Ker, P., & Fowler, E. (2023). Billionaires v BHP: who is right about lithium? [Audio podcast episode]. In The Fin. SAP. Retrieved from https://www.getpodcast.com/podcast/billionaires-v-bhp-who-is-right-about-lithium

https://podcasts.apple.com/au/podcast/the-fin/id1649633861?i=1000632607751

• Rapid Growth and High Demand: The demand for lithium, driven primarily by the burgeoning EV market, has led to significant growth in the industry. As of the early 2020s, the global market for lithium-ion batteries was valued at around $40 billion, with projections to reach over $100 billion by 2030. Australia, contributing significantly to global lithium production, has capitalized on this demand, moving from supplying just over 10% of the world’s lithium in 2000 to nearly 50% by 2020.
• Lithium as a Key Economic Contributor: In 2020, the value of Australia’s lithium exports was approximately $1.1 billion AUD. While still far behind commodities like iron ore, the rapid growth trajectory indicates lithium’s increasing economic significance.
• Booms and Busts: The initial boom (2015-2018) saw a dramatic increase in lithium prices, followed by a bust as Chinese subsidies waned. However, the current boom is characterized by more stable prices, reflecting a diversified global demand.
• Strategic Importance of Lithium: Lithium’s importance in energy transition strategies worldwide has positioned it as a strategic resource in international trade and geopolitics, affecting relations especially between major powers like the U.S. and China.
• Australian Lithium’s Global Impact: Australia’s dominant position in lithium supply, despite not having a significant EV manufacturing industry, underscores its critical role in the global supply chain for EV batteries.
• Investor and Billionaire Involvement: The lithium sector’s growth has attracted investments from Australian billionaires and major companies. For instance, mining magnate Gina Rinehart acquired a significant stake in Liontown Resources, a key player in the lithium industry. This kind of investment reflects confidence in the sector’s profitability and future prospects.
• Challenges and Opportunities: The lithium industry’s development is affected by factors such as environmental impacts of lithium mining, evolving extraction technologies, and the potential for new lithium deposits to be developed globally.
• Government Policies and Investments: The U.S.’s Inflation Reduction Act and Australia’s own policies are examples of how governments are reshaping the lithium market. These policies aim to foster more secure and sustainable supply chains and reduce reliance on dominant producers like China.
• The Debate on Lithium’s Future:
• Believers’ Argument: Proponents point to the increasing global EV sales (expected to rise from 3 million in 2020 to 14 million by 2025) as a primary driver of lithium demand. They argue that this surge in EV adoption, along with energy storage for renewable energy, will keep lithium demand high.
• Non-Believers’ Argument: Skeptics focus on the potential oversupply, particularly from South American sources, where lithium is extracted from brine in a potentially more cost-effective manner. They argue that advancements in extraction technologies could lead to an increase in supply, driving down prices. For instance, new methods like Direct Lithium Extraction (DLE) are being explored, which could significantly reduce costs and environmental impacts of lithium production.
• Influencing Factors: Technological advancements in extraction and recycling, geopolitical shifts (like U.S. efforts to diversify supply chains away from China), and the pace of global EV adoption are critical. Environmental concerns and regulations could also influence mining practices and lithium availability.
• Potential to Match Iron Ore: While lithium’s current export value is a fraction of iron ore’s (Australia’s iron ore exports were worth $124 billion AUD in 2020 compared to lithium’s $1.1 billion AUD), the potential growth of the EV and renewable energy markets could see lithium’s economic importance rise significantly in the coming decades.