Global lithium sector seeks $42 billion as pivot from China increases costs

The global lithium sector requires nearly $42 billion of investment by the end of the decade to meet the demand for the critical battery-making element, with attempts to build supply chains outside of China that will incur much higher costs.

According to a report from Benchmark Mineral Intelligence, the industry will need $7 billion of investment each year until 2028. The investment would help it meet the predicted demand of 2.4 million tons a year by 2030, which is almost four times higher than the 600,000 tons estimated to be produced in 2022.

The forecast comes as North America and Europe look to reduce their dependency on Chinese lithium imports and develop their lithium production. Benchmark said that strategy could require nearly twice as much capital than relying on getting the refined product from the Asian country.

China has enjoyed a vice grip over the lithium supply chain, bolstered by economic clustering, a high level of expertise, and lower energy and labor costs.

Lithium is central to the clean-energy transition and has surged over 400% in China over the past year as supply struggles to keep stride with the electric vehicle (EV) boom. Elon Musk, Tesla Inc.’s Chief Executive Officer, has made a public appeal for increased investment in lithium mining and said the EV-maker might consider mining or refinery it directly after prices rose to insane levels.