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Refining lithium is a ‘license to print money,’ says Musk

The constraints on lithium availability that have driven prices up are not the result of raw material scarcity, but due to limited global capacity to supply quality ultra-high purity hydroxide and carbonate chemicals. battery in battery supply chains, he said. Lithium carbonate prices in China have jumped nearly 450% in the past year.

Refining is “quite difficult and requires a massive amount of machinery and it’s a hard thing to scale,” Musk said. China accounts for more than half of all existing lithium refining capacity, although suppliers are adding projects in other centers. Tianqi Lithium Corp. delivered its first batch of a new Australian operation in May.

Financiers and producers have been wary of big spending on new refineries and mines to boost capacity after a previous flood of investment swamped demand and triggered a multi-year price slump through the end of 2020. Many materials suppliers were forced to cut production or delay projects, and some operations shut down altogether.

Australia should aim to add more refining and manufacturing capacity to help the world meet growing demand for batteries, Tesla President Robyn Denholm said this week. Projects are also being added in places like Chile, Argentina, and the United States. Tesla is building a cathode facility in Texas and working on the lithium refining business. “If our suppliers don’t fix these issues, we will,” Musk said.

The company is seeing signs that the prices of some other materials – including steel and aluminum – are on a downward trajectory and expects to see profits from this as early as the end of the year.