Upstream: Extraction, processing, and manufacturing

Lithium's upstream trajectory reflects a younger, rapidly scaling industry. As shown in Chart 16 below, assumptions made in the model based on literature illustrate an upward trend in ore-to-metal ratio, which stabilises throughout the projection. This is consistent with improvements in lithium processing and the maturation of an industry that, until relatively recently, operated at modest scale with limited investment in material efficiency. The pace of this ramp-up, however, is bounded by more than processing maturity alone—deposit cost structure (the breakdown of costs associated with extraction) also sets a limit on how quickly supply can scale.⁷⁹

The figure below illustrates the more revealing upstream signal at the semi-fabrication stage. Historically, losses between refining and semi-fabrication were extraordinarily large, with much of the refined lithium never becoming recoverable. This reflects lithium's historical application profile. Uses such as ceramics, glass, and greases made up a large share of lithium end-uses and are inherently dispersive, chemically binding lithium into products from which recovery is not practically possible. The model assumes that as battery applications come to dominate, semi-fabrication losses decline sharply as a share of refined output, a trend which is projected to continue through to 2050, consistent with available literature and data on lithium's changing application mix.⁸⁰ This is an important assumption underpinning the model: the transition towards batteries has not only transformed lithium demand, but is assumed to make the material substantially more recoverable in principle, by shifting it away from applications where recovery was effectively impossible and towards applications where it becomes technically feasible.

Manufacturing-stage losses follow a different trajectory, as they are assumed to grow as a share of output as battery manufacturing expands. This is consistent with the expected characteristics of a young, rapidly growing manufacturing sector, and is assumed to generate a substantial stream of production scrap which, as the downstream indicators show, becomes lithium's first meaningful source of secondary material.