Australia’s Department of Industry, Science and Resources released the December 2022 edition of the Resources and Energy Quarterly (REQ). Among its findings are that lithium export earnings are expected to exceed $16 billion in 2022–23, up from $5 billion in 2021–22. This will make lithium Australia’s sixth-largest resource and energy commodity export.

Australia is the largest lithium exporter in the world, accounting for 46% of the world’s lithium production in 2021. Among the lithium-specific findings of the report:

• Spodumene prices are estimated to rise from an average of US$598 a tonne in 2021 to US$2,700 a tonne in 2022, and US$4,010 a tonne in 2023 before moderating to US$3,130 in 2024. Lithium hydroxide prices are expected to lift from US$17,370 a tonne in 2021 to US$39,900 in 2022 and US$61,200 in 2023, moderating to US$48,500 by 2024.

• Australia’s lithium production is forecast to grow from 335,000 tonnes of lithium carbonate equivalent (LCE) in 2021–22 to 399,000 tonnes in 2022–23 and 470,000 tonnes of LCE in 2023–24.

• In 2022–23 Australia’s export earnings are forecast to more than triple — from $4.9 billion in 2021–22 to $16.1 billion, and $17.0 billion in 2023–24.

World demand for lithium—driven by demand for electric vehicle batteries—is estimated to increase from 592,000 tonnes of lithium carbonate equivalent (LCE) in 2021 to 745,000 tonnes in 2022. Over the following two years, demand is forecast to rise by more than 40%, reaching 1,091,000 tonnes by 2024.

Despite the spread of new battery manufacturing capacity into Europe and the US, Asia remains the major source of demand for lithium.

Higher prices for lithium and other key battery materials (such as nickel, graphite and cobalt) continue to put upward pressure on the cost of batteries which in turn is putting upward pressure on EV prices, the report notes.

World output of lithium was 551,000 tonnes LCE in 2021, and is estimated to reach 691,000 tonnes in 2022 and 1,087,000 tonnes in 2024. This rapid growth is forecast to be met by gains in output by Australia, Chile and Argentina.

The report forecasts a supply gap will persist over the outlook period, with total supply from both mine and brine operations currently insufficient to meet demand. With new lithium projects being developed rapidly, the supply gap is expected to reduce over the outlook, but will take time to close. Lithium stockpiles remain hard to ascertain, with some estimates of 4-8 weeks for spodumene.

The strong growth in spodumene prices that saw Australia’s export revenue reach a record $4.9 billion in 2021–22—up from $1.1 billion in 2020–21—is expected to drive a further tripling in annual export earnings over the outlook period. Production from lithium hydroxide refineries is forecast to steadily build, lifting total annual lithium export revenue to an estimated $16 billion in 2022–23 and $17 billion in 2023–24.

While much of the forecast export growth is price driven, Australia’s production capacity is also forecast to grow strongly over the outlook. Expected annual average growth of over 18% a year will see production rise from 335,000 tonnes of LCE in 2021–22 to 399,000 tonnes in 2022–23, and 470,000 tonnes in 2023–24.

Export volumes of spodumene concentrate are forecast to grow by more than one-third from 2021–22 levels over the forecast period: spodumene concentrate exports are forecast to rise to 3.2 million tonnes in 2023–24 from 2.3 million tonnes in 2021–22.

—“Resources and Energy Quarterly”

In 2021–22, China imported 96% of Australia’s lithium exports—predominantly spodumene concentrate—in both value and volume terms. The next largest export destination was Belgium, accounting for only 2.3% of Australia’s lithium export volumes, followed by South Korea (0.9%) and the United States (0.7%).