Lithium has become one of the most talked-about metals in recent years, largely due to its critical role in the production of batteries that power smartphones, laptops, and electric vehicles. This soft, silver-white metal is not only vital for the technology sector but also plays an important role in industries such as pharmaceuticals, ceramics, and lubricants. As the global push towards renewable energy gains momentum, lithium’s importance continues to grow, capturing the attention of investors around the world.
Despite being the 33rd most abundant element in nature, lithium remains relatively challenging to extract and process. According to the US Geological Survey, identified lithium resources have surged to approximately 115 million metric tonnes worldwide, with reserves standing at 30 million metric tonnes. In 2024 alone, global lithium production reached 240,000 metric tonnes, marking a notable increase from the previous year. Major production hubs include Australia, Chile, and China, with Australia leading by a significant margin.
Lithium is extracted from both hard-rock deposits and saltwater brines. Australia’s Greenbushes mine, the largest hard-rock operation, and Chile’s Salar de Atacama, a leading brine extraction site, dominate the global supply chain. Once extracted, lithium is processed into various forms such as lithium carbonate and lithium hydroxide, which are essential components for lithium-ion batteries.
China plays a pivotal role not only as the largest consumer of lithium but also as the top processor. South Korea follows as another key importer. With the ongoing expansion of electric vehicle manufacturing and energy storage solutions, demand for lithium is expected to remain strong for years to come. In fact, about 87 percent of current lithium production is dedicated to battery manufacturing, with smaller shares going to industries like ceramics and greases.
Investing in lithium, however, is not without its challenges. Mining lithium is both costly and time-consuming. Hard-rock mining operations require significant investment, while brine extraction demands millions of litres of water and can take over a year to produce usable material. Environmental concerns have also grown, with both types of mining linked to ecological damage, including water contamination, soil degradation, and high water consumption in regions already vulnerable to drought.
Nonetheless, the likelihood of lithium running out any time soon is low. Ongoing discoveries of new reserves and technological advancements in extraction methods are helping to secure future supplies. Moreover, the recycling of lithium from used batteries is becoming an increasingly viable option, potentially easing future supply pressures.
Looking ahead, researchers are exploring alternatives to lithium-based batteries. Innovations such as hydrogen fuel cells, sodium-ion batteries, and even seawater-powered batteries are under development. Although none are poised to replace lithium-ion batteries in the immediate future, they hint at a broader shift towards more sustainable energy storage technologies.
For investors, understanding the dynamics of lithium’s supply and demand is essential. The electric vehicle sector remains the primary driver of growth, and analysts predict a tight lithium market for the foreseeable future. As interest in green energy continues to surge, lithium remains a key resource to watch, offering opportunities for those willing to navigate the complexities of this evolving market.
