March 17, 2023
The Islamic Republic has announced it has found an enormous reserve of lithium, the element in heavy demand today for making rechargeable batteries and which the new electrical vehicle industry is most dependent upon.
The Ministry of Industry and Mining announced February 27 that it had uncovered a deposit of lithium ore totaling 8.6 million tons, equaling 10 percent of all the lithium discovered previously around the world.
It said the ore was found at Qahavand in Hamedan province, about 50 kilometers (30 miles) east of the city of Hamedan in an area of about 11 square kilometers (4 square miles).
The deposit, if confirmed, would give Iran the sixth largest lithium ore supply found in the world, just slightly more than the 7.9 million tons known to exist in the United States.
The biggest lithium reserves by far are in Bolivia, with 21 million tons or one-quarter of all the world’s lithium. But Bolivia extracts no lithium ore since the disorder in that country has discouraged the investors needed to start up mining-a fate likely to befall Iran as well, given sanctions.
The biggest lithium producers in the world are Australia, Chile and China, with 85 percent of all the world’s output today. The big investment money is going to Australia, which ships most of its lithium to China to be refined.
Iran’s Ministry of Industry and Mining said it spent four years searching before locating the deposit in Hamedan province. It said it expected to be producing lithium ore within two years. It didn’t speak of any plans to refine the ore itself.
The lucrative element is a crucial component in the cathodes of lithium-ion batteries in electric vehicles (EVs), as well as in rechargeable batteries like those used in cellphones. The metal’s price has skyrocketed in the last year due to higher demand for electric vehicle parts, global supply chain problems and inflation, but fell more recently, undergoing a correction amid a drop in EV sales and slow business activity in China, the fastest-growing EV market.
In the next two years, Goldman Sachs said before the Iran announcement that it expects lithium’s supply to grow on average by a substantial 34 percent year-on-year, led by Australia and China, which hold some of the world’s largest supplies of the metal. “Hence, whilst a recovery in EV sales into 2023 Q2-Q3 could temporarily lift sentiment and support falling battery metal prices, the likely supply surge and downstream overcapacity are set to bring lithium prices down subsequently in the medium term,” the bank wrote. But Iran wouldn’t be supplying any lithium to the market for a few years anyhow.
