Interest in lithium as a commodity is clearly surging, but its price remains well off its highs of recent years. Where will it head next?
On October 1st, the United States Department of Energy (DOE) confirmed a five per cent stake in Lithium Americas (LAC-T) as well as a five per cent stake in the Thacker Pass Joint Venture. Thacker Pass is expected to produce up to 40,000 tonnes per year of lithium carbonate, enough to supply 800,000 EVs. That mining volume would move the United States to second place in global production.
Meanwhile, the price of lithium remains far below levels of just a few years ago.
The spot price of lithium carbonate rose from CNY 33,000 to a high of CNY 597,500 per tonne between November 2020 and November 2022. Between early July and late August of this year, the spot price of lithium carbonate rose from 60,000 to 85,000 CNY/T.
The price has since fallen back to its current level of CNY 73,500.
Here is an overview of lithium’s supply and demand dynamics, key producers and consumers, developments in Canada, and price outlook.
Supply:
The top six lithium producing countries (2024 data) in metric tons are Australia (88,000), Chile (49,000), China (41,000), Zimbabwe (22,000), Argentina (18,000) and Brazil (10,000). In 2024, production levels were estimated to be 4,300 metric tons in Canada or just under two per cent of global supply. There are an estimated 30 million tonnes of reserves globally.
Canada has lithium activity (including exploration) in most provinces. Current Canadian projects include the North American Lithium (NAL) Restart Project in Quebec, the Snow Lake Lithium Mine in Manitoba, the Galaxy mines and the Whabouchi project in Quebec, and the pre-production PAK project in Ontario. Brine projects like E3 Lithium’s Clearwater project in Alberta and the Boardwalk project in Alberta are also progressing towards commercial production.
Lithium in Chile and Argentina is extracted from brine whereas in Australia (and Eastern Canada) it is mined from the mineral spodumene which contains up to 8 percent Li2O (Lithium oxide). Natural Resources Canada tells us Canada currently has an estimated 3.2 million metric tons of lithium oxides resources (measured and indicated) at hard rock deposits and lithium brines in Alberta and Saskatchewan will increase these resources as technology and processing are advanced.
Demand:
The dominant use of lithium is in batteries, accounting for 87 percent of global consumption. Battery use includes electric vehicle (EV) batteries, consumer rlectronics and energy storage systems. Lithium is also used in ceramics and glass, lubricating greases and in the manufacturing of polymers and synthetic rubbers as well as in air purification systems. CATL and BYD, the two largest Chinese battery makers, consume about 55 per cent of world lithium carbonate production annually.
Big Producers to Watch:
By monitoring how the larger producers are performing, we can gather insight on where prices are heading. Albemarle (ALB-N) is a good company to watch in this space for example. Albemarle‘s lithium resources include hard rock deposits in Western Australia and North America and hypersaline brine in South America and North America, all stable and trade-friendly global regions. ALB gives us a good global overview of both of these lithium sources and from a variety of jurisdictions.
Sociedad Quimica y Minera S.A. (SQM) is one of the most cost effective lithium brine producers globally given its access to the Salar de Atacama, a salt flat in Chile with the world’s highest concentration of lithium coupled with a dry climate. SQM may represent the production pricing floor globally.
Ganfeng Lithium and Tianqi Lithium are integrated Chinese companies that cover a significant part of the lithium value chain, from resource extraction to processing and battery production. Monitoring cost efficiencies from these integrated producers will help us understand the supply side better.
Pricing outlook:
The rebound in lithium prices in July and August was driven by more optimistic demand for EVs in China coupled with supply disruptions during peak demand season. The current market now reflects the reality of global oversupply and a pipeline of lithium mine projects around the world. A number of analyst firms show the range for 2026 from US $12,000 to US $17,000 (conversion rate of 7.1 CNY per USD). Looking out to 2030, we are seeing a price range between US $10,000 and US $15,000, implying a drop from 2026 expectations. A number of factors including Chinese policies on capacity and mine permitting, battery chemistry and battery recycling along with EV uptake and affordability will all play a part in future prices.
From another perspective, Arcane Capital Advisors sees a supply deficit starting in 2026 and it will continue to grow towards the end of the decade. “This is definitely contrary to what people in the market are saying” said Arcane Capital’s director and fund manager Lee Yuejer. He argues the supply deficit will be driven in part by an underestimated demand from battery energy storage systems.
Brian Donovan, CBV, is the president of StockCalc, a Canadian fintech based in Miramichi, N.B.