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Higher prices would indeed incentivize increased demand. But again, this requires higher prices. Understand that renewable activists are predicting that lithium

Higher prices would indeed incentivize increased demand. But again, this requires higher prices. Understand that renewable activists are predicting that lithium battery production will not only increase exponentially, it will also exponentially drop in cost per KWh as this happens. This is not going to happen because, as you point out, lithium mining will only expand if prices climb higher to make otherwise unprofitable reserves profitable. And since raw materials now dominate the cost of batteries, this is going to increase the cost of batteries. There's no having your cake and eating it too: in order to increase lithium mining capacity, battery cost is going to have to grow, not shrink. You edited your post after I replied, so I'll have to edit in response: There's no one "difficulty of extraction" factor for each commodity. The reality is that there's a diverse variety of reserves all of which are easier or harder to exploit, even for the same commodity. "The price is determined by how hard it is to extract" is at best a huge simplification. Higher commodity prices make it viable to extract the more inaccessible reserves, but those reserves will only be profitable so long as prices remain high. > If lithium was profitable to mine for $X/kg for many years, then that is the price it will naturally return to. Nope! This is completely wrong. Commodities don't "naturally return" to any price. Prices is a result of supply and demand. It could be we find some other battery chemistry that blows lithium out of the water. In that case the cost of lithium will probably collapse well below $X/kg. Conversely, if countries start to try and provision significant amounts of grid battery storage, the costs will grow even higher as more and more inaccessible reserves need to be exploited to supply market demand. There is no "natural" price of commodities, whatsoever. If the demand for lithium is going to rise and keep rising, then the cost will rise and keep rising unless some breakthrough makes it way more efficient to mine. Given the fact that we've been mining for centuries and we have huge demand for minerals other than lithium, I'm not optimistic on a 100x improvement in mining efficiency.

coder543 4y ago
The prices have gone up, so mining is expanding. There’s a clear next step to the way commodities work. That next step is not for prices to continue increasing dramatically, things should level off and eventually return to normal, as I explained. > Understand that renewable activists are predicting that lithium battery production will not only increase exponentially, it will also exponentially drop in cost per KWh as this happens. Battery prices don’t need to keep dropping for them to take over the world. They’re already cheap. Of course people would love for the prices to drop, and they have historically been dropping slowly, but the basic elements will cost a certain amount, so there is a price floor. I don’t know where that is, but it is lower than we’ve seen, because every step in the battery production chain has been making a profit up to this point, including the miners. The fact that prices have increased only indicates a mismatch between supply and demand, not that the natural price needs to be this high, or that it needs to continue rising. As I pointed out, everyone was already profitable at a lower battery price than what we have today. If batteries are expensive because of lithium, more lithium mines will open and drop the price. If batteries are expensive because the battery makers are price gouging, someone else will undercut them. The main concern for something like this is market distortion by patents. If the best way to make batteries is locked behind a patent, that can cause prices to be unnaturally high. This concern does not apply to elemental lithium. > Higher commodity prices make it viable to extract the more inaccessible reserves, but those reserves will only be profitable so long as prices remain high. You’re practically quoting my comment to me. I addressed that. It is possible that the price will settle higher than it is today if those methods play a big role, but it won’t matter. You don’t seem to appreciate how insanely cost effective batteries already are today. A modest price increase is fine, but it is still illogical to assume prices will stay high. Lithium is not hard to find. Why would the market settle on expensive extraction methods? It is a strange assumption to start from. We’re not talking about something that’s rare. Either way, the outcome is unchanged unless batteries increase in price exponentially, as your earlier comments apparently assumed.
- Manuel_D 4y ago
  For the second time, there is no "natural price". You need to iron this kind of wishful thinking out of your head. Companies want to buy more and more lithium, so unless you've got some breakthrough that makes mining a heck of a lot cheaper the cost will keep going up and up as more and more inaccessible reserves need to be exploited. If I have a reserve that costs $4/kg to operate when the price is $5/kg and another reserve that costs $7/kg, I may open the latter if the price rises to $8/kg. But if the price drops back down to $5/kg it's unprofitable to operate. Here's a way to articulate this that might better mesh with your mental model. The "natural price" of a commodity isn't static. If demand increases and the only way to meet demand is to use more and more expensive mining operations, then this raises the "natural price". As per the above example, the "natural price" rose to $8. It won't drop back below $8/kg unless either we find a way to make mining cheaper, or demand drops back to levels that can be satisfied by my cheaper-to-operate reserve.
  - coder543 4y ago
    You have too many assumptions about the availability of lithium, and lack of “easy” reserves. That’s the fundamental disconnect here. Lithium is not inaccesible, and it is super common. The “hard” ways to mine lithium aren’t that hard. We’re not talking about gold or platinum, where your discussion points would be relevant. I’m not wishing over here. But anyways, I’ve tried to explain the reason why the market disagrees with you, and why people are rapidly seeking to integrate batteries into the grid and into cars, which would not be possible if you were correct about lithium becoming insanely expensive. Battery production will keep scaling at a huge rate, and the prices will be fine. A modest price increase is irrelevant to anything discussed here today.
    - Manuel_D 4y ago
      Lithium is far from easy to extract. It also needs to be refined on-site because its raw form is too low-density to economically transport. So most lithium mines require large amounts of water to fill brine pools. The number of sites that are actually viable to produce lithium are not nearly so common. Again, the market disagrees with you not me. Lithium commodity prices are rising, and so are battery prices. People are indeed seeking to integrate batteries into the grid - I'm not disputing that. I'm pointing out that these batteries are actually becoming more expensive [1], not less and it's unlikely this trend will reverse on a dime. 1. https://www.utilitydive.com/news/new-york-battery-storage-costs-rise-interconnection-queue-12-gw/621954/ https://www.utilitydive.com/news/new-york-battery-storage-co...
onphonenow 4y ago
It's interesting because coder is very locked into their view on one price. I don't know lithium at all, but if you follow natural gas / fracking / oil production the question of what reserves are economically recoverable is HIGHLY price dependent (and highly variable). On low end $10-15/barrel cost of production or better. The only reason we have any production in the US is because oil costs more. If you said we would double oil usage prices would spike incredibly. Same thing with solar net metering, Solar activists demand that soler gen (often during periods with solar curtailments already in effect) be reimbursed based on the same cost as electric rates during the evening (usually peak demand and low solar / wind). Again, depressing how economically nonsensical this all is for a supposedly scientifically grounded effort. Anyways, rational heads (and economic forces) tend to prevail. I think we will see more TOU rates, and ideally this will at least create some market forces around storage.

