Time to Invest in Lithium?

Securing lithium supply has been a priority of the U.S. for decades. Now, the problem of strategic supply may be returning.

Lithium-ion batteries are powering the whole emerging-product category of electronic vehicles (EVs).

The good news is that lithium is one of the most prevalent elements on earth. The bad news is that there are only a few places where it is concentrated enough and unencumbered by other factors to enable economically viable production.

Don't worry, yet.

While there were shortages of very high-grade lithium carbonate used for battery production from 2006–2008, lithium supplies have been more than sufficient since the recent global recession dropped the bottom out of worldwide industrial production.

Recently, evidence suggests tightening supplies; for example, Talison Lithium Ltd. (TSX:TLH) stated in its Nov 15 earnings announcement that demand for its technical- and chemical-grade concentrate is outstripping current production capacity. The jury's still out regarding future lithium production capacity. Just because companies claim vast resources doesn't mean they can translate them into producing reserves—there are difficult technological issues involved. And, just because some folks wish that everyone owned an EV doesn't mean they will.

What we do know is that interested parties have strong reasons to paint the picture to their advantage. Current lithium producers would prefer we perceive their resources as able to satisfy demand, and explorers and developers of new resources would wish us to believe shortages are right around the corner to justify their programs.

What Is the Future of Lithium?

During the short history of lithium as an industrial metal, supplies have been both strategic and controlled. Economies cannot do without it. Lithium resource development will continue to be a high priority, and new resources will be developed even if operational costs exceed those of the lowest-cost brine producers.