Lithium Energy Storage Power Supply Purchasing Channels

In terms of geopolitical risks within the lithium supply chain, currently over 60% of the facilities that convert lithium ore into the intermediate products of lithium carbonate and lithium hydroxide are located in China (Tarry and Martinez-Smith, 2020).

In the short to medium-term, deficits are expected for lithium in 2022-2023, whereas the global supply/demand market balance will be tight for nickel (by 2029), graphite (by 2024) and manganese (by 2025). By 2025, the EU domestic production of battery cells is expected to cover EU's consumption needs for electric vehicles and energy storage.

Australia and Canada are the two countries with the greatest potential to provide additional and low-risk supply to the EU for almost all battery raw materials. Enhancing circularity along the battery value chains has potential to decrease EU's supply dependency.

However, it is likely that the EU will be import reliant to various degrees for primary and processed (batt-grade) materials. Australia and Canada are the two countries with the greatest potential to provide additional and low-risk supply to the EU for almost all battery raw materials.

Source: JRC analysis. The supply 1 of each processed raw material and components for batteries is currently controlled by an oligopoly industry, which is highly concentrated in China. Although China is expected to continue holding a dominant position, geographic diversification will increase on the supply side, mostly for refined lithium.

The largest increase 2 in the medium (2030) and long term (2040) is anticipated for graphite, lithium and nickel (e.g. lithium demand for batteries is foreseen to grow fivefold in 2030 and have a 14-fold rise in 2040 compared to the 2020 level). Figure 1 – Forecast of battery demand globally from processed raw materials