Lithium demand for battery storage, EVs underestimated – Australian execs

The market is underestimating the growth of lithium demand from the electric vehicle and battery storage sectors as prices begin to recover, Australian executives said at a major industry conference.

The Platts-assessed spodumene FOB Australia price was up 17.5% year to date to $975 per metric ton on Aug. 12, but is still far from its November 2022 high of $8,200/t. Platts also assessed the lithium hydroxide CIF North Asia price at $8,850/t on Aug. 11, down 11.5% year to date and nearly 90% from its Nov. 28, 2022, peak.

"We're seeing pain through the whole supply chain," Dale Henderson, managing director and CEO of Pilbara Minerals Ltd., told the Diggers and Dealers Mining Forum in Kalgoorlie, Australia, on Aug. 5.

Part of this pain was caused by failing EV growth. Then in July, the US rescinded tax credits for EV purchases as part of US President Donald Trump's One Big Beautiful Bill Act, which will "likely stymie the development of the US EV sector," S&P Global Commodity Insights' Metals and Mining Research team said in an Aug. 8 note.

Australian mining executives urged investors at the forum to look outside the US for markets with growing EV and battery storage demand, which would need lithium.

"Everyone seems to get fixated about North America. Yes, it is subdued. Yes, government policy in that [US] jurisdiction is creating headwinds; but frankly, it doesn't represent the overall market," Tony Ottaviano, managing director and CEO of Liontown Resources Ltd., told the forum on Aug. 5.

Countries with greater populations than the US such as Brazil and Mexico have helped drive a 22% year-on-year increase in battery EV sales in the first half, Ottaviano said.

"We [as an industry] are definitely being too cautious on demand," Ken Brinsden, the Australian CEO, president and managing director of Canadian lithium developer Patriot Battery Metals Inc., told the forum on Aug. 4.

"North America is not the main game. It was never the main game from a lithium raw material demand point of view. It's all about the rest of the world. And the rest of the world is going gangbusters," Brinsden said. "The industry is going to move back to a more natural state of demand outstripping supply much faster than the Western analysts are currently giving it credit for."

Pilbara Minerals' Henderson said global EV sales have "surprised to the upside" despite some forecasters predicting headwinds, particularly from the US.

"The demand drivers shaping this industry remain unchanged — it's about the energy shift, technology shift, and government stimulus," Henderson said, noting International Energy Agency's forecast that $3.3 trillion will be spent this year in energy, of which two-thirds will be clean technologies.

Energy storage driving demand

Lithium demand from energy storage systems is a "structural pillar catching up to EVs, and not yet widely reflected in forecasts," Liontown's presentation said.

"We believe the market continues to underestimate the demand coming from this sector," Ottaviano told delegates. Liontown predicts that by 2029, one in every four lithium units will go toward energy storage.

Global stationary storage grew year over year by over 120% in the second quarter and by 200% in June, Patriot Battery's Brinsden told delegates.

"So there's a reasonable chance that in stationary energy storage, we are actually still accelerating. This market is going to be much bigger than the EV market ... because global energy networks need to be stabilized and we need to smooth the available power," Brinsden said.

"We think analysts are underestimating battery energy storage systems like they underestimated solar power growth," the Patriot Battery CEO said.

Henderson said that while "EV adoption continues to take flight at different rates depending on different markets ... the energy transition and technology adoption we are witnessing was never going to be a straight line."

China's EV output to grow in the next decade

Mainland China's EV production is increasing. It accounted for about 25%, or 2.57 million, of the 9.93 million units manufactured globally in 2020; by 2024, it produced 46.6%, or 15.39 million, of 33.04 million units made that year. By 2035, China is expected to make 30.95 million of the world's total of 81.88 million units, according to S&P Global Mobility.

"Global EV sales continue on an upward trend, up 29% [year over year] in May, led mainly by gains in China," Suzanna Massingue, low carbon transportation analyst at S&P Global Commodity Insights, said in an Aug. 12 email.

China accounted for over 70% of global sales from January to May, the analyst said. When excluding China, EV sales growth in May was closer to 11% year over year, as US sales growth cooled to 5% and European sales recovered to book a 19% growth, Massingue added.