Lithium reserves abound but the dark battle for lithium batteries is on

Lithium pit

According to the Chief scientist of CATL, “the total amount of lithium in the world is sufficient, and the main reason for the price increase is speculation”. Since last year, the prices of various raw materials for power batteries have risen significantly. Lithium, nickel, cobalt, lithium hexafluorophosphate, diaphragms and even graphite have risen to varying degrees. Among them, the most obvious price increases are lithium and nickel. The price increase of lithium can be described as crazy. On the one hand, lithium ore can be auctioned for sky-high prices, and on the other hand, lithium ore continues to auction at new highs. This is affecting the price of everything that uses it including lithium batteries.

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Surge in Lithium and Nickel prices

Last month, a 54.3% stake in Sichuan Yajiang Snowway Mining Development Co., Ltd. was won at a price of 2.0002 billion yuan ($299 million) after five days and five nights of auction. The starting price was only 3.35 million yuan ($500,000). This means that the final price is 596 times the starting price. This is simply a sky-high lithium ore auction.

On the other hand, the Australian lithium mine Pilbara has been selling its own spodumene by auction since the second half of last year. The company had a new auction record relative to a price of $5,955 / ton. In addition, the price of nickel is also skyrocketing. In fact, the industry now loosely calls this metal  “demon nickel”,

The surge in power battery raw materials is affecting downstream, and power battery companies have to raise prices. What about car companies? They too are raising their prices and it has been on for the past two months.

As an emerging industry, the format of the new energy vehicle field is not mature enough, and there is a certain degree of uncertainty. The crazy price increase of power battery raw materials is a typical example. So, is there any shortage of power battery raw materials? Which raw materials are being hyped? In what way is it fried?

Lithium ore reserves are abundant enough for the development of the electric vehicles

From all the price increases so far, the most obvious price increase is lithium resources. The question is, what about the reserves of lithium resources? Here we look at a set of data. According to the data released by the US Geological Survey in 2020, the world’s proven lithium resources are about 80 million tons, and the reserves are about 17 million tons. This means that the industry can directly mine about 17 million tons of lithium. There are also a lot of lithium resources in nature.

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Media reports show that every 1GWh lithium iron phosphate battery needs to use 86 tons of metal lithium. Similarly, 1GWh ternary lithium battery needs to use 100 to 125 tons of metal lithium. According to data from Huajing Industry Research Institute, the global installed capacity of power batteries in 2021 will be 311GWh. If lithium iron phosphate batteries and ternary lithium batteries account for half of each, the global power battery industry will consume about 3.28 GWh in 2021. Ten thousand tons of lithium metal is not much compared with the reserves of 17 million tons of lithium resources. This means that there will be no shortage of lithium resources in the next few decades at least.

On the other hand, with the continuous improvement of power battery technology, the demand for lithium resources will also decrease. Lithium resources are mainly has three categories, namely ore, salt lake and clay lithium. Of these, ore and salt lake account for 84% of the total reserves. The extraction and development of these two types of products are currently very mature.

China electric car lithium issues

For Chinese electric cars, the biggest problem with lithium resources may be insufficient domestic reserves. China’s lithium resources account for less than 10% of the global total, and some mines are difficult to mine. Relevant data show that China’s dependence on foreign production of lithium resources is as high as 74%.

However, at present, Chinese companies have deployed in places rich in lithium mines such as the Lithium Triangle in South America, North America, and Australia, and the extraction of lithium from salt lakes in China is also progressing rapidly. On the whole, lithium resources are not in very short supply.

Nickel is another very important raw material, and its reserves are also very rich. According to data from the US Geological Survey, the global nickel reserves in 2020 will be 94 million tons. Also, the total resources will reach 270 million tons, which is richer than lithium resources. At present, only ternary lithium batteries use nickel. Based on the existing reserves, there will be no shortage of nickel in the next few decades.

At present, the prices of lithium and nickel elements are increasing wildly. In addition to the reason that the production capacity cannot keep up, another very important reason is that some people are hyping them unnecessarily.

According to public information, many people in the industry have reported that in the third quarter of last year, some traders took advantage of the seasonal production reduction of mining companies and actively stockpiled goods. This made downstream procurement more difficult, and lithium prices were pulled up.

Conclusion: Lithium ore prices may gradually fall

The power battery is the core component of electric vehicles, and its price fluctuations have a very obvious impact on electric vehicles. At present, due to the continuous increase in the price of raw materials, power battery companies are under certain pressure. However, at this stage, both power battery companies and car companies are actively deploying to deal with this problem. Judging from the market conditions, the price of lithium ore has almost hit its highest point. With the increase in the production capacity of mining plants and the continuous deployment of battery companies, the price of lithium ore may usher in a fall.

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