Here’s Why Elon Musk May Start Mining His Own Lithium

Elon Musk desires more lithium. But, for the time being, there are only few countries that can supply this crucial material.

Tesla Inc.’s chief executive made an appeal to investors for additional investment in lithium mining. He was trying to address the gap between demand and supply that he believes is being created by electric cars. Musk indicated that the electric car company might begin mining lithium in response to rising prices. Musk first spoke of the plan nearly two years ago.

As demand for the white, silvery commodity is expected to rise in the next years, it becomes urgent to ensure that there are enough supplies. Albemarle Corp. and other major lithium producers are increasing their capacity, but the lack of investment after 2017’s boom-bust cycle has impeded supply growth.

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For the moment, lithium production is concentrated in few countries. Australia, Chile, and Australia account for 81%. Supply disruptions are more likely when there is less supply.

In the aftermath of the price drop, investors shied away form lithium developers, producers and explorers. The electrification boom that Tesla and the non-hybrid vehicle came onto the scene five year ago prompted a large amount of lithium capacity to be brought online at that time.

Although startups and junior miners are working on newer, greener ways to mine lithium from the ground, they have not yet reached commercial scale. This means that automakers such as Tesla will continue to depend solely upon traditional mining countries like Chile and Australia.

Joe Deaux is your guide.

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