Industry
Unearthing the excitement beneath our lithium find
Summary
Demand for lithium has been growing consistently over the years, driven by its use in batteries, especially in electronic goods. In recent years, lithium has acquired an additional momentum from its centrality to electric vehiclesLast month, India said it had found 5.9 million tonnes of inferred lithium ore in Reasi district of Jammu & Kashmir, vaulting it into the world’s top-five countries by lithium reserves. It’s a mineral of increasing importance. Demand for lithium has been growing consistently over the years, driven by its use in batteries, especially in electronic goods. In recent years, lithium has acquired an additional momentum from its centrality to electric vehicles.Among minerals, lithium offers one of the highest energy-to-weight performance—a lithium-ion battery’s energy density is 260-270 Wh/kg, compared to a lead-acid battery’s 50-100 Wh/kg. That makes it ideal to drive the electric vehicle (EV) transition globally. India is likely to be a big EV consumer. With its latest discovery, it is also looking to be an integral part of the production chain.
The miners
Only a handful of countries have proven lithium reserves. In 2022, Australia and Chile accounted for 47% and 30%, respectively, of the 130,000 metric tonnes of lithium mined. These two countries also account for 60% of world’s lithium reserves, and house eight of the top 11 mines by 2020 production.
On paper, India’s discovery slots it into third position in terms of reserves. However, India’s discovery is in its early stage—inferred resources—and needs more studies to ascertain that it is technologically, economically and environmentally viable to mine the mineral.
The Indian imperative
Such concentration of lithium reserves is one reason why India's discovery evoked excitement. Global demand for EVs, and lithium, is expected to shoot up.
At present, India meets its lithium demand mostly through imports. However, discovery of the ore doesn't readily translate into production of lithium, and at any rate, not immediately. All sources of battery raw materials, assuming they are feasible to mine, have long lead times—as per consultancy Roland Berger, 3-7 years for lithium, 6-13 years for nickel and 4-10 years for cobalt.
The price dynamics
Lithium prices have been on a tear, surging from 67,500 yuan in January 2019 to 562,500 yuan in November 2022, before correcting to 295,500 yuan. That’s still an increase of 4.4 times. Prices corrected as battery makers expect an increase in supply of raw material and are concerned about the drop in EV demand because of the Covid-induced slowdown in China.
It also underscores the scale of battery and EV makers. Even as prices of lithium jumped, battery prices have dropped from $732 per kWh in 2013 to $151 per kWh in 2022 due to economies of scale.
The Producers
In 2020, China accounted for 76% of global production of lithium-ion batteries. By 2025, even as global production triples, China is projected to maintain its share at 73%.
Further, seven of the top 10 manufacturers are from China. This is the hegemony that India will be keen to break with the Reasi reserves.
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