Global Push For Lithium Intensifies To Meet Surging EV Demand: IRENA

Critical minerals, especially lithium, have become key components in meeting the growing demand for electric vehicles (EV). These elements are essential to support the booming electric vehicle industry. Apart from lithium, which has witnessed a surge in demand, there has also been increased demand for other critical minerals like cobalt, graphite, and nickel, according to a report by the International Renewable Energy Agency (IRENA).

In its latest report on critical mineral batteries for electric vehicles, IRENA identified key elements that are crucial for electric vehicles. There was an increase in demand for components like copper, which is expected to account for approximately 4% of demand from EV batteries by 2030. This demand is primarily driven by construction and power-related infrastructure, as cited in the research. Similarly, key critical minerals have seen a rise in demand, with components like phosphorus and manganese from EV batteries estimated to represent about 3% and 2%, respectively, by 2030.

Critical Mineral Battery Share

Among the critical minerals IRENA identified, the share of LFP batteries increased from a single-digit market share in 2015 to an estimated 44% of the passenger vehicle market in 2023. Moreover, the report estimates that critical mineral batteries will exceed 4,300 GWh per year by 2030, approximately five times more than in 2023. Alongside EV batteries, Battery Energy Storage Systems (BESS) represent a substantial rise in demand, and the demand for EV batteries is anticipated to be about ten times greater by 2030.

The report foresees an increase in supply for all materials from 2023 to 2030. For instance, the report estimates that growth in lithium production could range from 85% to 220% between 2023 and 2030. IRENA forecasts a potential increase from 1 Mt/year in 2023 to between 1.8 and 3.1 Mt/year by 2030.

Similarly, growth in nickel production is estimated to range from about 30% to 60%, with nickel supply potentially rising from 3.6 Mt/year in 2023 to between 4.6 and 5.6 Mt/year by 2030. Likewise, growth in cobalt production is estimated to range from about 15% to 110%, indicating a potential increase in cobalt supply from 0.22 Mt/year in 2023 to between 0.25 and 0.46 Mt/year by 2030.

While the supply of all materials is expected to grow significantly by 2030, there is considerable uncertainty about how much of this potential supply will materialize. The projections have a wide range, especially for lithium, cobalt, and natural graphite, for which the difference between the highest and lowest supply estimates represents approximately 140%, 95%, and 81% of the current supply, respectively. The actual levels of supply by 2030 will largely depend on market demand, technological innovation, and regulatory frameworks.

Composition of EV Batteries

The critical mineral usage in electric vehicle (EV) batteries is expected to affect the market in various ways. For instance, the report identifies the need to develop copper, phosphorus, and manganese for EV batteries, although their market dynamics are predominantly driven by other industries. In contrast, the demand for lithium and cobalt—and to a significant extent, graphite and nickel—is substantially driven by EV batteries. Based on this analysis, lithium is identified as more critical for EV batteries than nickel and cobalt, although substitution with LFP and LMFP batteries is possible.

The study also highlights that critical minerals like natural graphite face significant supply constraints. Therefore, synthetic graphite, although more energy-intensive, could be scaled up to bridge the supply gap. Beyond that, a transition toward anodes with increased silicon content is already occurring and could further reduce pressure on the material. While the global demand for some materials, such as phosphorus and manganese, is minimally affected by EV batteries, the production of their derivatives, such as purified phosphoric acid and high-purity manganese sulphate, is crucial and requires scaling up to meet demand.