As the world gradually transitions from fossil fuels to clean energy, the demand for lithium, a critical component in lithium-ion batteries, has skyrocketed. Australia estimates that within five years, the revenue generated from lithium mining will equal that of thermal coal.
New projections by the Australian government indicate that by 2027–2028, the nation’s lithium production and revenue from lithium exports will double. The value of lithium exports is projected to reach AUD 19 billion; in comparison, coal shipments for power plants are expected to decrease by 71 % over the same period.
Various factors, including the COVID-19 pandemic, the Russia-Ukraine conflict, and weather-related supply disruptions, have contributed to surging fossil fuel prices in recent years. However, prices have begun to stabilize, with thermal coal prices experiencing a significant drop in the first quarter of this year. Despite this decline, the total value of thermal coal exports is projected to reach USD 65 billion.
Lithium prices are also forecasted to rise annually, with data indicating that by 2027–2028, lithium prices will equal those of thermal coal. Lithium prices have risen over the past year due to supply shortages and this year’s prices are expected to reach nearly USD 19 billion. While prices may decline as more mines commence operation, they will likely increase gradually in the follow years.
This upward trend in lithium demand can be attributed to an anticipated tenfold growth in EV sales from now until 2030. Australia is the worlds’ largest lithium exporter, accounting for more than half of global production last year.
Currently, 80% of Australia’s lithium is utilized in lithium-ion battery production. Given the 40% increase in EV sales last year and the expected widespread adoption, this proportion is likely to rise to 90%. Tony Wood, Director of the Energy and Climate Change Program at the Grattan Institute think tank, believes Australia’s forecasts are reasonable and that the country is well-equipped to address the demand for lithium, nickel, cobalt, and other essential energy minerals.
Australia holds 27% of the world’s known lithium reserves, 22% of nickel reserves, and 21% of cobalt reserves. A report from the Grattan Institute last year cited the International Energy Agency’s predictions, stating that by 2040, global lithium demand will increase 41–fold, while the value of nickel and cobalt markets is expected to grow 30–fold.
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