Stay Away From the Lithium Market!
Climate change is an inescapable term for everybody living in 2024. After all, we are at a crucial point in human history, where we can correct our wrongs, and help give a better future for our descendants. One aspect of this is the transition from gas-powered vehicles and machines to ones powered by electricity and a battery. Electric Vehicles, or EVs are becoming the future of what people drive. However, these machines would not be possible without Lithium, as it is the most common element in these batteries.
Psychoeconomic Barriers to EV Adoption
As EV sales have been going up, so has the demand for Lithium. EV sales in China have gone up 80%. As a result, worldwide demand for Lithium went up 65% in 2022 when compared with 2021. Because of this, the market share for Lithium has a CAGR value of 5.4% and is currently sitting at around $360 million. Lithium is mainly mined in Australia, Chile, and China, with about 163 thousand metric tons produced between the 3 in 2023. Overall, there is more than 88 million metric tons of Lithium left to be mined across the world. However there a lot of concerns regarding the mining process, and the ethical side of it
88 million tons overall on Earth might seem like a lot of Lithium. This isn’t the case however as only 25% of it is fit for sale. This has been a growing concern for many people evaluating the Lithium market, as we could eventually run out of it. Not only that, the mining process can place a further strain on our environment. Chemicals like sulfuric acid and sodium hydroxide are used to extract Lithium. These chemicals, however, being a strong acid and strong base respectively, have corrosive properties which can damage ecosystems around them. Not only that, our water supplies could get poisoned by the sheer amount of dilute substances from mining. Finally, some 1.3 million tons of CO2 can be produced per year of Lithium mining which can further exasperate our climate problems.
Environmental Concerns
This entire list doesn’t take into account ethical concerns. Lithium mining, especially in Africa, is notorious for its sheer number of child laborers, some 35000 of them to be exact. This concern has led companies to try and find better sources of Lithium, however the convoluted supply chain has only netted losses when companies have tried this. New innovations in battery science will have to be made in order to figure out a possible solution to these ethical problems, or a downright substitution of Lithium in batteries.
The Stock Market’s Judgment on Lithium
Finally, the stock market can put the final nail in the coffin as to why Lithium is just not a viable option to invest in. Stock prices in 2021 and 202 for many lithium mining companies skyrocketed before plummeting in 2023. They have hit complete rock bottom, and prices seem to not be recovering.
The Lithium market is a facade that many people can be deceived by. Many factors like not even being certain whether an increase in EV sales would increase Lithium sales, scarcity, recent stock trends, ethical issues, and a reverse feedback cycle that could push us further into the harmful effects of climate change can all be factors to stay away from the market.
