Fitch: lithium supply will remain tight until 2030

Research firm Fitch Solutions (Fitch Solutions) released its latest industry report saying that despite the strong growth in lithium production in the next few years, the global lithium market will remain very tight in the coming years as the green transformation accelerates.

Fitch expects the global lithium market to be in short supply until 2030. The agency believes that in this context, lithium supply will face many unfavorable factors and bottlenecks, which may profoundly change the market pattern.

The report points out that due to the rapid progress of existing projects, global lithium production will accelerate in the next few years, and new projects will continue to emerge under the strong momentum of the green transformation and the battery industry.

Fitch forecasts that global LCE lithium production will increase by about 600000 tonnes between 2021 and 2025 (compared with 2021), compared with 240000 tonnes between 2016 and 2020. Fitch also expects lithium production to increase by another 290000 tons between 2026 and 2030, although this long-term forecast is conservative.

The emergence of new lithium production sites

The report shows that not only the existing established lithium-producing countries will achieve further production growth, but there will also be many new lithium suppliers in the next 10 years.

Fitch expects Australia's lithium production to accelerate, nearly tripling between 2020 and 2030. Chile's production will also more than double, while Brazil's production will increase fivefold because of its low base.

With interest in lithium projects, government support and increased funding, there will be a large number of new lithium producers in the future, which will account for a sizeable share of global lithium production by 2030, the agency said. These countries include developed markets such as the United States, Canada, Germany and other European countries, as well as developing countries such as Mexico, Serbia and Zimbabwe.

Fitch believes that advances in mining technology will also pose risks to supply.

At present, only hard rocks (traditional mines, such as Australia and Brazil) and traditional brine resources (Brazil and Chile) are used for large-scale commercial production of lithium chemical products.

However, many new participants are developing new extraction technologies, namely geothermal brine and sedimentary (clay) deposits, which Fitch believes could subvert the main supply of lithium.

The agency points out that with the progress of these new technologies, factors such as the institution, cost curve and ESG of the lithium industry will continue to evolve. The development of lithium recycling industry in the future may also alleviate some long-term lithium supply problems.

Fitch warned that lithium supplies would face many weaknesses, including geographical concentration at the mining and refining levels, and the limited presence of established and large mining companies. In addition, growing resource nationalism in the key lithium market could also hamper the development of new projects.

However, Fitch also stressed that lithium reserves are adequate and continue to grow, suggesting that lithium supply has great potential in the long run.