Key Takeaways
Tianqi Lithium's CEO warns that even the most optimistic lithium demand forecasts are too conservative, underestimating new industrial applications.
Electric trucks, mining equipment, and ships are highlighted as major new demand drivers not yet fully factored into most projection models.
Lithium Demand Forecasts:
A top executive at one of China’s largest lithium producers has warned that global demand forecasts for the critical battery metal are too conservative, failing to account for a surge in demand from heavy industry.
"This will be a huge increment," Tianqi Lithium Chief Executive Xia Juncheng said in an interview with the Financial Times, pointing to the rapid expansion of electric trucks, mining equipment, and ships that have yet to be fully included in most projection models.
Analyst forecasts for annual lithium demand in the next decade range from 3.6 million to 6.3 million tonnes, a steep increase from the 1.1 million tonnes consumed last year. Wood Mackenzie projects that annual demand could exceed 13 million tonnes by 2050, but Xia believes even these bullish estimates are too low, as they are largely based on electric vehicle sales and do not fully consider emerging power-hungry sectors like AI data centers and robotics.
The CEO’s comments come as the company navigates significant operational and political headwinds, particularly in Australia. These challenges add weight to his call for the industry to prepare for a demand surge that current supply chains may struggle to meet.
Tianqi’s operations in Australia, where it co-owns the Kwinana lithium hydroxide plant and the Greenbushes mine with local firm IGO, have faced difficulties. The Kwinana refinery has been consistently unprofitable, leading IGO to write down its stake and call for the plant's closure.
Furthermore, stricter Australian government rules on foreign ownership of critical mineral assets have made it unlikely for Tianqi to directly own mines. Xia stated the company is willing to secure supply by financing Australian lithium miners but acknowledged that outright ownership is no longer a viable path.
To counter these resource constraints and the extreme volatility of lithium prices, Tianqi is increasing investment in new battery technologies. The company is focusing on solid-state batteries, which use a solid electrolyte instead of the liquid found in conventional lithium-ion cells.
Tianqi has taken a 2.9% stake in Beijing WeLion New Energy Technology, a leader in the solid-state field, and established a joint venture in Shenzhen. This move into downstream technology aims to provide a hedge against the commodity price cycle, which saw Tianqi’s profits soar to a record in 2022 before a price crash led to a significant loss in early 2024. Xia also advocated for more flexible pricing mechanisms, including linking contracts to futures benchmarks, to stabilize the supply chain where producers are squeezed between high raw material costs and lower selling prices to major customers like CATL and BYD.
This article is for informational purposes only and does not constitute investment advice.
