Lithium

Material criticality in context

Lithium criticality is closely linked to the speed of its uptake. Within a single generation, it has moved from a niche industrial chemical used in ceramics, glass, and greases, to a defining material of electrified transport. This shift has occurred faster than for any comparable industrial metal, fundamentally reshaping its demand base in a relatively short period.^{68 69} Lithium is also mined solely for its own value, with no meaningful co-product or by-product relationship to other metals, differentiating it from materials like copper and nickel.

What makes lithium particularly difficult to substitute is that it sits at the heart of every lithium-ion cathode chemistry currently in commercial use, crucial for batteries. Battery manufacturers can reduce cobalt intensity through nickel-rich cathodes, or eliminate both nickel and cobalt by shifting to lithium iron phosphate, but all main commercial lithium-ion cathode families still contain lithium. Lithium demand is therefore less exposed than nickel or cobalt demand to changes in the chemistry mix. In the longer term, though, sodium-ion and other non-lithium technologies could displace some lithium demand.^{70 71}

The speed and scale of demand growth are compounded by the geographic concentration of supply. The world’s three largest producing countries account for more than three-quarters of global lithium production.⁷² Refining introduces a further layer of concentration that extraction figures alone do not capture, since converting lithium into battery-grade chemicals is dominated by a relatively small number of firms and countries.⁷³ In practice, this midstream chemical conversion, rather than mining itself, represents the more immediate supply bottleneck.

An additional dimension of lithium’s criticality stems from the structure of the market. Unlike established exchange-traded metals, lithium does not yet have a single, deeply liquid, and globally accepted price benchmark comparable to those of mature exchange-traded metals.^{74 75} Price fluctuations are not merely a consequence of tight supply; they also shape future supply. Producers have curtailed output in response to price collapses even while underlying demand has continued to grow, while repeated boom-and-bust investment cycles make it more difficult to plan and finance new production capacity.⁷⁶

Lithium is also extracted through fundamentally different production routes, each with distinct environmental trade-offs. Hard-rock mining is generally associated with higher energy use and emissions, while brine extraction raises concerns over water consumption and water stress in arid regions.^{77 78}

Material flows and application structure

This Sankey diagram maps how lithium moves from refined chemical through its material streams into applications and final end uses. The diagram is interactive: selecting any stream or application traces the flows connected to it. This is a conceptual visual showing the approximate distribution of lithium across material streams, applications, and end-uses. It shows the structure of the lithium system in 2020, when battery-grade material had already become the dominant application stream but industrial and specialty applications still accounted for a meaningful share of demand. As the midstream analysis demonstrates, this balance shifts substantially over the projection period, with battery applications coming to account for almost the entire system by 2050.