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Analysts: Copper Prices Could Double To $20,000 Per Ton

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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Peak Lithium Won’t Happen Anytime Soon

First it was peak oil—back in the 1970s, no less. Then it was peak oil again and again. Now we have moved up a rung and are worrying about peak lithium as a myriad of electric vehicle production and sales forecasts prepare us for a spike in lithium demand. This worry, however, is just as pointless as the worry about peak oil.

First, it’s not new: back in 2015 people were worrying that the lithium available on Earth will not be enough to support a booming EV industry sporting 100 megafactories around the world by 2040. While acknowledged as wild speculation, this scenario was posited as a possible one.

Of course, anything is possible, but what fans of peak whatever theories seem to ignore is the fact that both extraction and production technologies evolve. This is why reserves of metals and fossil fuels tend to increase over time: because as extraction technology improves, resources—theoretically extractable at some point in the future—become reserves, which can be extracted with presently available technology. Just think about the Permian, which recently got a reserve upgrade thanks to improving fracking technology.

The case against peak lithium was recently made very eloquently by energy analyst Michael Lynch in a story for Forbes. In it, Lynch noted the fact that lithium resource estimates were increasing and also the fact that reserve estimates have been on the rise but—this is the potentially worrying part—slowly. Related: Who Has The Right To Resources In The Caspian Sea?

In fact, Lynch says, there is nothing to worry about. The reason lithium reserve estimates have not been growing more rapidly is that there is abundant supply of cheaply extractable reserves in the Lithium Triangle, so there is no need to explore for more yet. Besides, addressing some people’s concern that a lot of the world’s lithium is concentrated in the Triangle, Lynch pointed out that “The concentration of production in the Andes doesn’t represent a lack of global resources, as some fear, but the economically rational decision to exploit the cheapest resource first, turning to other, more difficult (and expensive) resources later.”

Basically, there is nothing new under the sun. Whether it’s oil, iron ore, or lithium, the basic strategy that any business would follow is to extract the cheap reserves first and then move on to the more expensive ones if demand supports such a move. Indeed, a temporary tightness in lithium supply in the near future is a possibility, Lynch goes on to say, but this would more likely be a result of available production capacity combined with booming demand than irreversible depletion of reserves. Related: Is This Europe’s Newest Oil & Gas Producer?

What’s more, a shortage is as likely as the opposite: excess supply. The tricky thing about minerals is that the estimation of resources and reserves are dependent on a lot of variables. And change in just one of these variables could make a vast difference in the size of the estimate. As Bloomberg columnist David Fickling noted in a recent story, a change in the variable of price, for example, can make billions of barrels of oil disappear. This is exactly what happened to Exxon: the company revised down its recoverable reserves by 3.3 billion barrels because of lower oil prices. Yet the oil is still there. It has not disappeared.

The lithium is also there. According to an estimate—that tricky word again—by the U.S. Geological Survey, global reserves as of 2015 were 13.5 million tons, with production during the previous year at 36,000 tons. Production last year reached 43,000 tons and will likely continue to rise as automakers double down on their EV strategies. But, and this is the important thing, so will reserve estimates. Battery efficiency will continue to improve, so batteries might at some point start needing less lithium than they need now, and so will extraction technology, as producers naturally seek to make the most of available reserves before moving into new exploration. Peak lithium is not happening any time soon.

By Irina Slav for Oilprice.com

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Leave a comment
  • Ryan Hardy on August 12 2018 said:
    LOL...... Your out to lunch!!
    Your with Morgan Stanley ??
  • Patch on August 12 2018 said:
    One big difference between oil and lithium is it can be recycled over and over. Once gasoline is burned in a car it is gone forever. EV batteries can be recycled to be made into a new battery over and over.

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