Skip to main content

Lithium Oversupply and Lithium as a Strategic Resource

Last week, we got a glimpse of how critical minerals became a central topic in the geopolitical arena. Now, we take a closer look at how lithium may be at the center of political interests.

What is really happening in the lithium market, and how can geopolitics impact the future of the battery industry? Let’s take a closer look at the situation.

From Growth to a Sudden Lithium Surplus

As we know, lithium is a critical raw material for the technological transition to electric vehicles and energy storage. Demand for lithium has grown exponentially since 2016, driven by the global push for electrification. Automakers and energy companies have lined up to secure supplies of lithium. Between 2022 and 2024, global lithium production increased dramatically, from approximately 737,000 tons in 2022 to 1.2 million tons in 2024, measured in lithium carbonate equivalent (LCE). A significant part of this growth was driven by large-scale lithium extraction and the rising demand for electric vehicles.

www.dailymetalprice.com

But then came a turning point. Prices plummeted in 2024 due to an unexpected oversupply in the market. Demand for electric vehicles did not grow as much as expected, and manufacturers began reducing their orders. Overcapacity led to production cuts in Australia early in 2024, and China followed suit. Several Chinese mines were shut down, including one of the country’s largest lepidolite mines, which was put on hold due to high production costs (Fastmarkets). 

The major players want to secure their own supply

Despite the lithium surplus in 2024, we have seen an increasing trend among nations and automakers to secure their own lithium resources. Volkswagen announced in January 2025 an investment in a partnership with the Canadian lithium producer Patriot Battery Metals to strengthen its control over battery supply. Tesla has long been seeking more control over its lithium supply, and rumors about the company considering its own mines have been circulating for some time. Although it has not started mining operations, the company has invested in its own refining capacity and recently in 2023 opened a lithium refinery in Texas to reduce its reliance on external suppliers. 
But this issue extends beyond just the automotive industry, and there is now talk about lithium as a resource of national security importance. Several analyses have pointed out that a country lacking access to lithium could face challenges with energy storage, electrification, and military technologies (CNN). 

China Tightens Control

Concerns about securing lithium are not unfounded. In early January 2025, China proposed new export restrictions on lithium technology and battery materials. According to China’s Ministry of Commerce, the reasoning behind these measures is the need to protect domestic industry and maintain technological advantages. The proposal includes restrictions on the export of technology related to the production of battery-grade lithium iron phosphate (LFP), lithium manganese iron phosphate (LMFP), and other advanced cathode materials. China’s proposed restrictions on battery technology exports could impact the battery supply chain, particularly in the U.S. and Europe, where many producers rely on Chinese technology and the Chinese market.

Lithium supply remains uncertain, both at the production level and in politics. With trade conflicts looming and more countries striving to secure their own resources, lithium appears to be playing a role in both politics and economic strategies. How the market adapts to these shifts could influence both prices and lithium availability in the years to come.





Comments

Post a Comment

Popular posts from this blog

Exploring Copper and Lithium

Dear reader, Welcome to our blog about the two commodities copper and lithium.  This spring, we will use the blog to share information, news, and other exciting things about copper and lithium. Here we will explore how these commodities are used, why they are important, and how they impact the world around us. Our first blog post will give a short introduction to these metals and their uses. We hope you enjoy following our blog! What is copper and lithium? Lithium and copper are both metals, but they have different properties. Copper is the most well-known and widely used of the two. It has many applications and is especially important in electronics , wiring , and motors , but it is also used in building construction , pipes , and other types of infrastructure . In other words, copper has a wide range of uses. The famous landmark, the Statue of Liberty in New York, is made with 27.22 tons of copper. Copper is a metal well-suited for electronics because it conducts electricity and...
1 comment
Read more

What’s Going On in the Copper Market?

Our previous blog post was dedicated to lithium. This week, it's copper's turn, and we're taking a closer look at what's stirring in the copper world these days. Political developments in the United States are creating new waves of uncertainty in global markets. And copper doesn’t escape the turbulence. The market has been unsettled since February, when announcements of a potential tariff on copper imports first surfaced. As a result, analysts are now warning of a possible collapse in copper prices in the near future. "Copper should be made in America." Copper and U.S. trade policy in focus. The current unrest in the copper market began with a trade investigation initiated by the White House. In February this year, U.S. authorities launched a formal inquiry to assess whether the import of copper poses a threat to national security. This type of investigation, known as a “Section 232 investigation,” grants the president the authority to impose tariffs if deem...
Post a Comment
Read more

Critical Minerals and Global Power

This week one topic has dominated discussions on global affairs: the mineral agreement between the U.S. and Ukraine. Friday's meeting between Volodymyr Zelensky and Donald Trump escalated into a heated exchange, with journalists around the world witnessing a rare political spectacle at the White House. The meeting was intended to secure a deal on critical minerals but turned into a heated argument, and the agreement was never signed. The result is a deal that, for now, remains on hold.  But what was this mineral agreement really about? Without delving too deep into the political storm, we will take a closer look at what's in the ground and why these resources matter.  Ukraine has vast mineral resources , with an estimated 5% of the world's critical raw materials within its borders. Among these are deposits of copper, cobalt, manganese, and rare earth elements. We focus on our favorites: cobber and lithium. The country holds about one-third of Europe's lithium reserves a...
Post a Comment
Read more