More than $60 billion in capex required to meet 2040 lithium demand, Benchmark analysis finds

Operating lithium supply will need to expand by over three million tonnes LCE to meet expected 2040 base demand, according to analysis in Benchmark’s new Capex Briefing. It is a gap that is forecast to require USD ~$64 billion in capital spending to close, as demand for the mineral continues to expand at 7.3% CAGR under Benchmark’s base demand view. Operating supply in 2026 sits at 1.7 million tonnes LCE today.

As noted in Benchmark’s recent Lithium Forecast Report, lithium demand is expected to grow on the back of sustained electric vehicles (EV) adoption as well as an increase in deployment of battery energy stationary storage (BESS). While a tightening of the market is expected in the medium term, the long-term trend is one of strong growth; though the market could remain looser in the case of a more challenging economic environment or diminished policy support, the broad direction of demand is expected to remain the same.

Federico Gay, lithium analyst at Benchmark noted that “the supply side does remain the greater source of uncertainty. Permitting delays, financing constraints and geopolitical risks suggest supply risk is skewed to the downside. At the same time, demand, particularly BESS, is having a second surprising year of growth, which surpassed our initial estimates.”

Supply constraints to give DLE projects larger role

In the long term, supply is expected to be comparatively constrained, and less conventional lithium projects, including direct lithium extraction (DLE) and sedimentary projects, are likely to play a greater role.

Today, roughly 80% of total lithium production is produced from conventional sources, mainly spodumene mines and brines via evaporation, but Gay highlighted the volume of capital being invested into DLE amid the shifting economics within the industry, noting that “a significant share of the mines that need to be developed to bridge the supply gap are more complex, both geologically and technically, and that complexity carries a cost.

“DLE and sedimentary assets have higher capital requirements than conventional mines, and those sources, together with mica sources, will double their combined share of production to 40% by 2040.”