Workplace of the Chief Economist

EV demand continued its ‘speedy development pattern’ regardless of deteriorating financial circumstances, with international gross sales up 40% within the 9 months to September 2022, in line with the Australian Authorities’s commodity forecaster, the Workplace of the Chief Economist (OCE).

“Sturdy underlying demand and EV producers’ declarations of additional will increase in manufacturing, suggest that EV gross sales may attain nearly 40% of annual automobile gross sales by 2030,” the OCE mentioned in its Useful resource and Vitality Quarterly report.

World lithium demand outlook

World demand for lithium is forecast to rise by over 40% over the following two years from 745,000 tonnes in 2022 to 1,091,000 tonnes by 2024, in line with the OCE. In the meantime, international output was 551,000 tonnes in 2021 and forecast to succeed in 1,087,000 tonnes in 2024.

“A provide hole is forecast to persist over the outlook interval, with whole provide from each mine and brine operations at present inadequate to fulfill demand,” the report mentioned.

“With new lithium initiatives being developed quickly, the availability hole is predicted to cut back over the outlook, however will take time to shut.”

Contract costs to reset a lot greater

Lithium spodumene focus common round US$6,100 a tonne in November 2022, up 6.4% month-on-month and up greater than 300% year-on-year. The report notes that the majority Australian producers are locked into long-term contracts, which take time to regulate to strikes in spot costs.

“Excessive costs reported by Australian producers verify spot costs are actually flowing extra quickly into contract costs,” it mentioned.

“Costs are anticipated to develop additional subsequent yr as contract costs reset within the September quarter 2022, averaging US$4,010 a tonne in 2023 earlier than moderating to US$3,130 in 2024.”

Equally, lithium hydroxide costs are forecast to rise from US$17,370 a tonne in 2021 to US$39,900 in 2022 and US$61,200 in 2023 earlier than moderating to US$48,500 by 2024.

Spodumene and hydroxide costs (Supply: Division of Trade, Science and Assets)

Australia within the driving seat

The worth of Australian lithium exports are forecast to greater than triple from $4.9 billion in 2021-22 to $16.1 billion in 2023.

So as to add some perspective, iron ore, coal and copper exports generated $133 billion, $68 billion and $13 billion respectively in 2021-22.

The OCE expects Australian miners to proceed their enlargement into greater value-add actions comparable to refining into precursor chemical substances for cathodes, electrolyte manufacturing, battery anode vegetation and battery manufacturing.