Global Research
- Energy transition

Lithium 101

By Howard Lau, Analyst

21 November 2022

Article

Article

The “white oil” critical to our electric future

Lithium is a core component in electric vehicle batteries, making it a vital part of the transition to a low-carbon economy. It has become so sought-after that it is sometimes called “white oil”. We unpack 10 key facts about how it is used, where it is produced – and why many places are seeking to expand production.

1. Lithium has valuable chemical properties. It is a lightweight metal with the capacity to store large amounts of energy. This makes it an ideal material in the manufacturing of batteries, as it increases their energy density (the amount of energy stored per gram).

2. One of its key uses in in electric vehicle batteries. Lighter, more powerful batteries make electric vans, cars and bikes a more attractive proposition for consumers. Over recent years, electric vehicles have grown increasingly mainstream, driving increased demand for lithium-based batteries.

3. Indeed, most lithium mined today goes into electric vehicle batteries. We estimate that almost 80% of current demand is for the production of lithium-ion batteries, far outstripping demand from other industries including glass and ceramics, air conditioning, and medical uses.

4. Demand has surged over recent years. As recently as 2016, battery production accounted for only 38% of global lithium demand – half the proportion it stands at today.

38%

Global lithium demand accounted for by batteries in 2016

79%

Global lithium demand accounted for by batteries in 2022 (estimated)

5. Lithium has few substitutes. Other materials including nickel, cobalt, manganese and graphite are also important in building batteries today. As new types of battery technology evolve, we think the relative importance of these other materials may increase and decrease. But all the types of battery technology under development are likely to use lithium for the foreseeable future, in our view.

6. Lithium resources are distributed unevenly around the world. They are primarily found in hard rocks called spodumene, lepidolite, petalite, and amblygonite, as well as in underground deposits of salty water. The biggest proven reserves are in Bolivia (24% of the global total), Argentina (21%), Chile (11%), the US (10%), and Australia (8%).

7. Four countries dominate lithium production. Australia, Chile, China and Argentina accounted for 96% of global supply in 2021.

8. Many countries are now looking to expand production. Existing major producers, including China, are aiming to start new projects to extract lithium. In addition, the US, Canada and Brazil plan to boost production, and could account for a larger proportion of global supply by 2030.

9. Recycling is key for the future. Recycled lithium accounted for only 1.4% of global supply in 2021, according to energy consultancy Wood Mackenzie. But many countries are now upping their investment in recycling facilities, particularly as disposing of lithium batteries in landfill poses environmental risks.

10. Recycling will take some years to gain momentum, however. Even by the end of this decade it will account for less than 10% of global lithium supply. In part, this is because there’s not that much to recycle yet. But as they today’s electric batteries reach the end of their effective life over the coming years, there will be a marked increase in the amount of material available for recycling

First published 10th October 2022.

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The following analyst(s), who is(are) primarily responsible for this document, certifies(y) that the opinion(s), views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Howard Lau, CFA

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