Near insatiable demand for electric vehicles, piqued further by surging oil prices, is accelerating the scramble for components and raw materials. Miner Rio Tinto has completed the $825mn acquisition of the Rincon lithium project in Argentina. Hot on its heels, start-up Britishvolt inked a memorandum of understanding with Indonesia’s Bakrie to supply nickel sulphate for battery production.
Car manufacturers and their suppliers have learnt from the semiconductor shortage of the past two years. As manufacturers go all in on EVs, the race for battery supplies is pushing prices for raw materials ever higher. Spot prices for lithium carbonate have more than doubled this year to a record of more than $70,000 per tonne. For now, manufacturers can easily pass that on to customers. But a battery supply crunch looms.
EVs accounted for about 60 per cent of lithium needs last year, a level Citi expects to rise to 80 per cent by 2025. Some substitution, say sodium-ion, is possible but lithium is needed for almost all current battery production. Rio expects demand for the commodity to rise by about a quarter annually for the next decade. Lithium resources are abundant, but getting to them is not easy. Growing awareness of ESG concerns at miners makes it harder still. A supply deficit is expected to persist for at least the next few years.