Economics Assignment on Lithium Market: Supply, Demand and Price

Running head: ECONOMICS ASSIGNMENT
Economics assignment
Name of the student
Name of the university
Author note

1
ECONOMICS ASSIGNMENT
Table of contents
Question 1..................................................................................................................................2
Answer i)................................................................................................................................2
Answer ii)...............................................................................................................................3
Question 2).................................................................................................................................3
Answer i)................................................................................................................................3
Answer ii)...............................................................................................................................4
Question 3).................................................................................................................................4
Answer i)................................................................................................................................4
Answer ii)...............................................................................................................................6
Reference list..............................................................................................................................7

2
ECONOMICS ASSIGNMENT
Question 1
Answer i)
The article named “Australia is the new frontier for battery minerals” states that the
increasing demand of raw materials by China for making batteries for electric vehicles had
highly benefitted Australia. It states that the company Atlas Iron have shipped low grade iron
ore at value of A$3.5bn to China in the year 2011. The Australian mines of lithium, cobalt
and nickel have already shipped a huge amount of raw materials to the Chinese carmakers.
The demand for lithium is so high that it is expected to face shortage within a few years. The
lithium suppliers of Australia also claim that they provide a more secure of lithium and iron
ore for Chinese battery manufacturers (The Economist. 2018). However, it is quite doubtful
how much profit will the electric vehicles make as famous Chinese carmakers have already
experienced that full electrification of cars will take some to develop.
The second article mainly states the factors which affects the demand and supply of
lithium in the world market. According to the article provided, it has been found out that the
demand for lithium mainly depends on increase in the usage of lubricant grease, glass,
medicines, batteries and ceramics. It states that when the usage of electric vehicles increases,
the demand for lithium-ioned batteries goes up. The article also states that the demand of
lithium will increase in the preset as well as in the coming years (Leni 2018). However,
lithium is only produced by the four major players comprising of SQM, Albemarle, FMC
Corp and the Chinese producers. Therefore, it can be said the supply of lithium is mainly
dependent on these major players. It also states that Australia ranks first followed by Chile
and Argentina in the production of lithium.