coder543 4y ago

The prices have gone up, so mining is expanding. There’s a clear next step to the way commodities work. That next step is not for prices to continue increasing dramatically, things should level off and eventually return to normal, as I explained. > Understand that renewable activists are predicting that lithium battery production will not only increase exponentially, it will also exponentially drop in cost per KWh as this happens. Battery prices don’t need to keep dropping for them to take over the world. They’re already cheap. Of course people would love for the prices to drop, and they have historically been dropping slowly, but the basic elements will cost a certain amount, so there is a price floor. I don’t know where that is, but it is lower than we’ve seen, because every step in the battery production chain has been making a profit up to this point, including the miners. The fact that prices have increased only indicates a mismatch between supply and demand, not that the natural price needs to be this high, or that it needs to continue rising. As I pointed out, everyone was already profitable at a lower battery price than what we have today. If batteries are expensive because of lithium, more lithium mines will open and drop the price. If batteries are expensive because the battery makers are price gouging, someone else will undercut them. The main concern for something like this is market distortion by patents. If the best way to make batteries is locked behind a patent, that can cause prices to be unnaturally high. This concern does not apply to elemental lithium. > Higher commodity prices make it viable to extract the more inaccessible reserves, but those reserves will only be profitable so long as prices remain high. You’re practically quoting my comment to me. I addressed that. It is possible that the price will settle higher than it is today if those methods play a big role, but it won’t matter. You don’t seem to appreciate how insanely cost effective batteries already are today. A modest price increase is fine, but it is still illogical to assume prices will stay high. Lithium is not hard to find. Why would the market settle on expensive extraction methods? It is a strange assumption to start from. We’re not talking about something that’s rare. Either way, the outcome is unchanged unless batteries increase in price exponentially, as your earlier comments apparently assumed.

Manuel_D 4y ago
For the second time, there is no "natural price". You need to iron this kind of wishful thinking out of your head. Companies want to buy more and more lithium, so unless you've got some breakthrough that makes mining a heck of a lot cheaper the cost will keep going up and up as more and more inaccessible reserves need to be exploited. If I have a reserve that costs $4/kg to operate when the price is $5/kg and another reserve that costs $7/kg, I may open the latter if the price rises to $8/kg. But if the price drops back down to $5/kg it's unprofitable to operate. Here's a way to articulate this that might better mesh with your mental model. The "natural price" of a commodity isn't static. If demand increases and the only way to meet demand is to use more and more expensive mining operations, then this raises the "natural price". As per the above example, the "natural price" rose to $8. It won't drop back below $8/kg unless either we find a way to make mining cheaper, or demand drops back to levels that can be satisfied by my cheaper-to-operate reserve.
- coder543 4y ago
  You have too many assumptions about the availability of lithium, and lack of “easy” reserves. That’s the fundamental disconnect here. Lithium is not inaccesible, and it is super common. The “hard” ways to mine lithium aren’t that hard. We’re not talking about gold or platinum, where your discussion points would be relevant. I’m not wishing over here. But anyways, I’ve tried to explain the reason why the market disagrees with you, and why people are rapidly seeking to integrate batteries into the grid and into cars, which would not be possible if you were correct about lithium becoming insanely expensive. Battery production will keep scaling at a huge rate, and the prices will be fine. A modest price increase is irrelevant to anything discussed here today.
  - Manuel_D 4y ago
    Lithium is far from easy to extract. It also needs to be refined on-site because its raw form is too low-density to economically transport. So most lithium mines require large amounts of water to fill brine pools. The number of sites that are actually viable to produce lithium are not nearly so common. Again, the market disagrees with you not me. Lithium commodity prices are rising, and so are battery prices. People are indeed seeking to integrate batteries into the grid - I'm not disputing that. I'm pointing out that these batteries are actually becoming more expensive [1], not less and it's unlikely this trend will reverse on a dime. 1. https://www.utilitydive.com/news/new-york-battery-storage-costs-rise-interconnection-queue-12-gw/621954/ https://www.utilitydive.com/news/new-york-battery-storage-co...

onphonenow 4y ago

It's interesting because coder is very locked into their view on one price. I don't know lithium at all, but if you follow natural gas / fracking / oil production the question of what reserves are economically recoverable is HIGHLY price dependent (and highly variable). On low end $10-15/barrel cost of production or better. The only reason we have any production in the US is because oil costs more. If you said we would double oil usage prices would spike incredibly. Same thing with solar net metering, Solar activists demand that soler gen (often during periods with solar curtailments already in effect) be reimbursed based on the same cost as electric rates during the evening (usually peak demand and low solar / wind). Again, depressing how economically nonsensical this all is for a supposedly scientifically grounded effort. Anyways, rational heads (and economic forces) tend to prevail. I think we will see more TOU rates, and ideally this will at least create some market forces around storage.