As the world charges ahead with the green transition and electric vehicle uptakes soar, there’s one vital mineral the world is hungry for if it’s going to meet its green targets. It’s something Australia has plenty of, but experts say we must seize the opportunity with both hands.
The global lithium market is emerging at a rapid rate with the potential to be worth $182.53 billion by 2030. According to Grand View Research it is expected to expand at a compound annual growth rate of 18.1 per cent from 2022 to 2030.
In Australia that could translate to an estimated 395,000 clean export jobs to be created by 2040 in Australia if we seize this opportunity with both hands.
The jobs story is critical for federal and other governments as they start to speed up the evolution of clean energy and the coal industry winds down.
This comes as Victoria on Thursday announced a clean energy target of 95 per cent by 2035, an investment in clean energy and legislation for the closure of coal power plants by 2035.
The perfect global storm
As clean energy grows so does the market for lithium which is essential in energy storage, especially for EV batteries.
Tim Buckley, director of the public interest think tank Climate Energy Finance, says EVs have won in the world’s biggest auto market – China, where EV sales grew 154 per cent year-on-year to 3.3 million in 2021. The country represents 55 per cent to 60 per cent of all EV sales in the world, this year alone.
There is a massive structural change underway, he says, and it appears the trends are only set to accelerate.
Rising EV sales, along with an expanding renewable energy sector, are driving the market, with integrated charging stations, green power-generation capability, eMobility providers, battery manufacturers, and energy suppliers anticipated to stimulate market growth in the coming years.
Global EV stock is set to reach 350 million by 2030 and its share will climb up to 20 per cent, according to research from the International Energy Agency.
“Every week there’s massive new investment, new brands, tying up supply chains, investing in upstream supply chain security – this is all fueling the growth of lithium in Australia. Every week we see major new battery manufacturing sites opening across the world.”
It’s also thanks to the Russian invasion of Ukraine that the race for renewables has accelerated – oil security has become a major issue, and oil companies simply can’t drill fast enough to ease high prices.
Benchmark Mineral Intelligence reported lithium prices in China hit an all-time high last week, with prices for lithium hydroxide, which is used in batteries with high nickel content, rising nearly 150 per cent this year to nearly$US74,000 ($117,230) a tonne.
Chinese automotive manufacturer BYD – the largest EV producer in the world – discontinued production of combustion-engine auto production with immediate effect in March.
China wants plug-in hybrids and hydrogen fuel cell cars to make up 20 per cent of sales by 2025, and will ban internal combustion engine sales by 2035.
“It’s very telling, the writing is on the wall, it’s inevitable, it’s strategic. Capital markets are flowing,” Buckley says of BYD.
Japanese and Korean countries have been betting on hydrogen fuel cell electric cars to accelerate the race to zero emissions vehicles (ZEVs). But the success of Tesla, Ford, and other EV car companies, Buckley says, are piggybacking off the success of EVs in China. It means that lithium is in the lead.
“The jury is in – lithium is going to win the race for fuel cells for electric passenger vehicles.
For the month of August, he says, almost 30 per cent of all passenger vehicle sales in China were plugins and EVs. In Norway, it’s 80-90 per cent of new vehicle sales.
Massive demand and capital flow
According to Buckley, despite the economic headwinds lithium prices are still hitting all time record highs, due to rising demand and tight supply.
We are a global leader in lithium both in terms of capacity and financial market strength – because people in the West don’t want to invest in China.“
Australia supplies about 60 per cent of the world’s lithium in the form of a mineral concentrate called spodumene, which is the precursor to lithium. The country has the largest quarries in the world, with all but one mine located in WA.
“There’s a big big investment boom going on, and Australia is at the head of the queue because five of the top 10 lithium companies in the world are in Australia,” Buckley said.
“We are a global leader in lithium both in terms of capacity and financial market strength – because people in the West don’t want to invest in China.
“I find it fascinating to try and map out the massive growth opportunity.”
