A Brief Analysis on Lithium Sources
With increasing incentive and collective interest in electric vehicles mostly in the automobile industry (but scaling beyond that), demand for Lithium-ion batteries is increasing and will likely continue to grow at unprecedented rates. The goal of this analysis is to provide insight on preparing for shortages to anyone needing to source lithium-ion batteries. For companies like Samsung SDI, the recently announced battery supplier for Rivian, this information may prove to be useful.
Data was gathered from WorldData.ai, which provided me with a dataset from BP Statistical Review. The data contains country-specific lithium production in thousand tonnes of lithium content, and was recorded from each source from 1995–2018 once annually.
I performed an analysis in Tableau to visualize the data, and discuss the results briefly in this article. All visualizations in this project are interactive and available on my website: https://hainesdata.science/#lithium-sources
Lithium Production Worldwide
It is quite clear that lithium production worldwide has scaled greatly, likely to follow the demand resulting from needing more lithium for lithium-ion batteries, as most notably used in electric vehicles.
As seen in the visualization above, southern hemisphere countries have produced large amounts of lithium over the years, especially when compared with those in the northern hemisphere. Chile has the greatest total lithium production over the last 2 decades in the world with 238,000 tonnes of lithium product. Australia is not to be neglected either, as it has seen amounts similar to Chile: 224,000 tonnes.
Annual Lithium Production
Have Chile and Australia always been a lithium powerhouse? We will look into all lithium countries’ performance year-over-year.
Here, we can confirm that the southern hemisphere produces lithium not only in bulk amounts, but in consistent changes. Argentina, Australia, Chile, and Zimbabwe are almost exact in shape until the year 2018. In 2018, the rate at which lithium is produced slows down in Chile and Zimbabwe compared to that of Argentina and Australia, which dramatically increase.
With the data used, it is impossible to tell what is causing that “split” between the southern countries, but I would opt to say it has to do with the countries’ economic states and the price of lithium being proportional with the countries’ own market. Or, there is indeed a shortage in lithium popping up in Chile, China, Zimbabwe, and the US. A quick Google search actually shows that the US may be seeing lithium shortages, which should increase the value of lithium in other sourcing countries.
We can also confirm that Chile and Australia were consistently abundant in lithium production over the decades. The US had been abundant from the years 1995–1997, but fell out and struggled to catch up with its southern competitors.
To further analyze each countries’ performance, we can use a map visualization showing the countries’ total change in lithium production between the years 1995 and 2019:
As expected, Australia and Chile see the greatest growth in lithium production, followed by China and Argentina. The warmer shaded colors witnessed a greater change. Some countries saw an overall decline in production.
Key Lithium Sourcing Countries
From these analyses, it is clear there are some key countries to pay attention to when sourcing lithium.
Recently, Australia, Chile, China, and Zimbabwe have seen notable changes in their lithium production.
Australia’s production has increased significantly over the last 5 years, likely due to a dramatic increase in demand of lithium-ion batteries. It would seem Australia may be in the best place economically to enable lower prices. Again, this is impossible to tell with the given data, and that conclusion is merely speculation.
Using a 99% confidence interval, I forecasted a large range of growth in Australia’s production. At the current rate of growth, it is too hard to tell what will happen with Australia’s lithium supply. Demand for lithium from Australia may be remarkable, and if a shortage in Australia happens, the price of lithium would increase dramatically. Sourcing lithium through contract from Australia in the next few years would be very risky. There is not enough certainty of what direction it will take.
China has seen a constant rate of annual production in the last few years, which is remarkable when compared to the other countries’ annual production rates. Given China’s dominant semiconductor manufacturing, it is possible they are running out of lithium and are taking it steadily to conserve resources to ensure scalability of their semiconductor manufacturing.
Yet another country with a slowdown of lithium production. Chile, however, is in the southern hemisphere. And as discussed earlier, the “split” of production rates in the southern countries is notable. However, with 99% confidence forecasting, it is unlikely that Chile will see a decrease in production rates in the next few years. Sourcing lithium from Chile may be more expensive than Australia, but is far less risky and is guaranteed growth in the next few years.
Zimbabwe and Portugal
I am clustering these countries into one section, since their data is limited as a result of smaller production overall. While Brazil and Zimbabwe have not reached a noticeable peak in their production, it should be noticed that Zimbabwe has had a steady increase in its production over the last decades along with Portugal, even though their overall production has decreased.
Below is a line graph showing a clear increase in both Zimbabwe’s (R²=0.2848, p=0.006) and Portugal’s (R²=0.5577, p<0.0001). The R² and p-values resulted from a linear regression. Both p-values suggest strong evidence of increases in production rates in Zimbabwe and, most remarkably, Portugal. Sourcing lithium from Portugal and Zimbabwe will be expensive right now, but look out for a production increase in the future. Forecasting on Zimbabwe’s production, there will be at least a consistent production rate over the few years.
The lithium production market is indeed volatile, and thus unpredictable. However, with use of these analyses, it is possible to mitigate risk and plan ahead for any lithium shortages that may occur.
Here are the main takeaways:
- Lithium production has seen dramatic increase in the last 5 years
- Relying on sourcing lithium from Australia in the next few years would be very risky.
- China may be producing lithium conservatively to protect their lead in semiconductor manufacturing.
- Sourcing lithium from Chile may be more expensive than Australia, but is far less risky and is guaranteed growth in the next few years.
- Sourcing lithium from Portugal and Zimbabwe will be expensive right now, but look out for a production increase in the future. Investing in their production may prove to be useful.
Thanks for reading. Please check out my other articles, and if you missed it earlier, interactive visualizations for this article are available on my website. If you have any questions at all, please feel free to reach out via LinkedIn or email.