As the world’s electric vehicle demand rises the need for lithium will continue to grow. The electric car maker Tesla looks to grab hold of its key car component, which present a good opportunity to invest into lithium mining companies across Chile, Australia and China, the world’s three top producer’s. This is due to the fact that as more lithium is purchased by electric car producers the lower its supply and thus the higher its price will be.
Chile, the ‘Saudi Arabia of lithium’, has a challenge to sustainably regulate and limit its supply providing stability to its mining companies’ share price. With much of the metal’s demand coming from electric car makers; Tesla, General Motors and BMW and electronics manufacturers; Apple and Samsung, the demand may not outweigh the increasing supply from other exporters; Argentina and Australia as 500,000 tonnes of the metal is predicted to be added to the market per year by 2025 according to Morgan Stanley.
Producing the lithium battery parts in-house can benefit the economy with a move up the value chain and expansion in global exports; their main exports have been to China and Europe with a 1.5% increase year-over-year in January following a 35.7% surge in the fourth quarter of 2019. America’s imports have declined due to Tesla’s shift to domesticated manufacturing.
Chile’s main exporter SQM sets to increase its production by boosting extraction efficiency. Its current estimated water footprint is half of Australia’s where mineral rock is mined and then sent to China for processing. SQM’s share price is up roughly 100% since 20th March 2020 to date as electric car manufacturing restarts.
Bolivia and Northwest Argentina also hold reserves along Chile’s salt flat planes forming the ‘Lithium Triangle’ which holds up to an expected reserve of 75%. With automotive companies and battery suppliers continuously proving that their supplies have been sustainably sourced, miners are starting to implement membrane filtering techniques to avoid water-intensive methods.