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Here’s why Elon Musk might start mining his own lithium


Elon Musk wants more lithium, but only a handful of countries can provide the hardware key to transport electrification, at least for now.

The Tesla Inc. chief has issued a public call for more investment in lithium mining to fill what he sees as a gaping gap between supply and demand fueled by the adoption of electric vehicles. Musk has signaled that the electric car giant may finally start mining lithium due to soaring prices. He first mentioned this plan almost two years ago.

The urgency of having a supply range of the silver white merchandise comes as demand growth is expected to increase in the coming years. While major producers such as Albemarle Corp. are increasing their capacities and new projects are being built, supply growth is not fast enough due to a lack of investment following the lithium boom-bust cycle of 2017-2019.

Read more: Tesla is used to controversy. But his latest scandals could hurt his bottom line

For now, lithium production is concentrated in a few countries, with Chile and Australia accounting for 81% of global production. Fewer suppliers means a higher risk of supply disruption.

Investors turned away from lithium producers, developers and explorers following the two-year price slump. At the time, much of the lithium capacity was coming online, sparked by the electrification hype when Tesla and non-hybrid vehicles hit the scene five years ago.

While young miners and startups are developing newer, greener technology to mine lithium, none of them have reached commercial scale, forcing auto companies like Tesla to rely solely on traditional mining nations like Chile and Australia.

With the help of Joe Deaux.

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