The lithium supply chain begins at the extraction stage, where two principal routes dominate global production: hard rock mining and brine extraction.

Hard Rock Extraction

Hard rock mining, mainly in Australia produces c.70% of global lithium. Spodumene, is mined, concentrated, and typically sent to China for conversion into lithium carbonate or lithium hydroxide. It is faster to scale but more energy intensive and costly than brine extraction. Lower-grade mica is also increasingly used, especially in China.

Brine Extraction

Brine extraction, by contrast, is centred in South America’s “Lithium Triangle”:

• Chile

• Argentina

• Bolivia

In Chile and Argentina, lithium-rich brines are pumped from underground salt flats into large evaporation ponds. Over 12 - 18 months, solar evaporation concentrates the lithium before it undergoes chemical processing to produce marketable compounds. The method is significantly lower cost than mining but slower to operate. Bolivia has significant lithium resources but currently produces pre-commercial lithium.

Direct Lithium Extraction

An increasingly discussed additional route direct lithium extraction (DLE) uses chemical or electrochemical techniques to selectively capture lithium ions from brine without lengthy evaporation. This process has potential to shorten production cycles, increase recovery rates, and reduce environmental impact, though commercial-scale adoption remains limited. Clay deposits, found in regions such as the US and Mexico, are also emerging as a potential resource, though extraction methods remain commercially unproven at scale.

Global Demand

Global lithium demand is projected to rise sharply over the next decade as electrification gathers pace across:

• Transport

• Energy storage

• Industrial sectors

Consumption is expected to increase from c. 1.3m tonnes of lithium carbonate equivalent (LCE) in 2025 to almost 4m tonnes by 2035. Meeting this growth will require major investment in new mines, brine projects, and refining capacity, as well as significant advances in processing technology and logistics infrastructure.

Global Supply

In the near term, the market is well supplied, with capacity expansions in Australia, South America, and Africa broadly keeping pace with rising demand. However, the market is forecast to tighten towards the end of the decade, driven by accelerating electric vehicle (EV) uptake and continued build‑out of battery energy storage systems (BESS). Without sustained project development, supply deficits could re‑emerge before the end of the decade, potentially placing renewed upward pressure on prices.

Geopolitical Influence

Geopolitical considerations are becoming increasingly significant. Policy initiatives in the US and EU aim to reduce reliance on Chinese processing and strengthen regional battery supply chains. While these measures are stimulating investment in Western lithium resources and conversion capacity, it is expected to take at least a decade to achieve material diversification, given long project lead times and permitting constraints.

The Role of Recycling

Recycling is set to play an expanding role in the future supply mix, providing secondary lithium from end‑of‑life EV and energy storage batteries. However, substantial volumes are unlikely to return to the market before the 2030s, as most batteries require eight to 10 years of use before reaching end‑of‑life. By 2040, recycled material is expected to account for more than 30% of global supply, helping to mitigate but not replace the need for new extraction.

Overall, the outlook points to sustained structural growth, underpinned by the global transition towards low‑carbon mobility and renewable energy systems.