MettaInsights: Lithium Carbonate

Oct 1, 2021

What is Lithium Carbonate?

Lithium carbonate (Li2CO2) is an important industrial chemical. Its main use is as a precursor for compounds used in lithium-ion batteries. (1) 

What is Lithium Carbonate Used For?

Lithium carbonate is used in the pharmaceutical industry as a medication for the treatment of bipolar disorders. It is part of the World Health Organization’s list of essential medicines. Lithium carbonate is also used in the ceramics and glass industries. (1) 

Its most common use today, however, relates to the manufacturing of lithium-ion batteries. Two components of lithium-ion batteries are made with lithium compounds: the cathode and the electrolyte. As such, lithium carbonate is essential for the rapidly growing electric vehicles and renewable energy storage sectors, as well as for the production of all mobile devices we use on a daily basis

Lithium-ion batteries have a high power-to-weight ratio, high energy efficiency, and good high-temperature performance. These characteristics make them ideal for electric-propulsion vehicles where weight is an important consideration – less weight means the car can travel further on a single charge. (2)

Energy Sage

Lithium-ion batteries have a low “self-discharge” rate, which means that they are better than other batteries at maintaining the ability to hold a full charge over time. Finally, most lithium-ion battery parts are recyclable making these batteries a good choice for the environmentally conscious. (2)

Price Performance in 2021

The demand for lithium carbonate skyrocketed this year, pushing the price up by more than 390%. One tonne of lithium carbonate is currently valued at ~$25,512, from $5,380 on Jan 1, 2021, according to Trading Economics.

Trading Economics

Most economic recovery plans put forward by global leaders bet heavily on the EV industry to transform the transportation sector. Global sales of electric vehicles were up 150% in the seven months to July to just over 3 million units, with about 1.3 million sold in China, according to consultancy Rho Motion. In August only, sales of new energy vehicles in China surged 181.9% year-on-year to 321,000 units, data from the China Association of Automobile Manufacturers showed. (3)

Forecast

Demand for lithium is expected to jump 26.1% to a total of 450,000 tonnes, flipping the market into a deficit of 10,000 tonnes, according to Benchmark Mineral Intelligence. (3)

Electric vehicles production and use are expected to increase exponentially in the current decade and beyond, exerting pressure on lithium carbonate producers. Unless an alternative to lithium carbonate is found and/or new deposits are discovered and developed, the price of lithium is not expected to slow down its descent. Surely, a political move away from renewable energy technologies could negatively affect the demand for the chemical, but the probability of such a development is low. 

In the longer term, we believe the lithium market is likely to be in a perpetual deficit,” Macquarie Bank said as cited by Forbes. “Some new supply additions should temporarily lighten the market in 2026, however beyond 2027 the supply deficit should widen significantly.” (4)

Generally, the global lithium-ion battery market size is projected to grow from $41B in 2021 to $116B in 2030, at a CAGR of 12.3%. The automotive industry will account for a substantial portion of the demand, but the highest growth pace will be achieved by the power industry. It will be motivated by both higher electricity demands and speedy development of renewable energy sources. (5)

The Mettalex DEX

We are considering listing a lithium market on the Mettalex decentralized exchange in the next few months. 

Let us know if you would like to short or long lithium with stablecoins in this Twitter poll.

Your feedback is important to us.

References:

  1. Wikipedia. Lithium Carbonate. Accessed on: 27.09.2021. URL.
  2. EnergySage. How do electric car batteries work? Accessed on 28.09.2021. URL.
  3. Trading Economics. Lithium. Accessed on 29.09.2021. URL.
  4. Treadgold, Tim. Lithium Price Tipped To Rise After Warning Of ‘Perpetual Deficit’. Published: Jul 2, 2021,02:51am EDT. Accessed on: 29.09.2021. URL.
  5. PRNewsWire, Global Lithium-Ion Battery Market (2021 to 2030) – Declining Prices of Lithium-Ion Batteries Presents Opportunities. Accessed on: 30.09.2021. URL