Supply-demand balance and resilience

Lithium shows one of the most dramatic supply-demand trajectories in this study, with the pattern of change more important than the absolute scale. Chart 15 below shows primary supply expanding rapidly through the 2020s, increasing approximately sixfold between 2020 and the early 2030s. During this period, supply broadly keeps pace with demand, suggesting that the projected expansion of lithium production is sufficient to support the initial phase of battery deployment.

From around the mid-2030s onwards, primary supply plateaus before gradually declining, while desired demand continues to increase sharply, reaching around 15 times its 2020 level by the end of the projection period. The result is a prolonged period during which realised supply falls below the service level required to meet demand, indicating a structural imbalance rather than a temporary supply disruption. Even more striking is the scale of suppressed demand. By 2050, the gap between desired demand and real demand approaches half of total desired demand, with a gap of approximately 530 thousand tonnes. The model therefore suggests that lithium scarcity is unlikely to be expressed primarily through visible unmet demand. Instead, scarcity and price signals progressively suppress consumption below what would otherwise be required, implying that lithium availability could become a constraint on the pace of the energy transition rather than simply a challenge for the lithium market itself.

The figure also highlights the role of strategic reserves in shaping this trajectory. Lithium is the only material in the study where reserve releases make a substantial contribution to supply during the projection period. Reserve outflows begin increasing from the early 2030s, peak at approximately 28 thousand tonnes in the middle of the decade, and then gradually decline towards 2050. These releases help delay the onset of supply constraints, but only temporarily. As reserve availability declines, the gap between supply and demand becomes increasingly visible, suggesting that strategic reserves function as a bridge during periods of pressure rather than a long-term solution.