Chile produces almost 30% of the world's lithium and in the coming years the value of exports would be at the level of the wine sector
In 2019, the country was positioned as the second largest producer of "white gold" globally, only behind Australia, according to a study presented by Cochilco.
"Prospects of the lithium market to the year 2030" was the title of the conference held yesterday by the Chilean Copper Commission (Cochilco), in which they presented a study on the expectations of demand, production, investment, and uses of lithium in the next ten years.
According to the study, Chile was positioned in 2019 as the second-largest lithium producer in the world, with a 29% share, only behind Australia, which produced 48% of "white gold" globally.
However, even though both countries are expected to more than double their production towards the end of the decade, their participation will also progressively decrease, given greater competition from countries such as the United States, Canada, and Zimbabwe. Thus, in 2030 Australia's share would drop to 31%, while Chile's to 17%.
In any case, Cochilco analyst Andrés González pointed out that "Chile will continue to be a relevant player in the lithium-producing industry. The fact that it is a consolidated producer with an extensive history in the industry gives the country experience necessary for proper planning of their productive expansions ".
The study reported an important growth in the demand for lithium in the world in recent years, going from 204-kilo tons of lithium carbonate equivalent (kt. LCE) in 2016 to 323 in 2019, "which is equivalent to an increase annual compound of 16%, "said the analysis, adding that this" is mainly associated with the use of lithium in rechargeable lithium-ion batteries, especially in the electric vehicle segment, a situation that is expected in the long term to continue to rise as that the world is making efforts to find less polluting sources of transport. "
Cochilco stated that the consumption of lithium in electric passenger cars went from representing 18% of the aggregate consumption of lithium in 2016 to 32% in 2019, "and - even considering that historically the market has tended to overestimate the speed of growth of this industry - we expect that in 2030 it represents about 80% ".
Also, due to the advance in demand for lithium, the world supply of the mineral "had to be adjusted upward," the study indicated, detailing that "aggregate mine production grew from 209 kt. LCE in 2016 to 381 kt. LCE in 2019, which is equivalent to a compound annual increase of 22%. This is explained largely thanks to the operating increases of the two main producing countries, Australia and Chile. "
"As a result of this development, during 2016 and 2017 the prices of the two main lithium chemicals, carbonate (71% of aggregate demand in 2019) and hydroxide (24%), progressively traded upwards, with their prices estimated average growth in Asia by 167% and 97% respectively during the period. Subsequently, given the increase in supply coupled with lower expectations in electric car sales, a growing supply surplus was entered, which explains why prices they have tended to fall from 2018 onwards, "he added.
"These figures suggest that in the coming years the value of our lithium exports will be similar to that of highly consolidated economic sectors such as wine, which reflects the importance of the exploitation of this resource for the country. This important productive advance will keep us as a relevant actor to face the strong growth expected in world demand for lithium " Baldo prokurica
According to the Minister of Mining, Baldo Prokurica, and based on Cochilco estimates, "the current lithium production in Chile is expected to more than double by 2025, reaching nearly 250 thousand tons of lithium carbon equivalent. (LCE) ".
"These figures suggest that in the coming years the value of our lithium exports will be similar to that of highly consolidated economic sectors such as the wine industry, which reflects the importance of the exploitation of this resource for the country. This important productive advance for us will remain a relevant actor to face the expected strong growth in world demand for lithium, "said the Secretary of State.
According to figures from the National Customs Service, Chile last year exported a total of US $ 931 million in lithium, while wine shipments registered more than double, bordering the US $ 2 billion.
The hit of the pandemic to lithium demand
González, meanwhile, pointed out that the global recession triggered by the COVID-19 pandemic has implied a growth "in electromobility that is lower than initially projected for this year, a situation that has negatively affected lithium demand."
"On the supply side, some delays have been announced in the entry of new projects along with the certainty of lower production in some current operations. This lower-than-anticipated production has helped mitigate the drop in prices that we have seen. from the end of 2017 to the present, "he said.
In any case, it expects that in the long term there will be no significant effects on lithium demand, along with anticipating the development of new projects. With this, it projects that from 2025 demand will begin to grow faster than supply, which will translate into upward pressure on prices.