Lithium is Ukraine’s new gold. How can the country’s economy leap into the future?

Opening day – By 2050, total lithium demand will increase by almost 20 times.

…and Ukraine can use it!

According to the United States Geological Survey (USGS), batteries consumed 74% of global lithium production in 2022.

The reason for the rapid growth is the stable demand for green energy, the growth in sales of electric vehicles, the active development of battery energy storage systems, in which lithium plays an important role.

Tesla estimates in particular suggest that by 2030 the company will need about 1,000 kilotonnes of lithium carbonate equivalents (LCE) per year; this is 16 times more than in 2022 and 30% more than what is currently produced in the world.

Here are a few key estimates of the source of demand growth:

1. Electric vehicles

• The International Energy Agency estimates that the number of electric vehicles will reach 125 million by 2030;
• The electric passenger vehicle market based on lithium batteries will grow by 26% per year by 2030;
• By 2050, electric vehicles will make up 90% of the passenger car fleet in Europe;
• Annual electric vehicle sales will exceed 100 million units (BloombergNEF, 2021).

2. Renewable energy sources

• According to BloombergNEF, the capacity of energy sources will increase 6 times by 2050, while solar and wind energy will constitute 56% of global energy production. This further increases the demand for lithium-ion batteries.

3. Energy storage systems:

• The global energy storage market is expected to be over 2,500 GW by 2050 (Wood Mackenzie, 2020).

Lithium production volume in 2022 was 130 thousand tons.

According to the European Energy Agency, lithium production in 2050 under the baseline scenario will be 1.3 million tons compared to the optimistic 1.6 million tons, and the market size (including lithium recycling) will be around 2.4 million tons.

Where are the biggest sources of lithium?

1. Bolivia – more than 21 million tons;
2. Argentina – 20 million tons;
3. USA – 12 million tons;
4. Chile – 11 million tons;
5. Australia – 7.9 million tons;
6. China – 6.8 million tons;
7. Germany – 3.2 million tons;
8. Congo – 3 million tons;
9. Canada – 2.9 million tons;
10. Mexico – 1.7 million tons.

Resources in Ukraine are estimated at 0.5 million tons.

Not much, but…

But according to some estimates, lithium reserves in Ukraine can reach 5 million tons, and this is already 7th in the ranking of the country and 10% of the world’s reserves!

Four lithium ore deposits have been discovered in Ukraine.

Two sites in the Kirovograd region – Polokhovskoye and Dobra.

In the Zaporozhye and Donetsk regions temporarily occupied by Russia, there are two more – Shevchenkivska and Krutaya Balka.

In particular, data only for the Polokhovskoye area:

• Balance reserves are 27,774 thousand tons;
• With a planned capacity of 1,100 thousand tons of raw ore per year, it will be sufficient for 27.5 years of mining operation;
• The first ore zone was observed from 500 m to 500 m depth. The lower limit of mineralization was not drawn. The thickness of the ore body is 10 to 50 meters.

Such depth requires the construction of a mine that is much more expensive than open-pit mining as is done in Latin America. Investors especially estimate the investments to be made in the mining and processing facility at $200-300 million.

1.5 million tons of ore will be mined here throughout the year. From this, 300 thousand tons of petalite concentrate will be obtained. It costs up to $2,000 per ton (on the cost, I’ve only one word from an estimate, it will be around $1,000).

This will result in an increase (!) in the company’s revenue of up to $600 million per year and a rapid payback for the business.

An additional $400 million is planned to be invested in hydroxide production (petalite 1/2 output).

And here is where the most interesting work begins.

Price:%s:

• The average price of lithium in 2022 was $37,000/tonne;
• In 2022, the maximum price reached 80 thousand dollars per ton;
• In the first quarter of 2023, the cost of one ton of lithium hydroxide in North America exceeded $54,000.

If Ukrainian producers can sell at this price, their revenue will exceed $8 billion per year.

However, analysts predict lithium prices will fall to $11,000 by 2030.

But let’s take a look at the demand forecast… It’s hard to believe that prices will drop that much. Yes, and it is not hard to believe that they will fall.

Yes, you can think of dozens of attempts with other materials for batteries … it will happen sooner or later.

But can you imagine how long it will take to replace or compete with the lithium market? And how much investment will it require?

So lithium will continue to live.

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