thumping headache. A global shortage of this crucial battery component has pushed prices to record levels, threatening to put the brakes on growth and dash his dreams of a cheaper electric car.
So much so that the eccentric tycoon, who has just clinched a deal to buy Twitter for £35bn, has said he may also have to set up his own lithium mining company to secure supply. It’s not hard to see why. Lithium prices have risen six-fold from $12,000 a tonne in 2017 to reach $78,000 this year, fuelled by an explosion in demand for electric vehicles.
The number sold around the world more than doubled last year to 6.6m, according to the International Energy Agency. And experts predict lithium demand could increase ten-fold by the end of the decade. While Musk clearly
‘It’s been described as an arms race’
has more at stake than most, his concerns are shared by car manufacturers, world leaders and environmentalists.
The race to secure more of this soft, silvery white alkaline metal has become a defining feature of the global race to wean ourselves off fossil fuels and cut carbon emissions to net zero by 2050.
Without a reliable supply of affordable lithium for the big batteries needed in wind turbines and cars, this target appears more fanciful.
China’s stranglehold on the market has not helped – it controls more than 80pc of battery cell production, as well as dominant positions in lithium refining and component production.
The war in ukraine, and russia’s decision to cut off the gas supply to poland and Bulgaria, has provided a rude wake-up call to world leaders for the need to reduce their reliance on hostile nations for vital resources.
The lithium problem is pressing enough for uS president Joe Biden to invoke emergency powers to ramp up production of key battery materials, including lithium, nickel and cobalt.
The goal, according to the White House, is ‘reducing our reliance on China and other countries for the materials that will power our clean energy future’. But Biden’s decision to pull troops out of Afghanistan could become a spectacular own goal, for Afghanistan sits on $1trillion of mineral deposits, including what could be the world’s largest lithium reserves.
Taliban warlords have been meeting Chinese mining bosses, who covet the lithium stash.
Lithium is a relatively common element, but not enough of it is being mined. In part, this is because it is difficult, expensive and time consuming to extract.
New mines can take up to a decade to establish and until very recently we did not need such vast quantities of it.
The metal is generally found in deposits of clay, in mineral ore or underground pockets of water.
Most is mined in Chile and Australia, then exported to China to be processed.
The biggest mine is greenbushes, around 150 miles south of perth in Western Australia. But firms around the world are rushing to develop new mines.
Work is also under way to tap into the uK’s own lithium riches – on a more modest scale.
Two firms in Cornwall, British Lithium and Cornish Lithium, both backed by millions in government grants, are racing to extract lithium from the granite – and prime Minister Boris Johnson has described Cornwall as the ‘Klondike of lithium’.
Cornish Lithium’s founder, Jeremy Wrathall, said: ‘It has been described as an arms race – and it absolutely is. We are witnessing a total industrial revolution.
‘The sheer scale of adoption of electric vehicles has taken everyone by surprise, and it’s brought forward the huge imperative to develop stable secure, supply chains.
‘one problem is people have said lithium is an abundant element. This is a red herring and has created complacency.
‘Yes, lithium is abundant – it is technically everywhere, and is probably in my garden.
‘But to find sufficiently high concentrations of it is extremely rare, particularly in Europe.’
‘A total industrial revolution’