{"id":30827,"date":"2023-03-09T11:46:24","date_gmt":"2023-03-09T11:46:24","guid":{"rendered":"https:\/\/www.innovationnewsnetwork.com\/?p=30827"},"modified":"2023-05-12T13:27:42","modified_gmt":"2023-05-12T12:27:42","slug":"capturing-value-global-lithium-supply-chain","status":"publish","type":"post","link":"https:\/\/www.innovationnewsnetwork.com\/capturing-value-global-lithium-supply-chain\/30827\/","title":{"rendered":"Capturing the value of the global lithium supply chain"},"content":{"rendered":"

Australia should develop into the downstream stages of the lithium supply chain to reduce criticality and capture more of its value.<\/h2>\n

The demand for lithium has greatly increased in the past decade with the shift towards renewable energies and electric vehicles, which require sophisticated battery storage technologies. It is estimated that 74% of the lithium used globally is for batteries (Fig. 1). The rapid increase in worldwide demand leads to an uncertainty of sufficient supply of lithium, and Australia is the world\u2019s largest miner of lithium<\/a>.<\/p>\n

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Fig. 1: The proportional uses of lithium<\/figcaption><\/figure>\n

Australia\u2019s reserves and resources of lithium<\/h3>\n

According the United States Geological Survey<\/a>, lithium is approximately one-third as abundant in the Earth\u2019s crust as copper and has a similar abundance to sodium. Australia\u2019s probable and proven reserves are currently enough to supply 100% of the world\u2019s current demand for up to 20 years. Australia has an estimated 6.2 million tons of lithium reserves out of an approximate 26 million tons worldwide, second to Chile with 9.3 million tons of lithium reserves.<\/p>\n

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Fig. 2: The projected increase in quantity and value of Australia\u2019s lithium exports (Data source: Resources and Energy Quarterly December 2022)<\/figcaption><\/figure>\n

From these reserves, Australia currently produces 335,000 tonnes of lithium carbonate equivalent (LCE) and is expected to increase up to 470,000 by 2024 (Fig. 2). This is projected to provide over 40% of the world\u2019s lithium demand of 1,091 tonnes of LCE by 2024. Although Australia is relatively well endowed with reserves and resources, the development of new mining capacity is constrained by the availability of capital and downstream processing.<\/p>\n

The global lithium-ion battery industry chain<\/h3>\n

A mineral is considered critical if there is a risk of supply disruption for the mineral, and if the consequence of such a disruption would be great. Although the supply of lithium resources is not constrained, it is considered a critical mineral in that the majority of the downstream processing occurs in one country to produce battery technology (Fig. 3). China has a major contribution to the global refining and electrochemical stages with 89% and 75% respectively.<\/p>\n

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Fig. 3: The proportion of lithium mined and processed for each country in 2017 (Data source: Lithium-Ion Battery Value-Chain Report)<\/figcaption><\/figure>\n

The lithium-ion battery industry chain can be divided into five main stages, namely:<\/p>\n

1)\u00a0 Mining for materials;<\/p>\n

2)\u00a0 Refining and processing;<\/p>\n

3)\u00a0 Making battery materials;<\/p>\n

4)\u00a0 Manufacturing the cells; and<\/p>\n

5)\u00a0 Assembling the cells into battery packs.<\/p>\n

The least value obtained is in the mining stage and the most value obtained is in the battery pack system assembly stage (Fig. 4). Australia earns less than 1% of the ultimate value of lithium-ion battery packs. Approximately, 99.5% of the value of lithium is added through offshore processing, cell production, and battery assembly.<\/p>\n

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Fig. 4: In 2018, Future Smart Strategies claimed Australia earned only half of 1% of the ultimate value of its exported ore. Approximately 99.5% of the value of Australian lithium ore is added through offshore processing, cell production, and battery assembly (Data source: Future Smart Strategies 2017)<\/figcaption><\/figure>\n

To capture more of the value of the lithium supply chain, Australia must seize more of this, for example, through downstream processing and the production of lithium-based chemicals. Locating processing facilities near to mines can provide a competitive advantage as well, with potential for a six-fold increase in efficiency in transport and logistics.<\/p>\n

By building downstream processing capacity, Australia will not only un-constrain the development of lithium mines, but it will also increase Australia\u2019s share of the supply chain, and reduce the world\u2019s reliance on China for the refining stages.<\/p>\n

Australia can move along the lithium battery supply chain<\/h3>\n

Australia will capture up to three times more value in the supply chain, if it expands into the second stage of the supply chain (refining and processing) and the following synergies will be realised:<\/p>\n