A lithium mining machine moves salt by-products in a mine in the Atacama Desert in Salar de Atacama, Chile on October 25, 2022.
Lucas Aguayo Hour| Anadolu Agency Getty Images
Iran says it has discovered a large deposit of lithium – a key element in batteries for electric devices and vehicles – in one of its western provinces.
“For the first time in Iran, lithium reserves have been discovered in Hamedan,” a mountainous province in the west of the country, Mohammad Hadi Ahmadi, an official at Iran’s ministry of industry, mines and trade, was quoted as saying on Iranian state television. Saturday.
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The ministry believes the deposit contains 8.5 million tons of lithium, often referred to as “white gold” for the fast-growing electric vehicle industry. If the claimed figures are accurate, that would make the lithium deposit the second largest known reserve in the world after Chile, which holds 9.2 million metric tons of the metal, according to the US Geological Survey.
The beneficial element is an important component in the cathode of lithium-ion batteries in EVs, as well as in rechargeable batteries such as those used in mobile phones. Metal prices have 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 fall in EV sales and slow business activity in China, the fastest-growing. EV market.
News of Iran’s lithium deposits, if true, would be a lifeline for the country’s battered economy.
Weighed by several years of severe international sanctions and faced with a spiraling currency, which reached its lowest point against the dollar at the end of February, Iran will benefit greatly from the ability to export such valuable resources – although trading partners will likely be limited because. against the sanction.
Isolated from the global financial system, Iran continues to draw condemnation from Western countries that accuse Tehran of supplying Russia with weapons used in the war in Ukraine. The Iranian government has also spent nearly six months cracking down on the rights of women and anti-government protesters.
In terms of the global lithium market, such an addition to the world’s known reserves can push metal prices down further, depending on Iran’s capacity to export.
Iran is also one of the world’s top producers of oil and gas, but is unable to export widely because sanctions have reduced its ability to generate revenue and FX as well as its ability to contribute to global supply.
Analysts at Goldman Sachs see lithium sticking more in price.
“Over the next 9-12 months, we are more constructive on base metals, while expecting lower lithium prices along with cobalt and nickel,” wrote a report from the bank’s commodity research desk in late February.
Over the next two years, Goldman expects lithium supplies to grow by an average of 34% annually, led by Australia and China, which have some of the world’s largest supplies of the metal.
“Therefore, while the recovery of EV sales to 23Q2-Q3 could lift sentiment and support the falling battery metal prices, the possibility of a supply surge and downstream overcapacity is set to reduce lithium prices in the medium term,” the bank wrote.