The lithium business is gaining more and more followers, especially in the automotive industry, where the shortage of materials for the production of batteries for electric cars requires more investment to give the sector a greater boost.
Elon Musk has raised his voice in this regard, and has called for more investment in lithium refining around the world, warning that those who seize the opportunity will find the business as lucrative as “minting money”.
“I would like to once again urge entrepreneurs to get into the lithium refining business. Mining is relatively easy, refining is much more difficult,” Musk said. The CEO of Tesla Inc. (TSLA) added during the financial results call that margins similar to software can be achieved with lithium processing. “You can’t lose it, it’s a license to print money.”
Restrictions in lithium availability that have pushed up prices are not the result of raw material shortages, but of limited global capacity to deliver ultra-high purity carbonate and hydroxide battery chemicals., said. Lithium carbonate prices in China have risen nearly 450% in the past year.
Refining is “pretty hard and it’s kind of hard to scale because it requires a huge amount of machinery,” Musk said. China accounts for more than half of all existing lithium refining capacity, though suppliers are adding projects at other hubs. Tianqi Lithium Corp. delivered its first batch from a new Australian operation in May.
Financiers and producers have been wary of investing in new refineries and mines to increase capacity, after the previous rush of investment swamped demand and caused prices to slump that lasted until the end of 2020. Many Material suppliers were forced to cut production or delay projects, with some operations closing entirely.
Australia should try to add more refining and production capacity to help the world meet growing demand for batteries, Tesla Chairman Robyn Denholm said this week. Projects are also being added in places like Chile, Argentina and the United States. Tesla is building a cathode facility in Texas and is working on lithium refining. “If our vendors don’t fix these issues, we will,” Musk said.
Tesla sees signs that the prices of other materials – including steel and aluminum – are on a downward trajectory, and expects to see the benefits as early as the end of this year.
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For Elon Musk, lithium refining is like a ‘license to print money’