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Energy Investing
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Re: President Biden Embraces His Truth:Asleep at the wheel Math and Physics. Any energy transition has taken 20-30 years. There are problems that take time. You try to rush things and it will implode on you. Lithium is one example. The West Australian has a great article entitled: " ‘Asleep at the wheel’: The trouble with lithium" Which can be read here (near the bottom of the posts): Elon Musk wants to mine it, China is scouring Tibet for it, battery makers are crying out for it. Lithium, the wonder metal at the heart of the global shift to electric cars, is in a full-blown crisis. Demand has outstripped supply, pushing prices up almost 500 per cent in a year and hindering the world’s most successful effort yet to halt global warming. The shortage of lithium is so acute that in China, which makes about 80 per cent of the world’s lithium-ion batteries, the government corralled suppliers and manufacturers to demand “a rational return” to lower prices. Analysts at Macquarie Group warned of “a perpetual deficit”, while Citigroup nearly doubled its price forecast for 2022, saying an “extreme” rally could be coming. The consequences of failure to produce enough lithium are potentially devastating. Global investment in EVs has grown faster than any other new-energy sector over the past few years, outstripping even wind and solar power. Current lithium spot prices could add up to $US1000 ($1400) to the cost of a new vehicle, Benchmark Mineral Intelligence said. Along with higher prices of other raw materials, that is reversing years of falling prices as EVs race to become cost-competitive with petrol-powered cars. If battery makers can’t get enough lithium, it would curb the expansion of clean-energy vehicles, making it harder to meet global emissions targets. It looks like the expansion ramp up is not going to be fast enough to hit demand” over the next three years, said Cameron Perks, an analyst at Benchmark. EV makers “have been asleep at the wheel” The article ends with: Another potential source of lithium is from recycling old batteries, a practice that could meet 16 per cent of annual demand by 2035, according to BloombergNEF. But battery retirements are only set to surge after 2030. “Basically, there’s just not enough batteries to be recycled right now,” said McKinsey’s Hoffman, adding that recycling presents its own environmental problems. “There is no great way to recycle a battery today.” One roadblock to investing in output is that not everyone is convinced that the market will remain undersupplied and miners don’t want to be burned again by the kind of glut that caused prices to slump in 2018. The upshot is that the lithium crunch isn’t likely to go away soon, leaving an industry that exists because of the need to protect the environment with little option but to ramp up output as fast as possible, even with a supply chain that spews emissions and guzzles scarce resources. “Yes, it helps to be green,” said Perks at Benchmark. “But right now, we need all the lithium we can get.” |
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