Iran’s plans to begin mining lithium ore from two newly discovered deposits over the next two years could prove to be a medium-term lifeline for an economy battered by high inflation and the rapidly declining value of its currency, according to one of published article English language daily newspaper The National from Abu Dhabi. Excerpts follow:
The country last week announced the discovery of significant deposits of lithium – a key element in the manufacture of batteries for electric vehicles – in its western Hamedan province.
The reserves contain about 8.5 million tons of lithium, which is often referred to as white gold because of its value, a senior official at Iran’s Ministry of Industry, Mines and Trade told Press TV.
If the estimate is correct, this will be one of the largest lithium ore discoveries in the world and could potentially support Iran’s manufacturing sector and boost its exports.
Lithium, which has a wide range of industrial uses, has seen a spectacular two-year price rally that has been called “insane” by Tesla CEO Elon Musk and “unreasonable” by China’s EV maker BYD.
Prices rose as high as $86,170 a tonne in November last year but have since fallen to around $52,000 a tonne.
With the forecast value of the lithium-ion battery market growing from $44.49 billion in 2021 to $193.13 billion by 2028, according to research by Fortune Business Insights, many countries have made it their strategic aim to secure the supply.
It took Iran about four years of exploration to find the deposits and its Ministry of Industry, Mines and Trade is currently assessing its technological capacity as part of an effort to bring the mines online in partnership with private investors.
Iran is also reportedly exploring for other lithium deposits in the area. However, the planned start of funding by 2025 does not mean any immediate relief for the Iranian economy.
According to OilPrice.come, behind the recent price drop is – to some extent – a slowdown in demand for electric vehicles in China, partly due to the country phasing out its subsidies for electric vehicles. But the bigger price pressure is coming from a surge in lithium shipments from China, Australia and Chile, and now Iran.
“Demand remains strong, but prices have been unsustainable for some time,” Ord Minnett analyst Dylan Kelly told Mining.com.
Rystad had previously warned that the global lithium market deficit would shrink from 76,000 tons last year to around 20,000-30,000 tons this year, ahead of Iran’s recent discovery.
Goldman Sachs agreed, predicting that supply would grow faster than demand, which would depress market prices.
While analysts seem to agree that the lithium carbonate market is set for another correction this year, Rystad Energy sees the price correction as temporary as demand is still healthy.
The question now is how big the impact of western sanctions will be on Iran’s ability to sell any lithium it discovers, OilPrice concluded.
Consequences for Iran
Given China’s experience in lithium mining in Latin America, the Iranian authorities have said they are monitoring the use of foreign expertise to exploit the reserves, Amwaj.media wrote.
Deputy Industry Minister Mohammad Hadi Ahmadi was quoted as saying on February 28 that Iran is currently “looking into the use of technology from two developed nations” for lithium ore extraction.
He said two lithium mines were found in Hamedan.
If the 8.5 million tonne lithium deposit is confirmed, Iran’s newly discovered reserves would become the fourth largest in the world.
According to the US Geological Survey, Bolivia (21 million tons), Argentina (17 million tons) and Chile (9 million tons), forming the so-called “Lithium Triangle”, have the largest total reserves.
Studies must be conducted to determine the exact value of the discovered reserves and the feasibility of recovery. The potential economic benefits could be significant and a morale boost for Iran’s ailing economy.
Lithium is a coveted light metal for the manufacture of batteries, especially for electric vehicles.
The ore discovery could benefit China, a major lithium producer and Iran’s largest trading partner.
According to reports, China accounts for about 60% of the world supply of lithium chemicals. In addition to its own lithium reserves, China has invested heavily in extracting the valuable element in Latin America.
Iran is looking for sustainable revenue streams outside of selling its sanctioned oil. With lithium’s soaring value, the country will likely seek to capitalize on the potential economic and political benefits of the recent discovery.
Further work is needed to determine the viability of the reserves and provide a framework for conducting mining activities, a challenging task given the Western sanctions imposed on Iran.
Given the interest in the material from major economic powerhouses like China, Iran could seek mining deals with its largest trading partner. Such deals would result in a significant inflow of foreign currency that could help Iran’s shrinking economy, Amwaj.media concluded.
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