Lithium Mining Plans Could Boost Iranian Economy

Iran’s plans to start mining lithium ore from two newly discovered deposits in the next two years could prove to be a lifeline in the medium term for an economy battered by high inflation and the rapidly declining value of its currency, reads a write-up published by Abu Dhabi-based English-language daily The National. Excerpts follow:
The country has announced the discovery of significant lithium deposits — a key element in the production of electric vehicle batteries — in its western province of Hamedan last week.
The reserves contain about 8.5 million tons of lithium, which is often described as white gold due to its value, a senior official of the Iranian Ministry of Industries, Mines and Trade told Press TV.
If the estimate is right, this will be one of the largest lithium ore discoveries in the world and could potentially support Iran’s manufacturing sector and boost its exports.
Lithium, which has a wide range of industrial uses, registered a spectacular two-year price rally described as “insane” by Tesla’s chief executive Elon Musk and “unreasonable” by China’s EV manufacturer BYD.
Prices rose to as much as $86,170 a ton in November last year, but have since come down to about $52,000 a ton.
With the projected value of the lithium-ion battery market projected to grow to $193.13 billion by 2028, from $44.49 billion in 2021, according to research from Fortune Business Insights, many countries have made it their strategic aim to secure supply.
It took Iran about four years of exploration to find the deposits, and its Ministry of Industries, Mining and Trade is currently assessing its technological capacity as part of efforts to start up the mines in partnership with private investors.
Iran is reportedly also searching for more lithium deposits in the area. However, the scheduled start of extraction by 2025 means there is no immediate relief for the Iranian economy.
According to OilPrice.come, behind the recent price slump is — to some degree — a slowdown in China’s EV demand, in part due to the country putting an end to its EV subsidies. But the larger price pressure comes from an increase in lithium supplies from China, Australia, and Chile, and now, Iran.
“Demand remains strong but prices have been unsustainable for some time now,” analyst Dylan Kelly of Ord Minnett told Mining.com.
Rystad had previously warned that the global market deficit of lithium would shrink from 76,000 tons last year, to somewhere between 20,000 and 30,000 tons this year and that was before Iran’s most recent discovery.
Goldman Sachs concurred, forecasting that supply would grow at a faster clip than demand, depressing market prices.
While analysts seem to agree that the lithium carbonate market is set for continued correction this year, Rystad energy sees the price correction as temporary, with demand still healthy.
The question now is how big of an impact Western sanctions will have on Iran’s ability to sell whatever lithium it uncovers, OilPrice concluded.

Implications for Iran

Mindful of China’s experience in lithium extraction in Latin America, Iranian authorities have said that they are eying the use of foreign expertise to exploit the reserves, Amwaj.media wrote.
Deputy Industries Minister Mohammad Hadi Ahmadi on Feb. 28 was quoted as saying that Iran is currently "reviewing the use of technology from two developed nations" for extracting lithium ore.
He said two lithium mines have been found in Hamedan.
If verified, the 8.5-million-ton lithium deposit would make Iran's newly discovered reserves the fourth-largest in the world.
According to the US Geological Survey, Bolivia (21m tons), Argentina (17m tons) and Chile (9m tons) — forming the so-called ‘Lithium Triangle’ — have the largest overall reserves.
Studies need to be conducted to determine the exact value of the discovered reserves and the feasibility of extraction. The potential economic benefits could be of great significance and a morale boost for Iran's ailing economy.
Lithium is a lightweight metal that is highly sought after for its use in producing batteries, particularly for electric vehicles.
The ore discovery could benefit China, a major producer of lithium and Iran's biggest trading partner.
China reportedly accounts for roughly 60% of the world's lithium chemical supply. In addition to its own lithium reserves, China has heavily invested in extraction of the valuable element in Latin America.
Iran is looking for sustainable sources of revenue outside the sale of its sanctioned oil. Given the increasing value of lithium, the country will likely seek to exploit the possible economic and political benefits of the recent discovery.
More work is needed to determine the profitability of the reserves and to establish a framework for conducting mining activities, which is a challenging task given the western sanctions placed on Iran.

With interest in the material from major economic powers such as China, Iran may look to secure mining deals with its biggest trade partner. Such deals would see a significant inflow of foreign currency that can help Iran's declining economy, Amwaj.media concluded.