Lithium, Tension in the Battery Metal Boom

Why the world’s “white gold” market is under pressure

What’s happening?

Lithium demand is showing signs of strong rebound: Chilean producer SQM expects this year’s demand to exceed 1.5 million tones, a roughly 25 % increase from 2024.

At the same time, analysts warn of supply chain stress because most lithium production remains regionally concentrated in the so called “Lithium Triangle” of Chile, Argentina and Bolivia.

Why markets care

• Input cost risk: Lithium is a key component for EV batteries and grid storage. Supply squeezes or production delays can raise costs across the battery chain and auto sector.

• Investment timing: The build out of new mines and refining capacity takes years. A rush in demand with slow supply response creates structural pressure.

• Policy & geopolitics: Countries with lithium reserves are becoming strategic players, shifting how investors view resource exposure.

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Key drivers

• Demand surge: Battery demand in the U.S. and Canada is projected to grow by about 40 % and 74 % annually, respectively, through 2029.

• Concentrated supply: South America contributes about 30 % of global lithium output, making the chain vulnerable.

• Supply challenges: Although demand is rising, the timeline for new mines and extraction capability lags, pressuring supply.
  

What to watch next

• Production updates from top producers like SQM and others in Chile and Argentina.

• Announcements of new lithium extraction technology or large scale projects in North America or elsewhere.

• Price trends in lithium carbonate or hydroxide, and whether miners raise capex to respond.

• Policy shifts related to critical minerals regulation or export controls in South America.

Lithium is no longer a niche raw material it's central to the electrification story. But while demand is accelerating, supply chain constraints and regional concentration mean the market is increasingly exposed to shocks.

For companies in batteries, autos and energy storage, paying attention to lithium dynamics now is essential for next gen strategy.