Demand for lithium has soared recently. Governments are pushing for the global rollout of electric vehicles (EV) in a bid to halt – and hopefully reverse – the climate changes we’re currently seeing. In response, more people are making the switch to EV and these electric motors are powered by lithium batteries.

Australia is already reaping the benefits of this surge in demand for lithium and is poised for the world moving away from diesel and petrol. But why is this country the one to reap the rewards?

The current picture

As the world’s biggest producer and exporter of lithium, Australia is perfectly placed for the upswing in EV sales. Ahead of any complete move towards electric motors in the next decade, we’re already seeing unprecedented lithium price surges. Figures from Benchmark Mineral Intelligence (BMI) reveal that the price of spodumene, the lithium-raw substance mined in Australia, rose 478.3% between January 2021 and January 2022.

In January this year alone, prices for spodumene shot up by 45.5% in January. While there was a slight lull in April that saw the rising value of lithium pause its upward trend, it’s expected that this was just a temporary change due to the ongoing impact of Covid-19.

What led to this price rise?

The main reason for the price hikes comes down to growing sales of EV. Europe and China in particular are driving the current lithium market. The China Association of Automobile Manufacturers predicting sales of EV to reach five million this year, which is a significant upward move from 3.4 million in 2021.

With so many motorists wanting to get ahead of the curve and swap their traditionally-powered cars for electric, car manufacturers have moved EV production up a gear.

However, it’s announcements like the one from Volkswagen, the biggest car manufacturer in the world, that trigger these surges in lithium prices. The motoring brand recently stated its plans to see the share of battery-electric vehicles rise to 50% by 2030, meaning that lithium production will be even bigger business in the next eight years.

The impact of lithium price rises on Australians

For forex traders and those who trade on the commodities markets, there are plenty of opportunities to do well here. Even as the upward trajectory takes a breather, it’s still performing significantly better than ever before.

But Australians are already seeing the benefits of the growing lithium industry. Miners and their communities are likely to see a surge in work, while ports across the country that oversee the export of the mined materials are also going to see a boom in business.

As with any new industry or market in a region, mining and port towns are likely to experience a period of growth. More houses, more businesses, and more local services and amenities will be added. This will expand smaller areas and creating opportunities for workers across lithium production and export, and also across other sectors in the towns.

As supply meets demand, Australia is about to experience some significant changes. Ultimately, time will tell if the lithium bubble will burst, but right now, there’s a lot of profit to be made.