As surely we all know by now, lithium is a key material used in the production of batteries for the electric vehicles that we are being “encouraged” to buy, albeit without much thought of what that encouragement might lead to. Top-down mandates tend to be like that. Unsurprisingly, lithium is currently in short supply.
Elon Musk wants to mine it, China is scouring Tibet for it, battery makers are crying out for it. Lithium, the wonder metal at the heart of the global shift to electric cars, is in a full-blown crisis. Demand has outstripped supply, pushing prices up almost 500% in a year and hindering the world’s most successful effort yet to halt global warming.
The shortage of lithium is so acute that in China, which makes about 80% of the world’s lithium-ion batteries, the government corralled suppliers and manufacturers to demand “a rational return” to lower prices. Analysts at Macquarie Group Ltd. warned of a “a perpetual deficit,” while Citigroup Inc. nearly doubled its price forecast for 2022, saying an “extreme” rally could be coming.
There is a view that the squeeze may have peaked (a minority view, but it’s out there), but if it has peaked, it is doing so from a very high level.
Expense apart, lithium has its problems, ranging from where it is produced (the U.S. has just one source at the moment, a brine operation, yes, brine, in Nevada), to the mess associated with its mining (it can also be found in a type of rock).
And now there is this (via Reuters):
Lithium’s pivotal role in electric vehicles makes it an important commodity in meeting global targets to cut carbon emissions, and it was added to the EU’s list of critical raw materials in 2020.
Great!
But . . .
The European Commission is currently assessing a proposal by the European Chemicals Agency (ECHA) to classify lithium carbonate, chloride and hydroxide as dangerous for human health.
That would result in a more restrictive regulatory framework for their use at a time when the EU is aiming to be self-sufficient in electric vehicle batteries by 2025.
The proposal doesn’t ban lithium imports, but if legislated will add to costs for processors from more stringent rules controlling processing, packaging and storage.
I’m not entirely convinced that the central planners behind the EU’s headlong rush into electric vehicles were at the top of their game.