Lithium prices surge, Tesla also a factor

Prices of lithium carbonate on the Chinese market have risen by 253 % over the past year. The increase is mainly due to higher demand for batteries in the automotive industry. Tesla has also played a part, having already received more than 400,000 orders for the new Model 3. 

Lithium carbonate is a key component in the production of lithium batteries for electric vehicles, whose importance has been growing recently. Rising demand for lithium carbonate has also pushed up lithium prices, which have climbed to as much as $23 000 per tonne in China in recent weeks. The sharp increase lately has also been caused by China's demand significantly exceeding its own production.

Moreover, production of this raw material is limited to just five countries (Australia, China, Argentina, Bolivia and Chile), and the number of companies involved in lithium production is also limited. Just three companies control 90 % of lithium mining outside China. According to 2014 data, lithium production in the five largest countries amounted to only 35,000 tonnes.

Lithium prices are not the only determining factor

Until the end of last year, lithium battery prices had been falling significantly; the question for the period ahead will be how the price of the main raw material will affect battery prices. Lithium prices only recorded a significant increase at the turn of 2015/2016.

A number of other factors affect the final price of batteries. For example, the efficiency of battery recycling has increased in recent years, making it possible to reuse most components made of nickel, cobalt or iron from batteries.

Progress has also been made in the efficient use of materials, reducing the amount of lithium needed to manufacture a battery and power an electric vehicle.

One example is the Chevy Spark EV, which uses batteries from LG Chemicals. In 2014, a battery with the same capacity required a total of 226 lithium cells, while in 2015 it required only 192 cells. This represents savings of approximately 15 % in a single year.

Lithium mining is also possible in Czechia

In Czechia, lithium reserves are located beneath Cínovec, where up to 6 % of global reserves of this raw material may be found. Australian company European Metals has already expressed an interest in mining there. According to Jaromír Starý of the Czech Geological Survey, the deposit is impressive in terms of the quantity of metals, but the ore is relatively low-grade.

While the lithium content in zinnwaldite is around 0.2 %, the global average ranges between 0.4 – 0.8 %. Even so, according to Starý, the economic viability of the deposit is unquestionable.

Lead photograph source: Dnn87