Lithium, coined ‘the new oil,’ is shifting global markets. Here’s what you need to know about it

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As electric vehicles become more common, the resources helping to power the new generation of transportation are becoming increasingly prized. 

Lithium — a metal that’s a key element in the batteries commonly used in today’s EVs — has become an incredibly hot commodity in recent years. According to the United States Geological Survey, global consumption increased by 41 per cent from 2021 to 2022.

Elon Musk, the CEO of Tesla, dubbed lithium-based batteries “the new oil.”

While lithium prices tumbled 65 per cent in 2023 after a meteoric two-year rise, analysts still anticipate hundreds of new mines are needed to meet surging EV demand.

So where does this newly critical resource come from, and how can the world take advantage of its economic potential?

Where does lithium come from?

Lithium isn’t found as a standalone metal in nature, but quantities of the resource can typically be sourced from underground hard-rock and brine deposits.

Hard-rock sources are often accessed through traditional mining techniques, while brine lithium is commonly extracted through a months-long evaporation process, said Craig Johnson, a professor of political science at the University of Guelph who leads a research team looking at lithium mining in five countries.

Hard-rock mining can have long-term impacts on the landscape and brine extraction is immensely water-intensive, while the long-term impacts on ecosystems, wildlife, and nearby communities are not well-understood, said Johnson.

Community members and researchers have raised concerns over the potential negative impacts of these practices.

“There are costs associated with extracting lithium,” said the researcher.

New techniques are being developed to streamline extraction operations, but Johnson says they have yet to be brought to scale.

Where is it being mined?

Australia, the world’s leading producer of lithium, mostly mines hard-rock, while Chile — who once-held the title of world’s largest producer — now stands in second and mainly uses evaporation, explained Johnson.

In 2022, Canada produced an estimated 500 tonnes of lithium — an amount dwarfed by the tens of thousands of tonnes produced by global lithium powerhouses.

In terms of sheer quantity, the U.S. Geological Survey states that Chile has the world’s largest lithium reserves — or, proven mineable deposits — at 9.3 million tonnes while Bolivia has the most total lithium resources of any country with 21 million tonnes, but the mining potential of these deposits have yet to be proven.

Australia pulled ahead as the top producer of lithium around 2017, and Johnson attributes the country’s rise to effective financing and simple geography.

“The fact that Australia is so close to the Asia Pacific and has such good access to those large markets in South and Southeast Asia really helps it to position itself in ways that countries like Chile or certainly Bolivia would really struggle to do,” he said.

Who processes it?

Lithium doesn’t go straight from the ground into an EV. After extraction, the mineral is processed and then manufactured into a functioning battery.

Johnson notes that China — the world’s third-largest producer of lithium — connects “the next link in the supply chain,” often acting as the world’s processor and manufacturer.

“For the past decade, China has occupied this really critical niche where it has become the world’s most important producer of lithium-ion batteries and components for electric vehicles,” he said.

The International Energy Agency indicates that China produces roughly three-quarters of lithium-ion batteries, with the last 25 per cent coming mainly from the United States, Europe, Japan and Korea. China is also responsible for over half of the world’s lithium refining.

The United States and the European Union have adopted policies aimed at reducing China’s role in the supply chain, said Johnson. Despite these efforts, the International Energy Agency anticipates that China will still be responsible for 70 per cent of battery production by 2030.

“That’s a formidable challenge, to say the least,” said Johnson.

The world is on the cusp of an EV revolution and auto makers are scouring the globe for the resources needed to make all those batteries. Canada has many of the required critical minerals (cobalt, nickel, lithium). But can it move fast enough to turn a profit while balancing the interests of the environment and indigenous groups?



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Kennedy Mornah is an Award Winning Ghanaian Journalist with over two decades of experience in the Ghanaian Media landscape spanning the electronic, print and digital media. He is a Media Consultant, a Corporate MC, Radio and TV Host, Founder and Publisher of the Maritime and Transport Digest Newspaper, Businessman, a Go getter and an optimist. He has worked for renowned media organizations including Diamond Fm in Tamale, Luv Fm in Kumasi, Oman Fm in Accra and Starr Fm in Accra In 2017 he received the Reporter of the Year Award at the Ghana Shippers Awards in Accra, Ghana.

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