EV uptake puts pressure on Australia’s lithium supply

Vivek Dhar is an economist and director of mining and energy research at the Commonwealth Bank, where the global energy transition is front of mind.

Speaking on carsales’ EV podcast, Watts Under the Bonnet, Dhar reflected on the effects of a supply chain under pressure and the opportunities that growing EV uptake presents for Australian-mined lithium.

Acknowledging that Australia’s lithium supply is vast, Dhar responded to the question of whether there is in fact enough to cope with a significant spike in demand?

“Absolutely. When we talk about Australia’s role in the lithium market, it is by far the most significant, you know, we’re talking 45 to 50 per cent of global lithium supply comes from Australia,” he said.

“Now, in terms of where Australia is moving, yes, of course future investment and keeping up with the rapid increase in lithium demand is going to be a challenge.

“We are seeing supply come from China increases, from Argentina, from Canada, from even some African countries … Keeping up to the speed that we need to by 2030, it is going to be hard for Australia to protect that share of 45 to 50 per cent.”

In terms of meeting the potential supply demands, Dhar warned of such a sharp increase in demand on any commodity.

He went on to question whether we’re currently focusing on the right battery chemistries and suggested we should look to other markets, like China, “to know where the chemistry shifts can happen”.

But can Australia really be a major player in not only the supply of battery components, but in the manufacturing?

“You really have to ask, where is it that we have our niche?” he said.

“And I think focusing on that is more critical than trying to take an approach where it’s like, oh, we can just do it all here. Because not only is the expertise needed, [but] we also need to have the labour, the supply chains, all move to make it happen.

“It’s very challenging given the pull, particularly to the US, for a lot of this right now. And so I think chemicals is where we should focus on, and then from there, see where the opportunity sits.”

While Dhar would love to be able to predict what the future workings of our supply chain might look like, he admitted he doesn’t think anyone can predict the shape of things in 10 years’ time.

But he does warn that a “scattergun approach” is risky.

While there’s a great focus on lithium and Australia’s potential to be an ongoing player in the global market, Dhar insisted it’s not the lone hero we might think it is, in discovering greater power, greater performance and, ultimately, a longer driving range.

“The parts where the engineering side is making the advances comes in the electrolyte. Right now, it’s liquid, and that’s where the energy transfer happens. But as that technology evolves and becomes more advanced, we actually expect that to be where the next phase of improvements happen,” he said.

“The lithium is there for the electrochemical potential. When you talk about energy density, it’s not so much the lithium you are looking at, it’s more the nickel. So, the more nickel you have in your battery, the higher the [potential] driving range. And that’s why when you talk about the higher-spec cars coming out of, say, Europe and [the] US, you’re trying to increase your nickel intensity of that battery.

“Cobalt is actually the stabiliser, so when you want the battery to remain stable in performance, that’s where the cobalt is used. Now, cobalt is the most expensive [component], if you look at prices for metals, and therefore the move has always kind of been how can we increase nickel and reduce cobalt?

“If you told me this five years ago, I’d say high nickel cathode chemistries had so much potential over the next decade, but then the emergence of LFP [lithium iron phosphate] came in … and the improvements we’ve seen there in energy density is more to do with the engineering and the technology there. And that’s made the equation very different.”

Dhar conceded that keeping up with the EV market is like chasing a moving target, but he remains optimistic, excited even, with the potential for great innovation in our supply chain.

“It’s fascinating that everyone can come out with a forecast, but it’s where, you know, the engineers are really driving the action,” he said.

“There are some other markets where policy is deciding the winners, but when it comes to EVs it’s the engineers driving it.

“And I think that’s exciting too, to know that we’re almost thinking back to who’s going to be the Edison, who’s going to be those kinds of inventors. I think that’s really fascinating in the EV space.”

To listen to the full interview with Vivek Dhar and other episodes of Watts Under The Bonnet: The Electric Vehicle Podcast, go to the free LiSTNR app, Apple Podcasts, Spotify, Google Podcasts or wherever you get your podcasts.

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For everything you auto know about EVs, listen to carsales' Watts Under the Bonnet: the electric car podcast

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