The downstream processing segment of the lithium market, encompassing the conversion of raw lithium into battery-grade lithium hydroxide and carbonate, is experiencing significant transformation.
This evolution is driven by technological advancements, geopolitical shifts, and increasing demand for electric vehicles (EVs), clean energy storage, and Battery Energy Storage Systems (BESS), among others.
The critical battleground from now to 2030 is downstream conversion – refining into lithium hydroxide or lithium salts, cathode precursor manufacture, and battery recycling. The raw ore business will increasingly act as a feedstock commodity.
Lithium hydroxide is gaining prominence due to its suitability for high-nickel cathode chemistries, which are prevalent in advanced EV batteries. The market for lithium hydroxide is projected to grow at a compound annual growth rate (CAGR) of 23.51% from 2024 to 2029, reaching some 564.78 kilotons of lithium carbonate equivalent (LCE) by 2029.
In Western markets such as Australia, Canada, the US, and European Union, governments and OEMs are pushing for more domestic or regional processing to bolster supply security, manage carbon footprints, and capitalise on what is poised to become a high-value industry.
Market analysts flag that scaling active material processing is possibly the limiting factor in many value chains. And failure to do so will leave miners squeezed.
Recycling and direct lithium extraction (DLE) is set to become increasingly important. Participants in industry roundtables consistently cite DLE as a technology frontier that could reshape cost and environmental profiles — provided it can scale and prove reliable.
In 2030, PwC through its Strategy& network reports almost every second car sold will be a battery electric vehicle (BEV), leading to a demand increase for global batteries of 35%. Market growth is being driven by both increased BEV sales and increasing battery size per BEV.
Consequently, PwC says demand for the most relevant active materials, especially lithium, nickel, and graphite will grow steadily.
“We expect an increase from 400,000 up to 6,000,000 tons (by) 2030,” PwC reports.
Shifting dynamics
The economics of lithium are shifting from raw ore to chemicals and active materials. Analysis by PwC’s Strategy& shows the scale-up needed in active material processing is enormous – on the order of multiple magnitudes by 2030 – if Western regions want to localise battery value chains.
Global mining leaders agree another catalyst for the growth of the downstream lithium market will be the shift in government policy for many nations and their willingness to provide incentives for its advancement.
While China currently leads in refining capacity, other regions are making significant strides to enhance their domestic processing capabilities, ensuring a more diversified and resilient global supply chain.
As mentioned, governments and OEMs are pushing for domestic refining, recycling and cathode precursor capacity, and commercial players that secure both feedstock and processing will win the margin pool. Policy instruments (industrial subsidies, content rules, strategic investments) are poised to accelerate regional moves to capture more of the battery value chain.
One example of the emerging recycling segment is Livium’s (ASX:LIT) wholly owned subsidiary Envirostream recently extending its agreement with LG Energy Solution (KRX:373220) for the provision of lithium-ion battery recycling and disposal services for a further three years.
Envirostream will receive guaranteed volumes of end-of-life batteries, which LG retains the right to purchase black mass generated from the batteries. Speaking to Mining.com.au in September, CEO Simon Linge says a large contribution to the agreement extension was Livium’s performance in its duties, which has bolstered the contractual relationship.
“I think we’ve been able to prove that we have been able to support them through the last 18 months and we’re confident that this new agreement, we think, shows that they’re confident in our ability to do that for another three years,” Linge says.
According to Linge, LG plays an effective role in sourcing recalled batteries from the market, for Livium to recycle.
“They are at the back half of that or the back third of that recall program, but as you can imagine, you get an initial surge, and then it’s harder to get the last bit of the tail,” he adds.
“Wanting to extend the agreement just for that tail may go longer than they’d originally expected, but then the broadening of the agreement into non-recall batteries was really just a reflection of the relationship that we built.”
BESS case scenario
As renewables proliferate and electrification grows, Battery Energy Storage Systems (BESS) are also set to play a crucial role in a dynamic energy system by smoothing supply and demand peaks and helping defer the cost of grid expansion and upgrades.