There’s a big big investment boom going on, and Australia is at the head of the queue because five of the top 10 lithium companies in the world are in Australia.”
The biggest Australian players, according to Buckley, are Pilbara Minerals with a market capitalisation of $16 billion, Mineral Resources with a market capitalisation of $14 billion, and IGO Limited with a market capitalisation of $11 billion.
Other major players in Australia include Allkem, Liontown Resources, Core Lithium, and even Wesfarmers (owner of Bunnings, Kmart, Officeworks) has refineries in the development stage.
The combined market capitalisation of those companies is $60 billion. Going back to 2016, the market capitalisation was $6 billion. The price of lithium has gone up tenfold as well.
With one of the largest lithium deposits globally (about 35 per cent of the worlds reserves of lithium), Australian exports of metals used intensively in low emission technologies (copper, nickel and lithium) are expected to double to around $33 billion in export earnings in 2022–23.
Over the past two years, the price of lithium has risen 13-fold globally, hitting an all-time high of $77,000 per tonne in March 2022 according to the Australian government.
And lithium export earnings are forecast to increase by more than ten-fold in just two years from $1.1 billion in 2020–21 to almost $14 billion in 2022–23 before easing to around $13 billion in 2023–24.
Other top exporters include Chile, China, and Argentina.
Four mineral operations in Australia, two brine operations each in Argentina and Chile, and two brine and one mineral operation in China accounted for the majority of global lithium production in 2021 according to the US Geological Survey.
The world’s largest lithium producer, Albemarle Corporation, in partnership with the world’s second biggest producer, Sociedad Química y Minera de Chile, operates Chile’s Salar de Atacama – home to almost a quarter of the world’s current supply of lithium. Albemarle also has assets in Australia, at Kemerton Strategic Industrial Area in WA, in Greenbushes, WA, in Wodgina WA, and Kemerton WA, alongside partners and subsidiaries.
More training is needed
With all this investment flowing in, it’s clear that more training is needed to ensure the workforce is well equipped.
It’s estimated that the lithium industry could generate over 100,000 new jobs in Western Australia by 2025.
In a report produced for the Australian government Tim Buckley and co-authors found that 395,000 clean export jobs will be created by 2040 if Australia takes advantage of the clean energy opportunities available to it, as fossil fuel demand plummets globally by 80 per cent by 2040).
And with $10 billion of value-added critical minerals under construction right now in Australia – that’s tens of thousands of jobs in the pipeline over the next five to seven years in lithium and beyond that time horizon, thousands of ongoing employment opportunities.
The government has been leveraging public-private financial partnerships with Export Finance Australia (previously known as the Export Finance and Insurance Corporation) and The Modern Manufacturing Initiative to accelerate the flow of capital into developing Australia’s critical minerals sector.
But getting this skilled labour force on the ground requires training. There are massive structural changes required in Australia, Buckley tells us, and value adding critical minerals for export provides a bigger opportunity.
“We are building three of the world’s largest lithium hydroxide refineries, the largest outside of China, so there’s a once in a generation opportunity to become the world’s quarry and to value-add minerals for export.”
“Could this turn down? Anything can happen, but all the trends are accelerating the deployment of EVs, and decarbonisation requires a decades-long structural change.”
“Australia will be the lucky country if we seize with both hands this opportunity.”
I wonder whether lithium mining is as good as we can get environmentally. We’re on a very dry continent and the mining uses and wastes a lot of water. I’ve seen the pictures of the tree clearing and ponds of waste water. Where are the clean energy and environmental researchers on this new mining boom? Are there alternatives to producing lithium like this or using alternative methods?
We should be manufacturing the batteries in Australia and selling them to the rest of the world. That is value adding, we don’t want to be just a quarry, allowing our country to be dug up and shipped overseas for minuscule profits for Australians compared to what is possible. This could be a road to riches for many or a road to ruin for many and riches for a very select few. Most of the money is in the product not the ingredient.