LITHIUM MARKET ANALYSIS

Lithium compounds are highly soluble, so low concentrations of lithium in water do not harm the environment. The main industrial applications of lithium are based on its chemical properties. It is a highly reactive metal that easily loses one electron. It forms lithium compounds containing Li+ cation, and lithium carbonate is a great example of this. Lithium carbonate exhibits a pronounced retrograde solubility. Lithium is highly reactive and pyrophoric. As a result, lithium is commonly kept in mineral oil, as it is insoluble in cold water. The electric vehicle industry is the biggest driver of lithium demand. A single electric car uses five times more lithium than a smartphone, and a higher-range electric car consumes the equivalent of ten thousand cellphones.

Market Statistics:

The global Lithium market was valued at US$ 6.8 Bn in 2021 and is forecast to reach a value of US$ 19.2 Bn by 2030 at a CAGR of 12.2% between 2022 and 2030.

Asia Pacific held dominant position in the global Lithium market in 2021, accounting for 71.1% share in terms of volume, followed by Europe and Asia Pacific, respectively.

Figure 1. Global Lithium Market Value Share (%), By Region, 2021

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Recent Developments:

Oct 2021

Albemarle signed investment agreements with the  Yangtze River International Chemical Industrial Park  in the Zhangjiagang Free Trade Zone (Jiangsu  province), and the Pengshan Economic Development  Park in the Pengshan District (Sichuan province), for  setting up plants with a planned production capacity  of 50,000 metric tons lithium hydroxide per annum.

Sep 2021

Albemarle Lithium UK Limited signed a definitive agreement to acquire all of the outstanding equity of Guangxi Tianyuan New Energy Materials Co. Ltd for USD 200 Billion, subject to certain adjustments.

Jan 2022

Ganfeng LiEnergy, a subsidiary of Ganfeng Lithium, started operating a battery factory with an annual capacity of 10 GWh in Xinyu, Jiangxi province. The factory has production lines for prismatic lithium iron phosphate batteries, pouch cells, as well as solid-state batteries.

Nov 2021

Ganfeng Lithium Co Ltd and its unit GFL International Co Ltd signed a contract to supply battery-grade lithium products to Tesla for three years starting from 2022.

Market Drivers:

High demand from automotive industry where it is used in the production of electric vehicle is driving growth of the lithium market. Growing government initiative for zero-emission vehicle is another major key factor fostering market growth. For instance, in 2019, the number of light electric vehicles worldwide reached 2,264,400 units, which was 9% higher than the number in 2018. However, the first half of 2021 was impacted by the lockdowns related to COVID-19, causing unprecedented declines in monthly vehicle sales from February onward. The global sales of electric vehicles were estimated to be 3.24 Billion units in 2021.

Growing demand for lithium battery from portable consumer electronics is again anticipated to foster market growth. Expanding consumer electronic market will favour the market growth. According to the Japan Electronics and Information Technology Industries Association (JEITA), the exports of electronics grew to JPY 10,822,446 Billion, registering a growth of 117.2%, in 2021.

Figure 2. Global Lithium Market Value Share (%), By Type, 2021

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Market Restraints:

Gap in demand and supply is expected to restrict the market growth. For instance, according to the Coherent Market Insights, According to Rio Tinto, a substantial supply gap for lithium has been forecast, which is experiencing  rapid demand growth on the back of the accelerating EV uptake and that the gap must be addressed  within the next 10 years.

Lack of technical ability is a major problem for new entrants. For instance, the Bolivian state has faced serious management and technical hurdles in extracting massive, high-density lithium deposits in the salt flat Salar de Uyuni. Similarly, Chinese producers, Quinghai Lithium and Citic Guoan MGL, hoping to exploit sources near Tibet, have experienced some major hurdles. This factor is expected to hamper the market growth.

Market Opportunities:

Increasing adoption of lithium in smart grid electricity is expected to provide lucrative growth opportunities for the market players. Increasing investment in electricity grid is expected to positively shape the market growth. For instance, investments in electricity grids were estimated to reach USD 290 billion in 2021 by IEA, recovering from 2021 and surpassing the 2019 level of USD 270 billion.

Growing use of lithium in aircraft production is anticipated to bring profitable growth opportunities for the market in the near future.  For instance, lithium is considered a lightweight metal and is widely preferred in the manufacture of aircraft body materials. Lightweight components increase the fuel efficiency of aircraft, and the lithium market finds ample opportunities in aircraft manufacturing. In combination with aluminum and copper, lithium is widely used in manufacturing airplanes and jet fighters. Approximately 400 kg of lithium is required for manufacturing a single airbus A350.

Market Trends/Key Takeaways:

New product launch is expected to be a major trend in the market. This is estimated to impact the market growth positively. For instance, in May 2021, Natural Battery Technologies announced the launch of automotive safe batteries through using Lithium Iron Phosphate (LFP), Advanced Cell Chemistry Carbon based battery for electric vehicles and Inverter Lithium Batteries for home and commercial use.

Increasing defence budget is expected to contribute to the market growth. In Germany, as of February 2021, the country reported  a record high in NATO defense spending for 2021,  submitting a budget of EUR 53 billion (~USD 63.8  billion) and witnessing a growth rate of 3.2% compared  to 2021. Similarly, as per the Budget 2021-22 of India, the total defense budget announced worth INR 4,78,195.62 crore for 2021-22, which is 13.73% of total Central Government expenditure and 2.15% of GDP for 2021-22.

Competitive Landscape:

1. Albemarle Corporation
2. ALLKEM LIMITED
3. Ganfeng Lithium Co. Ltd
4. Lithium Asutralia NL
5. Livent
6. Mineral Resources
7. MORELLA CORPORATION LIMITED
8. Sichuan Yahua Industrial Group Co. Ltd
9. SQM SA
10. Tianqi Lithium
11. Avalon Advanced Materials Inc.
12. Pilbara Minerals