Battery demand will continue to drive the lithium and cobalt markets for years to come, supporting prices for the sought-after minor metals, panelists speaking at this year's Indaba mining conference Tuesday said. "Forecasts are unified in their projections as overall demand for battery metals is expected to soar," according to the panel moderator and general manager at Industrial Metals, Barbara O'Donovan.
Forecast demand for lithium-ion batteries from passenger electric vehicles, consumer electronics and stationary storage is expected to increase up to seven fold by 2024, according to Industrial Minerals.
This will no doubt support both lithium and cobalt prices in the years ahead, O'Donovan said, with lithium carbonate spot prices having already increased from as low as $7/kg in June 2016 to as much as much as $20.5-24/kg today.
At the same time, spot prices for cobalt, the other in-demand battery grade metal, have jumped almost 15% in the last month, to around $16.70/lb at the end of January, according to Industrial Minerals, and up over 50% on the year.
"Long-term strong battery demand is very real," said Edward Lauer, the head of portfolio optimization at Eurasian Resources Group. "Even if demand from commercial and residential battery storage doesn't materialize to the same extent, consumer electronics and electric vehicle industries will only continue to grow."
Although electric vehicles are still less than 1% of the total car market today, their use is widely forecast to grow.
Up from just 270,000 EVs in 2015, this year sales are expected to top 600,000 and should pass 1 million in the next two years, according to Andrew Grant of Bloomberg New Energy Finance.
"There is more upside risk on battery demand than downside. With big changes expected in the way we use our cars, from self-drive to automation, to the impact of regulation and societal views on the environmental , we forecasts up three million additional electrical vehicle cars by 2025," Grant said.
The price of battery production is also expected to fall as technologies improve. Lithium-ion battery production costs averaged around $240/kWh in 2016, according to Grant, down from $350 a year earlier.
At the same time, rising lithium and cobalt prices are not expected to dampen overall demand for batteries as they make up less than 3% of total costs in the case of lithium.
Even with demand forecast to increase significantly, new supply is expected to meet it in the medium term.
According to Cameron Perks, a consultant for Industrial Minerals, there are around 350 lithium mining projects active today. He expects total demand for lithium to reach 500,000 mt by 2020, up from less than 200,000 mt today, but expects supply to keep up.
"By 2020 we should expect lithium suppliers to at least keep up with demand, which should average around 6% a year."
"Not all the current lithium projects are expected to reach the market, and will of course be of varying size and quantity, but we don't expect to see too much of a shortage in the years ahead, and probably not in the long term either as there are a lot of reserves available," Perks said.
At the same time, cobalt has had problems from elsewhere, coming under pressure recently from accusations of child labor in mines in the Democratic Republic of the Congo, a country which accounts for over half of world supply.
"This is a big challenge for the cobalt industry and something we want to tackle," said Lauer. "It requires a change to supply chain due diligence, and stakeholders need to come together fro government to local level."
"The importance of governments is massive, especially for metals like cobalt and lithium which can help transform the way we consume energy, so we need to work together to support the industry."
