The lithium market has experienced significant volatility in recent years, with prices soaring during the electric vehicle (EV) boom and subsequently plummeting due to oversupply. However, industry experts are now forecasting a potential resurgence in lithium demand by 2025, which could present opportunities for companies like Atlas Lithium (NASDAQ: ATLX) to capitalize on the changing market dynamics.
Lithium, a crucial component in EV batteries and energy storage systems, saw its price skyrocket between 2021 and 2022 as global demand for EVs surged. However, the rapid expansion of lithium production, particularly in China, led to an oversupply situation and a sharp decline in prices. Lithium hydroxide, which peaked at $85,000 per metric ton in 2022, now trades at approximately $12,000 per metric ton. Similarly, lithium carbonate contracts have dropped from over $40,000 per metric ton to around $13,000 per metric ton.
While this price decline has shaken market confidence, it may present a value-buying opportunity for long-term investors. The McKinsey Battery Insights team predicts that lithium demand could strengthen significantly in the coming years, driven by several key factors. These include accelerating EV adoption, growth in renewable energy storage solutions, and supportive government policies aimed at reducing carbon emissions.
The U.S. Inflation Reduction Act, the EU's planned ban on internal combustion engine vehicles by 2035, and China's aggressive EV policies are expected to drive a surge in EV sales. McKinsey predicts that by 2030, up to 90% of passenger vehicle sales in key markets like the U.S., Europe, and China could be electric. Additionally, the growing need for large-scale battery storage solutions to support renewable energy generation is expected to further boost lithium demand.
Technological advancements in battery technology are also projected to support this demand growth. The McKinsey Battery Insights team estimates that global demand for lithium-ion batteries will increase from 700 gigawatt-hours (GWh) in 2022 to 4.7 terawatt-hours (TWh) by 2030. Data from Statista anticipates that global demand for lithium will surpass 2.4 million metric tons of lithium carbonate equivalent by 2030, doubling from projected 2025 levels.
Atlas Lithium, a Brazil-based company, is positioning itself to potentially benefit from this anticipated market rebound. The company is advancing its hard-rock lithium project in Minas Gerais, one of the largest lithium exploration projects in Brazil. Atlas Lithium's strategic advantage lies not only in its sizable resource base but also in its efficient technological approach to lithium processing.
The company is preparing to ship its fabricated modular dense media separation (DMS) lithium processing plant from South Africa to Brazil. This technology is designed to separate lithium-bearing spodumene from other materials, providing a high-grade lithium concentrate crucial for battery production. The DMS plant represents a significant step for Brazil's lithium industry, with a modular design that allows for efficient transportation and installation. Phase 1 of the project aims to produce up to 150,000 tonnes per annum (tpa) of 5.5%-6% battery-grade spodumene.
Atlas Lithium's use of DMS technology also aligns with growing environmental concerns in the industry. The company notes that this processing method reduces water consumption significantly compared to traditional lithium processing methods, making it an environmentally sustainable way to produce high-quality lithium. As ESG (Environmental, Social, and Governance) factors become increasingly important to investors, Atlas Lithium's sustainable practices could enhance its appeal in the market.
The potential resurgence of the lithium market by 2025 and Atlas Lithium's strategic positioning highlight the dynamic nature of the clean energy transition. As the world continues to shift towards electric mobility and renewable energy solutions, the demand for lithium is expected to play a crucial role in shaping the future of energy storage an