Mining.com.au previously reported that BESS deployments in H1 2025 are up 58% over the first six months of 2024. The Department of Industry, Science and Resources (DISR) September 2025 Resources and Energy Quarterly, notes BESS growth is expected to be at almost 13% a year to 2027 driven primarily by its increasingly important role in electricity grids.
BESS is now also supplying electricity during high demand periods in addition to their existing role in providing grid auxiliary services. Capital is flowing to battery energy storage systems and cell production, but industry insiders tell this news service the pace of investment still falls short of the scale needed to meet some decarbonisation pathways.
That investment gap – and the divergence between announced projects and actually delivered capacity – is the reason downstream players (refiners, cathode makers, recyclers) must plan for serial bottlenecks and secure long-term offtake early, they say.
Chris Ackerman, Corporate Development for Q2 Metals (TSX-V:QTWO), tells Mining.com.au growth in the downstream lithium market is still being driven by EVs and, as mentioned, it appears growth here will continue – particularly as range increases and prices decline.
“But there are other disruptors that are emerging and vying for centre stage, as well. With the advancement of AI and the need for data centres, as well as the need for energy storage capacity for solar and wind (renewables) energy via Battery Energy Storage Systems, will be key drivers moving forward. BESS is needed to store renewable energy/energy grid storage,” Ackerman tells this news service.
Ackerman reiterates that lithium demand is primarily driven by battery applications, which should come as no surprise – somewhere in the 90% range.
“It is primarily associated with electric vehicle batteries which is a major and growing component – but larger grid applications in the form of BESS is poised to be a key growth area,” Ackerman tells this news service.
“Cell phones, laptops, drones – there are innumerable battery applications we use everyday. Rounding it out, there are various other industrial applications as well, whether alloying, glass or even medicinal.”
Some analysts believe a rebound may be on the horizon, fuelled by this renewed growth in EV adoption and clean energy storage. Although lithium prices remain difficult to predict, global lithium miners are once more betting big on the metal.
Brunswick Exploration (TSX-V:BRW) CEO Killian Charles notes, however, EV adoption is actually secondary to renewable power installation. Historically, developed nations had ample access to electric power while developing nations did not.
Renewables and access to electricity, he says, is the key driver in the growth of the market, adding that historically, developed nations have had ample access to electric power while developing nations did not.
“The extreme growth of solar power installation continues unabated. This causes electricity to be available in areas that typically have poor to no EV penetration due to weak or oversaturated grids,” Charles tells this news service from Canada.
“As we increase and unlock more electric power through renewable energy, we effectively scale up demand for lithium ‘products’ be it energy storage or EVs.”
“As we increase and unlock more electric power through renewable energy, we effectively scale up demand for lithium ‘products’ be it energy storage or EVs”
Broadly speaking, Brunswick’s CEO expects a market rebalancing to occur throughout 2026 and into 2027 followed by incentivised pricing in 2028 and beyond. This is largely driven by significant demand growth.
While much has been written about declining EV demand, he tells Mining.com.au this is largely a non-issue. EV sales may be down but so are car sales in general.
“EVs as a proportion of total car sales are still increasing (reaching 25% on a global basis) even if most of these sales are predominantly Chinese driven. Typically, bear markets for commodities are driven by very weak demand growth and, at times, reducing demand. This is not observed in the lithium market,” Charles continues.
“Demand is still forecasted to grow by 12% per annum over the next five years. This is a staggering amount and it remains the fastest growing commodity market.”
By 2030, he expects the market to start to mature. There have been major swings in lithium prices over the past 10-15 years and this has underscored the immaturity of the market where the addition of a single mine or single new battery plant can cause huge imbalances.
“By then, one would expect the overall size of the market to better absorb new assets on the supply or the demand side. Not to say there won’t be swings in the price but they will be considerably dampened,” Charles adds.
Supply chain realignments
China dominates global lithium refining, accounting for a substantial share of processing capacity. However, the US and Europe are making concerted efforts to develop domestic refining capabilities to mitigate reliance on Chinese supply chains. For example, North America is expected to process 59% of its lithium as hydroxide by 2034, up from 43% in 2024.
