A Brief 2022 Lithium Sector Review

Introduction: Lithium in 2022

In 2021 lithium markets hit new highs as demand for the element skyrocketed with countries and companies committing to low-carbon technologies and creating green growth – 2022 saw lithium continue its upward trajectory. In November 2022, lithium prices reached $80,800 per tonne, a 1,000% increase since 2021. Research and exploration of new lithium sources led to the discovery of lithium reserves in Mexico, while the United States, France, the United Kingdom and Chile all invested in their lithium infrastructure. Bolstered by further announcements from major automotive groups and energy giants that lithium-reliant technology was set to become the status quo, the sector is forecasted to grow even more in 2023. As evidenced by EnergyX’s own development over the course of this year – lithium has a critical role in the future.

Why is lithium important?

Lithium batteries can be used for EVs and energy grids, making them an important element to global climate goals. “Rechargeable batteries appear to be the backbone or ‘holy grail’ towards a clean energy and low-carbon emission economy,” point out researchers in a study published by the Journal of Energy & Natural Resources Law, “EVs, energy storage systems (ESSs), smartphones and home ESSs have been exponentially increasing battery demand for the past few years.”

The importance of lithium has been highlighted throughout 2022. In a comparison of 2021 Q1 and 2022 Q1 EV sales, China increased by 200%, the U.S. by 60%, and Europe by 25%, and the International Energy Agency (IEA) has published data showcasing the rapid implementation of renewable energy globally. There is no way to decarbonize the transport and energy sector without lithium batteries being involved in some way, which is why demand has continued to rise and supply chains put under increasing strain.

Breakthroughs in Lithium

Outside of the environmental concerns for lithium extraction – which have continued to dominate debates – the major issue continues to be supply. We will not run out of lithium, but we do run the risk of having a supply deficit by 2027, something that could stall efforts to increase use of renewable energy and electric transport. A McKinsey report points out, “Direct lithium extraction (DLE) and direct lithium to product offer significant promise of increasing lithium supply, reducing the industry’s environmental, social, and governance footprint, and lowering costs.” This is exactly what EnergyX has been working on.

EnergyX’s proprietary DLE technology, Lithium Ion Transport and Separation (LiTAS™), was tested in the field in Bolivia, yielding 94% of lithium within local brine pools in a matter of days using no additional water. Following these tests, EnergyX was able to further fine-tune LiTAS™ to make is brine agnostic, or capable of processing any lithium brine regardless of concentration or content. This makes LiTAS™ one of the leading proven Direct DLE technologies on the market. In turn this contributed to a $450 million investment commitment from Global Emerging Markets (GEM) to boost commercialization efforts.

Conclusion: Lithium Market Recap

Elon Musk famously said that working in the lithium sector was like “printing money” – but what is needed is more downstream technologies like DLE to ensure that we do not maintain the risk of supply deficits by 2027. The developments in 2022 took a step towards easing it, but more must be done to improve market forecasts. With year-on-year record breaking increases in lithium prices, 2023 seems poised to continue the trend.

“There is a broad analyst consensus that prices should ease over the course of 2023, but lithium’s supply-chain dynamics are evolving so fast there is elevated uncertainty around any forecast,” notes Andy Home for Reuters, “Lithium’s supply pipeline is full of known unknowns with a few totally unknowns thrown in for good measure, which is why there are so many competing narratives around likely price evolution.” This being said, the continued investment in the sector in addition to the breakthroughs in DLE and increasing demand for lithium-powered technology will only push prices higher.