February 2025 – Lithium

Lithium requirements will increase substantially in the energy transition – raising concerns about adequacy and affordability of lithium over the long term. A cumulative availability curve (CAC) helps assess these concerns. A CAC summarizes estimates of quantities, costs and locations of resources, which are key characteristics of future resource availability. With estimates of in situ resources and production costs for 150 conventional and unconventional lithium deposits, the CAC developed in this study shows that: in situ resources doubled between 2009 and 2023 to 726 million metric tonnes lithium carbonate equivalent (LCE), illustrating the dynamic nature of our knowledge of resources; cost estimates suggest an incentive price of US$12,500-$15,000 per metric tonne LCE, well below the peak price in 2023 but above the average price from 2011 to 2020; and resources are more geographically dispersed than current production. Production is not constrained by physical availability but by investment to convert resources into reserves, and further into operating mines and processing facilities, in ways that are environmentally and socially responsible.

This study uses high-frequency stock price data to uncover the factors that drive the returns of companies operating in the electric vehicle and battery supply chain. The study’s statistical approach separates out the influence of systematic risk factors and factors unique to the supply chain. EV and battery stock returns are found to be exposed to a market and a tech factor. There is also evidence for an EV factor, unrelated to the broader market, that generates common variation among these returns. Lithium companies are found to be exposed to their own unique risk factor.

With the lithium-ion battery sector entering the terawatt era (Twh) – driven by demand from the Electric Vehicle (EV) and Battery Energy Storage Sector (BESS) – there remains little doubt over lithium’s central importance to the energy transition. But how has lithium pricing evolved in the market? The recent slump in lithium prices has triggered a range of questions in the market: how sustainable are current spot prices? Has lithium’s marginal cost of production become more dynamic compared to previous years? What next for lithium prices and pricing? This paper sheds light on some key features of lithium’s evolving pricing landscape; the drivers of volatility in the market; and the implications ahead as lithium’s journey to market maturity continues apace.

Just as a regulated reserve reporting update helped spur investors to U.S. oil and gas production nearly 15 years ago, recent regulatory changes to resource and property disclosures in the mining sector could similarly catalyze investment in lithium extraction today.

The stepwise shift in demand for critical minerals in the upcoming decades necessitates an equal supply response. For the investors and companies to effectively allocate capital towards increasing the supply of minerals, the market must improve pricing efficiency. Deepening critical mineral futures markets will be an important step in the path to the renewable energy transition.

The global shift towards net zero emissions has significantly increased demand for traditional commodities and created new markets, particularly within the battery supply chain supporting electric vehicles and energy storage systems. This paper explores the performance and trajectory of the lithium futures market, which emerged to manage price volatility in the booming lithium industry.

Amongst other factors, the success of the clean-energy transition currently relies on lithium. With their distinctive properties, lithium compounds are a crucial component in lithium-ion batteries, electric vehicles (EVs), and energy storage systems. There are currently no foreseeable alternatives to lithium’s use in modern battery technology. But, lithium-compound prices have been on a rollercoaster. Can this price risk be hedged by industrial consumers, thereby facilitating the scaled-up use of one of the essential materials in the energy transition? This article briefly examines this question solely from a U.S. perspective, and the answer is promising.