The US and Canadian lithium sector are poised for potential growth in 2024 despite challenges in pricing and demand that impacted the global industry in recent times. Market experts noted that the long-term outlook for lithium remains robust while rapid transformative changes may face expected issues.
Lithium has become the new oil, at least for the production of electric vehicles (EVs). And the race to secure this critical resource has already started since last year.
The growing demand for lithium-ion batteries in the U.S reached a record high in 2023, showing rising interests on EVs and the clean energy transition.
Canada’s Lithium Vision: Electrifying the Future
Canada, particularly Quebec, demonstrates a bullish sentiment towards the lithium and battery sectors. The Canadian province focuses on establishing a comprehensive supply chain from mining to electric vehicle production.
Jean-François Béland, Vice President of Ressources Québec, emphasized the necessity to electrify cars. He particularly emphasized this in an interview, noting that:
“The demand will be there, whatever happens, because we need to electrify our cars. Lithium and critical minerals are, in the 21st century, what coal was in the 19th century and what oil was in the 20th century.”
As per the S&P Global Commodity report, lithium-ion battery capacity would reach 6.5 TWh in 2030. Lithium is the key element in creating EVs and is hailed as the beating heart of net zero.
The demand for lithium-powered EV batteries would grow annually at over 22% rate, with the EV transport segment getting 93% of the market share in 2030.
Amid the fallout from the pandemic and geopolitical tensions, companies are revisiting undeveloped lithium assets, accelerating projects, and exploring new opportunities. National government policies promoting energy transition and regional battery supply chains helped propel this development.
Thus, construction activities are anticipated this 2024, including various projects in Quebec, Arkansas, California, Texas, Nevada, Tennessee, and South Carolina.
Construction Surge and Lithium Price Outlook
For instance, Standard Lithium is considering starting construction on a commercial-scale plant for its Phase 1A lithium project in Arkansas this year. As per the company’s CEO, Robert Mintak, the completion of the project’s feasibility study was a major achievement in 2023.
Now, their goal is “to have project finance completed with a final investment decision in the first half of 2024 and a 20-month to 24-month build time,” Mintak noted.
Meanwhile, existing lithium companies like American Lithium (AMLI) continue to sharpen their focus on primary lithium projects. Similarly, other entities like EnergySource Minerals are also aiming to advance construction activities for their lithium projects in California.
Despite a dip in lithium prices due to reduced demand from the battery and EV sectors in 2023, industry forecasts anticipate growth in global passenger plug-in electric vehicle sales by 2027. Industry experts emphasize the anticipated increase in demand for EVs and their associated components.
S&P Global reported that EV sales would hit over 30 million units in 2027.
The same market report highlighted the significant drop in lithium prices in 2023 from record highs in 2022, over $70,000/tonne. This is largely driven by the decrease in demand from the battery and EV sectors.
Still, the analysts anticipate that prices will stabilize in the range of $20,000/t to $25,000/t from 2024 to 2027. Despite the decline, this pricing level is still attractive for investments, particularly supported by government policies encouraging the EV sector.
It is also important to note that battery startups are drawing in huge investments. In the recent surge of venture capital, these emerging companies are making waves with some substantial financing rounds.
The lithium industry is indeed cyclical and the current pricing environment still indicates a strong appeal for investment. This can be attributed to supportive government regulations pushing for the death of combustion engine sales.
The lithium sector in the US and Canada is experiencing a transformative period marked by rapid demand escalation, construction surges, and market volatility. While lithium prices witnessed fluctuations due to reduced demand, a resurgence is expected with the accelerating EV market. Canada, particularly Quebec, emphasizes a holistic approach to foster the lithium supply chain, echoing the mineral’s pivotal role in the clean energy transition.