Advertisement
Canada markets closed
  • S&P/TSX

    22,167.03
    +59.95 (+0.27%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CAD/USD

    0.7387
    +0.0014 (+0.19%)
     
  • CRUDE OIL

    83.11
    +1.76 (+2.16%)
     
  • Bitcoin CAD

    95,931.03
    +2,358.40 (+2.52%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,254.80
    +42.10 (+1.90%)
     
  • RUSSELL 2000

    2,124.55
    +10.20 (+0.48%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • NASDAQ futures

    18,465.00
    -38.75 (-0.21%)
     
  • VOLATILITY

    13.01
    +0.23 (+1.80%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6844
    +0.0039 (+0.57%)
     

Race for Lithium Supplies Escalates as Automakers Invest in Mines for EV Market

The race for securing lithium supplies for electric vehicles (EVs) is heating up, with multiple automakers throwing their hats into the mining arena to secure future lithium supplies. The mad rush by several EV manufacturers at the same time is leading to what materials experts at Benchmark Mineral Intelligence are calling a lithium “land grab”.

It’s a trend that seems to have no end in sight with some of the bigger headlines of the past year going in this direction, such as:

· General Motors announced plans to invest $650 million in a new Nevada lithium mine

· General Motors signing a 6-year North American lithium hydroxide supply deal in 2022

ADVERTISEMENT

· Tesla signed a new agreement to secure lithium potentially from Quebec

· German Chancellor Olaf Scholz made a trip to Latin America to help his country secure lithium supplies for groups like Mercedes-Benz Group AG and Volkswagen AG

· Stellantis partnered with a battery materials manufacturer for a five-year supply deal for high-purity manganese sulfate monohydrate for electric vehicle battery packs

· US Department of Energy guaranteed a conditional loan to a lithium company to develop another Nevada project with offtake agreements already signed to Ford and Toyota

· Chinese EV manufacturer BYD is looking to buy lithium mines in Africa and has secured a contract for lithium extraction in Chile

Automakers are starting to realize that owning or having a controlling stake in the source of lithium is the only way to ensure a steady supply.

This is important because EVs rely on lithium-ion batteries, and without guaranteed lithium, the production of these vehicles could be at risk.

Read:

It takes about two years to build a battery factory (gigafactory) and 10 years or more to finance and build a lithium mine. As the demand for EVs continues to grow, automakers will need to make even larger investments in lithium mining.

Nickel will also play a big role in the EV market, along with lithium. Automakers will need to scale up production of the chemical versions of these minerals, such as lithium hydroxide carbonate and nickel sulfate.

Because they’re in fierce competition with Chinese entities to secure these supplies, it’s also becoming increasingly important for these EV companies to secure lithium from non-Chinese sources, as China currently controls a large portion of the global lithium supply. This puts companies at risk of supply chain disruptions, making it crucial for them to find alternative sources.

While the headlines are starting to heat up as the lithium land grab heats up, it’s important to realize that the race for securing lithium supplies is just beginning—and it’s expected to last at least for the next decade.

So beyond securing supply deals, automakers are starting to invest in lithium mines themselves, as seen by the latest GM deal, which according to the automaker giant’s press release is the largest investment by an automaker into the lithium mining sector to date.

Moves like these will only increase, as the need to ensure a steady supply of the mineral, which is crucial for the production of EVs becomes even more important.

So while the lithium market is heating up like crazy, so too are the EV wars, where major players like Ford and GM are having to pull out all the stops to gain ground against Tesla. Meanwhile, Elon Musk’s Tesla has already begun hiring out for his company’s lithium refinery, which the CEO once called a “license to print money”. It’s a move that can’t happen any sooner for the EV giant, as the carmaker continues to face higher and higher lithium prices as its supply deals get amended.

It’s the lay of the land now, as the price of lithium carbonate continues to rise, and it’s important for companies to secure non-Chinese sources to reduce the risk of supply chain disruptions. While the demand for EVs is growing, and as a result, the demand for lithium and nickel is also increasing.

This next decade will be an interesting time for the lithium sector, as companies compete for access to this precious mineral.