Albemarle says lithium prices must rise for supply to match EV demand

By Ernest Scheyder, Dave Sherwood

3 MIN READ

(Reuters) - Global supplies of lithium used to make electric vehicle (EV)batteries will fall short of an expected four-fold jump in demand by 2025 if prices do not rebound to fund expansions, an executive at industry leader Albemarle Corp said on Tuesday.

FILE PHOTO: A sign at the approach road leads to Albemarle's lithium evaporation ponds at its facility in Silver Peak, Nevada, U.S., January 9, 2019. REUTERS/Ernest Scheyder/File Photo

The warning laid bare the tension emerging in the EV industry between the companies that supply the lithium crucial for battery development and automakers who are hunting for discounts.

Prices for lithium dropped last year due in part to the coronavirus pandemic, forcing Albemarle and peers to pause expansions, a step they will reverse only if the price is right, Eric Norris, who runs Albemarle’s lithium business, told the Reuters Next conference on Tuesday.

“The resource is there. The economics need to improve to incentivize that expansion. That’s the critical thing,” Norris said.

Global lithium supply and demand at the end of last year was nearly even, according to data from Benchmark Mineral Intelligence. But by 2025, that gap is expected to widen markedly, with demand outstripping supply by nearly 228,000 tonnes.

CHILE IMPACT

Albemarle is one of the largest lithium companies in Chile’s Salar de Atacama salt flat, where it produces the metal used by Tesla Inc and others.

Automakers, including Volkswagen and Daimler, have recently ratcheted up scrutiny of the region´s miners ahead of the expected spike in demand.

“We have come a long way to educate many producers, the likes of VW, on how we operate in Chile,” Norris said.

The Atacama “is a natural ecosystem that replenishes itself,” he said, noting that the resource mined was lithium-rich brine, not the freshwater used for drinking by local communities.

The salt flat, home to both Albemarle and top competitor SQM, lies amid the world’s driest desert and questions remain about lithium mining’s impact on its fragile ecosystem. A Chilean government water study due later this year may help shed light on those impacts.