Lithium Consumers Need a Stronger Lithium Supply Chain

During a working table to discuss the creation of the Organization of Lithium Producing and Exporting Countries (OLPEC), similar to the oil-centered OPEC, experts and interested countries revealed their energy transition strategies and the importance of ensuring global lithium supply to achieve these goals, not only within their borders, but globally. 

According to the Deputy Chief of the Delegation of the EU in Mexico, Jean-Pierre Bou, lithium is at the very heart of the European “Green Transition,” which will drive increases in the demand for several critical raw materials, including lithium. For this reason, the EU considers that creating a sustainable and secure supply chain is essential and poses a big challenge for both producers and consuming countries. “We cannot underestimate the importance of working tables like this one. For this reason, the EU commits to invest more in addressing sustainability issues, as well as helping resource-rich countries in their goals to develop local capabilities,” he added. 

Bou pointed out that the lithium market has significantly evolved over the past 11 years, since in 2010, batteries represented only 20% of the global lithium demand, while in 2021, they accounted for 75%. He highlighted that lithium demand is experiencing a rapid expansion, doubling between 2017 and 2021. Furthermore, the mineral deman experienced an additional increase of 30% in 2022. However, Bou warned that this accelerated growth creates great volatility in the mineral’s price, which might impact small mining companies and early-stage projects. 

Non-producing countries are interested in developing a stable supply chain. During the event, Armando Cheng, Director General, Taiwan’s Government Representation in Mexico, highlighted that Taiwan has developed a strong industry around lithium and battery manufacturing. However, the country does not produce lithium. The country aims to be one of the largest lithium battery suppliers in the world, but the lack of easy access to this mineral will make it dependent on the main lithium producers: Australia, Chile, China, Argentina, Bolivia, Peru and, potentially, Mexico. “Taiwanese companies might face risky investments that could result in supply chain disruptions. They are vulnerable to local regulations related to mineral extraction and environmental protection,” he stated, adding that, over the past three years, the prices of lithium mines have risen from eight to 14 times their value, posing another challenge for buying countries. 

During the panel, experts pointed out the importance of differentiating the concepts applied in the mining sector, as media outlets constantly refer to lithium reserves, while in Mexico there are no lithium reserves, as the correct terminology is “lithium resources.” 

Some experts noted that keeping up with exploration while developing the technology to extract lithium from deposits with low grades but large volumes of rock is positive, as happened with copper porphyries decades ago. 

Experts suggested that while lithium is key to ensuring an energy transition, Mexico should not forget about other important minerals like cobalt and zinc, the latter being a fundamental element for energy transmission. Furthermore, María Prol, Researcher, UNAM’s Geophysics Institute, suggested that minerals are not the only pending in Mexico’s green transition, as over 80% of the energy generated by CFE comes from polluting sources, as reported by MBN.