With the annual production of electric vehicles (EVs) set to grow from 3.4 million in 2020 to 12.7 million in 2024, and battery production growing from 95.3GWh to 410.5GWh over the same period, demand for lithium is expected to rise from a forecasted 47.3kt ('000 tonnes) in 2020 to 117.4kt in 2024 at a 25.5% compound annual growth rate (CAGR), according to GlobalData, a leading data and analytics company.
Lithium players Piedmont Lithium Ltd (ASX:PLL) and Anson Resources Ltd (ASX:ASN) are set to gain from the surge in global demand for lithium, particularly in China - where lithium-ion battery manufacturing capacity is expected to increase from an estimated 388.2GWh in 2020 to 575.3GWh in 2024.
Piedmont shares recently soared to a new 13-year high after forging a binding agreement with Tesla Inc (NASDAQ:TSLA) for the supply of spodumene concentrate from the company’s Piedmont Lithium Project.
The Piedmont Lithium Project is in the world-class Carolina Tin-Spodumene Belt in North Carolina, one of the world's premier regions for lithium exploration, given its favourable geology and ideal location with easy access to infrastructure, power, R&D centres for lithium and battery storage and major high-tech population centres.
Piedmont is accelerating mine and concentrator development to support Tesla’s plans, expand mineral resources and potentially increase planned annual spodumene contrate production capacity.
Revival in lithium production
GlobalData senior mining analyst Vinneth Bajaj said: “Lithium metal production is expected to reach 134.7kt in 2024 versus 58.8kt in 2020.
“This follows a significant 18.2% decline in 2019 to 78.2kt, resulting from sluggish global EV sales and a steep fall in prices, which, in turn, encouraged reduced production levels.
“Lithium production over the next four years will be mainly supported by output from existing Australian mines such as Mount Cattlin and Pilgangoora.
“Other major mines include Mount Marion, Salar de Atacama and Salar del Hombre Muerto located in Australia, Chile and Argentina, respectively.”
Commercial lithium plant in Utah
Anson Resources is continuing to make progress on the development of its planned bromine/lithium plant at the Paradox Brine Project claims in Utah, US.
The company plans to continue with its re-entry program to increase bromine and lithium carbonate equivalent (LCE) estimated tonnages in the JORC indicated and inferred categories.
Importantly, the completion of this further re-entry program will enable Anson to extend its Preliminary Economic Assessment to Stage 3 of its project, expansion of the sodium bromide plant and a commercial lithium carbonate plant.
Boosting electric vehicle sales
Bajaj said that nearly 12.7 million EVs are expected to be produced across the globe in 2024, increasing from 3.4 million in 2020.
“China is determined to boost EV sales, targeting a 20% share of the new car sales by 2025, versus just 5% in 2019.
“The country’s decision to cut subsidies in a phased manner until 2022, rather than eliminating it in 2020, is expected to provide an essential boost to the domestic market, as well as the overall global EV market.”
Tesla’s big plans
On its Battery Day, Tesla announced it is working towards achieving 100GWh of cell production capacity by 2022 and up to 3,000GWh by 2030.
This is far greater than other manufacturers such as China’s BYD, which is expected to expand its capacity to 126GWh in 2024, versus 40GWh in 2019.
Japan’s Panasonic, a key supplier to Tesla itself, is expected to increase its capacity from 40GWh in 2019 to 63GWh in 2021, while LG Chem will expand from 65.2GWh in 2019 to 172.4GWh in 2024.
Bajaj added: “Tesla also announced a revolutionary 4680 cell design, the production of which has already begun with 10GWh of annual capacity expected through 2021.
“It is expected to completely change the cost dynamics of EVs by reducing the overall cost of its long range and high-performance battery cells.”