LITHIUM -THE WHITE GOLD - Nandini Jain

 

One of the first three chemical elements to form in the universe, this metal, billions of years later, is all set to become the “White Gold for Electric Mobility”, as economies all around the globe seek to transition away from the unsustainable reliance on fossil fuels for energy needs. You must have guessed it by now- this article is about Lithium batteries all set to take the center stage as a strategic resource of energy storage for the increasingly demanded electric vehicles worldwide.

 

Why is Lithium called White Gold?

 

Tesla’s CEO Elon Musk rightly agrees that “Lithium Batteries are the new oil”. Lithium remains the

common denominator in all energy storage technologies. It is the most important and basic element used in batteries of mostly all of our electronic gadgets-our laptops, cell phones, computers, tablets and most importantly in the batteries powering electric mobility so much so that Electric vehicle growth will be responsible for more than 90% of demand for lithium by 2030. Following are the key benefits that Lithium-ion batteries provide which is making them the revolutionizing factor in the EV space,

 

●      High Power Density: Lithium-ion batteries are capable of packing huge amounts of power. They have one of the highest energy densities among different battery types, in the range of 100 – 200 Watt-hour/kg.

●      Low Self-Discharge Rates: Lithium-ion batteries have self-discharge rates in the range of 1% to 3% per month. This means that these batteries have a high shelf life when sitting on the shelf due to unwanted chemical actions within the cell.

●      Low environmental impact and high recyclability: In comparison to lead acid and Nickel-Cadmium batteries which are highly toxic and difficult to recycle, Lithium can be sent back to industries and be reused in manufacturing energy storage systems.

●      Fast charging: Lithium-ion takes a maximum of one hour or less to charge. This is much faster as compared to lead acid batteries which take more than 10 hours to charge.

 

Due to these reasons, it has become a vital mineral in portable and rechargeable batteries, earning the name White Gold. With the demand for electric vehicles expected to grow more than tenfold by 2030, the global lithium-ion battery market size is projected to grow to USD 116.6 billion by 2030. This unprecedented increase in demand for lithium has also led to a price rally, with prices of lithium soaring by approximately 200% in 2021 and 2022.

 

Lithium: Demand and Supply Drivers

 

Demand:

 

Not long ago, in 2015, less than 30 percent of lithium demand was for batteries; the bulk of demand was split between ceramics and glasses and greases, metallurgical powders, polymers, and other industrial uses. However, by 2030, batteries are expected to account for 95 percent of lithium demand. Now, as the world pushes for more and more sustainable energy, Bank of America predicts that demand for lithium is expected to rise to 3 million tonnes by 2030 and to 5 million tonnes by 2050. Even during the COVID pandemic and other supply neck bottlenecks brought about by the Russia-Ukraine War, there was no dip in the demand for lithium batteries as EV sales kept shooting up. According to the International Energy Agency (IEA), EV sales hit a record high in 2021 and are set to do so in 2022 also. Due to this spiked demand, lithium prices skyrocketed by around 550 percent in a year: by the beginning of March 2022, the lithium carbonate price had passed $75,000 per metric ton and lithium hydroxide prices had exceeded $65,000 per metric ton (compared with a five-year average of around $14,500 per metric ton).

 

Supply:

 

According to the International Energy Agency (IEA), China controls more than half of the world’s lithium processing and refining and has three-fourths of the lithium-ion battery megafactories in the world. Not only this, but more than 80% of the world’s raw lithium is mined in Australia, Chile, and China. While lithium has been found on each of the six inhabited continents, Chile, Argentina, and Bolivia—together referred to as the “Lithium Triangle”—hold more than 75 percent of the world’s supply beneath their salt flats.

 

Innovation in Mining: Supply-demand equilibrium:

 

Though Lithium mining is cheap and effective and the lithium of consumed batteries can be reused, mining in itself is not a very sustainable process. Mining approximately requires 500,000 gallons of water per ton of lithium. It harms the soil and contaminates the air and the already limited water supply. In Tibet, for example, Chinese lithium mining has leaked chemicals like hydrochloric acid into the Liqi River, which resulted in the poisoning of fish and the killing of livestock. The mining process is thus not eco-friendly. Not only this, supply will have to be ramped up shortly to meet the pressing demand.

 

With super hiked-up demand and supply constraints, only new technologies can fill the gap and make the lithium mining process more environment-friendly. According to a report by McKinsey, alongside increasing the conventional lithium supply, which is expected to expand by over 300 percent between 2021 and 2030, direct lithium extraction (DLE) and direct lithium to product (DLP) can be the driving forces behind the industry’s ability to respond more swiftly to soaring demand. They offer a significant promise of increasing supply, reducing the industry’s environmental, social, and governance (ESG) foot­print, and lowering costs, with already announced capacity contributing to around 10 percent of the 2030 lithium supply. With the introduction of new lithium mining areas in Eastern Europe, Russia's capacity base should be enough for supply to grow at a 20 percent annual rate.

 

One of the most striking features of lithium-ion batteries is that they can be recycled. Depending on the recycling process employed, it is possible to recover up to 80 percent of the lithium contained in end-of-life batteries. By 2030, such secondary supply is expected to account for slightly more than 6 percent of total lithium production.

 

 

Lithium Batteries: Is it all glitters?

 

Though lithium-ion batteries are the dominant players, they aren’t the most environmentally friendly option. Batteries are key to humanity’s future — but they come with environmental and human costs, which must be mitigated. Research has already started on the various substitutes - inexpensive, abundant, safe, and sustainable battery chemistry that uses calcium ions or sodium ions. Solid-state batteries are yet another innovation that could bring a storm in the current scenario.

 

Not only this, it will be difficult for economies to compete worldwide given the dominant hold a few countries have over the lithium reserves. China holds substantial reserves and lithium geopolitics is set to potentially create new dependencies and opportunities for conflicts. Centralized resources in a not-so-centralized energy market can create issues for the economies to increase their reliance on Lithium batteries. For example, given the Chinese strength, India has already acquired Faradion, a sodium-ion start-up, leveraging incentives offered by the Indian Government under the advanced chemistry cell program.

 

Thus, it will be interesting to see whether lithium-ion batteries win the battle of their continued dominance as the white gold or lose out to more eco-friendly alternatives.

 

 

My Take:

 

I believe that the days of lithium-ion will be numbered if no innovation is brought into place. The process of mining will have to be made environment-friendly and sustainable if it is to continue its domination. There are ample substitutes available in the ecosystem and a lot of research is already going into the same. Countries have already started heavily investing in search of alternatives. However, in the short term, lithium will play the role of white gold, boosting the pick up of EVs globally.