Iran’s lithium find is a potential game changer
The discovery of a lithium mine in Iran and its potential implications for the global production of lithium-ion batteries and electric vehicles is still one of the topics discussed in the world media.
According to Iran’ Ministry of Industry, Mining and Trade (IMT), the deposit holds 8.5 million tonnes of the rare element, which is often called “white gold” for the rapidly growing electric vehicle industry. Should the estimate be accurate, that would make the deposit the second-largest known lithium reserve in the world after Chile, which holds 9.2 million tonnes of the metal, according to the US Geological Survey.
This is the first lithium carbonate equivalent (LCE) deposit discovered in the mountainous Hamadan province, signaling positive news of the possibility of other reserves in Iran. With global lithium reserves estimated at 89 million tons, Iran may now possess almost one tenth of the world’s lithium supply.
Increased demand for rechargeable batteries like those used in electric vehicles and cellphones has pushed lithium prices to record levels in recent years. Lithium has found strategic importance due to rising demand for most low carbon technologies that are pushing the envelope for a low carbon future within a global electric mobility ecosystem.
The recent discovery is set to shift attention to Iran’s extractives sector which is relatively underdeveloped. Iran holds about 7 percent of the world's proven mineral reserves, but mineral products make up for no more than 0.6 percent of its GDP.
At current rates, Iran’s mineral reserves are worth $700 billion, with a value added estimated at $4 trillion, according to former head of state mines and metal holding company IMIDRO Mehdi Karbasian.
The country will be able to extract lithium in the next two years, IMT deputy minister Mohammad-Hadi Ahmadi has said. It is currently studying technological capacities existing in two developed countries as part of efforts to start up the mine through a partnership with private investors.
Iranian officials are usually discreet about divulging the details of foreign involvement in the country’s development projects in the face of sanctions pressures.
Experts say such an addition to Iran’s strategic energy inventories would enable the country to blunt Western sanctions with a potentially potent element.
Iran owns the world’s largest oil and gas reserves combined, but sanctions have slashed its capacity to contribute significantly to global supply due to the abundance of producers.
As regards lithium, economically viable deposits are limited and the suppliers of the rare element are few. In market terms, Iran with 8.5 million tonnes of lithium reserves would be impossible to sideline.
As a result, Iran can use the potential to attract foreign investment and leverage it in negotiations with the West to remove sanctions on the Islamic Republic.
China is currently the world's largest lithium battery consumer market. In 2021, the global lithium-ion battery market reached 545 gigawatt hours (GWh), and China accounted for more than half of the total.
The country is Iran’s largest oil customer and an important trade partner despite the sanctions, having signed a 25-year cooperation agreement in 2021 to strengthen their longstanding economic and political alliance.