A lithium mining machine moves a salt by-product on the mine within the Atacama Desert in Salar de Atacama, Chile on October 25, 2022.
Lucas Aguayo Araos| Anadolu Agency | Getty Images
Iran says it’s discovered a large deposit of lithium — a key element in batteries for devices and electric vehicles — in one among its western provinces.
“For the primary time in Iran, a lithium reserve has been discovered in Hamedan,” a mountainous province within the country’s west, 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 holds 8.5 million tons of lithium, which is commonly called “white gold” for the rapidly growing electric vehicle industry. If the claimed figure is accurate, that will make the deposit the second-largest known lithium reserve on the planet after Chile, which holds 9.2 million metric tons of the metal, in keeping with the U.S. Geological Survey.
The lucrative element is an important component within the cathodes of lithium-ion batteries in EVs, in addition to in rechargeable batteries like those utilized in cellphones. The metal’s price has skyrocketed within the last 12 months on account of 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.
Iran’s lithium deposit news, if true, can be a lifeline for the country’s battered economy.
Weighed down by several years of heavy international sanctions and faced with a spiraling currency, which hit its lowest point against the dollar in late February, Iran would profit greatly from the flexibility to export such valued resources — though its trading partners would likely be limited on account of those sanctions.
Isolated from the worldwide economic system, Iran continues to attract penalties from Western nations that accuse Tehran of supplying Russia with weapons which are getting used in its war in Ukraine. Iran’s government has also spent nearly six months cracking down violently on women’s rights and anti-government protesters.
By way of the worldwide lithium market, such an addition to the world’s known reserves could push prices of the metal down further, depending on Iran’s capability to export.
Iran can also be one among the world’s top producers of oil and gas, but its inability to export widely on account of sanctions has slashed its capability to usher in revenue and foreign currency in addition to its ability to contribute to global supply.
Analysts at Goldman Sachs see lithium dropping further in price.
“Over the subsequent 9-12 months, we’re progressively more constructive on base metals, whilst expecting a move lower in lithium prices alongside cobalt and nickel,” a report from the bank’s commodities research desk from late February wrote.
In the subsequent two years, Goldman expects lithium’s supply to grow on average by a considerable 34% 12 months on 12 months, led by Australia and China, which hold among the world’s largest supplies of the metal.
“Hence, whilst a recovery in EV sales into 23Q2-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 within the medium term,” the bank wrote.
