In its second quarterly update to its Lithium: Outlook to 2030, 17^th Edition report, Roskill maintains the view that future refined lithium supply will remain tight, with a period of sustained supply deficit in the mid-2020s.

Further additions to lithium production capacity for mined and refined lithium products will be required to keep pace with demand growth, led by battery applications. Although on paper, capacity in the pipeline appears sufficient to meet this demand growth, Roskill expects challenges and set-backs in developing, financing and commissioning lithium mining and refining operations.

The company suggests that even major incumbent lithium producers are at risk of failing to meet production targets and expansion plans, highlighting the technical and financial hurdles involved with bringing sizable volumes of new capacity online.

In 2019, rechargeable batteries accounted for 54% of total lithium demand, almost entirely from Li-ion battery technologies. Falling sales in H2 2019 in China, the largest market for EVs, and a global reduction in sales caused by lockdowns related to the COVID-19 pandemic in H1 2020 slowed lithium demand growth, impacting demand from both battery and industrial applications. However, longer term scenarios continue to show strong growth for lithium demand over the coming decade. Roskill forecasts demand to exceed 1.0Mt LCE (lithium carbonate equivalent) in 2027, with growth in excess of 18% per year to 2030.

As battery applications extend their dominance of lithium demand, the market is expected to become more focused on providing products to meet specifications for automotive batteries. The shift towards high-nickel cathode materials, to increase battery energy density, is accelerating demand growth for lithium hydroxide, though its cost premium over lithium carbonate has made some consumers reluctant to switch feedstock.

Lithium hydroxide is expected to become the dominant lithium chemistry consumed, though the balance between lithium carbonate and lithium hydroxide remains highly dependent on lithium-ion cathode requirements.

On a cautionary note, Roskill also writes:

However, significant challenges remain in the horizon for the electric vehicle revolution. The lithium-ion battery supply chain does not only depend on lithium. Other raw materials like cobalt, nickel, manganese, graphite, and their battery-grade intermediate materials will need to grow at a similar path than lithium. In this sense, five different raw material markets will need to grow at similar growth rates during the outlook period to limit distortions in the cost structure of lithium-ion batteries.

—Lithium: Outlook to 2030, 17^th Edition