As Patagonia Lithium (ASX:PL3) Executive Chairman Phil Thomas explains to Mining.com.au, while the lithium market currently faces an oversupply, the trajectory points towards a potential deficit by the early 2030s.
This shift underscores the urgency for continued investment in lithium extraction, technological innovation, and strategic policy support to ensure a stable supply that meets the growing demands of the electric vehicle and energy storage sectors.
Thomas says China maintains its position as the dominant consumer of lithium, driven by aggressive EV production and energy storage initiatives. However, the US is increasing investment in domestic lithium production, exemplified by projects like Thacker Pass, and aims to reduce reliance on imports and strengthen the domestic supply chain.
The US Department of Energy’s 2024 review highlights the need for increased capacity in midstream and upstream sectors to support the growing demand for EV batteries. Thomas notes such government policies and incentives will help drive the sector’s growth.
“Policies like the US Inflation Reduction Act and the European Critical Raw Materials Act are providing financial incentives for EV production, raw material sourcing, and battery manufacturing,” Patagonia’s Executive Chairman continues.
“These initiatives are accelerating the transition to electric mobility and renewable energy, thereby increasing lithium demand”
“These initiatives are accelerating the transition to electric mobility and renewable energy, thereby increasing lithium demand. The US Government is converting debt to equity in some projects.”
Countries in Europe are accelerating battery manufacturing and localising supply chains to mitigate import dependencies, which Thomas says is spurred by stringent emissions regulations and green industrial policies.
For example, Europe is accelerating its efforts to establish a self-sufficient lithium supply chain. The European Investment Bank has pre-qualified Vulcan Energy (ASX:VUL) for up to €500 million in debt financing to support its lithium hydroxide production facility in Germany, which aims to produce 24,000 tonnes annually by 2026.
As reported by Mining.com.au, Vulcan has now appointed global technology company ABB (SWX:ABBN) as the main electrical contractor partner for the phase one Lionheart Project in Germany.
Under the contracts, ABB will be responsible for the design, engineering, manufacture, testing, and delivery of the electrical infrastructure systems for the project covering the lithium extraction plant, central lithium plant, and well sites with a combined value of €46 million.
Vulcan CEO Cris Moreno says ABB’s system will be the electrical backbone powering the Lionheart Project. The signing of the contract follows a memorandum of understanding entered into by the companies in April 2024. The partnership is designed to optimise processes, shorten delivery times, and reduce and improve cost performance.
Meanwhile in North America, St-Georges Eco-Mining (CSE:SX) and its partners are evaluating potential spodumene suppliers from across Canada, in relation to its lithium production pilot plant and other metallurgical initiatives.
The pilot plant is designed to produce lithium nitrate and potentially lithium hydroxide, along with various byproducts generated through the company’s proprietary processing technology. The company says several suitors have expressed interest in providing concentrate.
St-Georges’ consortium of partners – Coalia and LiOH Corp – has now received a first shipment of five tonnes of Canadian-sourced spodumene concentrate. Initial work and testing is underway, with received material already processed through the alpha-to-beta transformation stage.
Drivers of growth
In terms of growth, Patagonia’s Thomas reiterates that EV adoption, which is projected to account for 87% of global lithium consumption by 2030, will see regions like China, Europe, and India being dominant. Renewable energy storage will also be a driver of growth.
“Lithium-ion batteries are increasingly integral to energy storage solutions, facilitating the integration of intermittent renewable sources like solar and wind into the grid. This sector is anticipated to grow at a rate of 25% annually through 2030,” Thomas tells this news service.
He adds that battery innovation will contribute to the sector’s expansion. Advancements in battery technologies, such as solid-state batteries and high-nickel/cobalt chemistries, are driving demand for high-purity lithium compounds.
Advancements in refining technologies are enhancing efficiency and sustainability. Companies like Mangrove Lithium are developing modular platforms that directly convert lithium chloride into high-purity lithium hydroxide, reducing operational expenditures by up to 40% compared to conventional methods.
“These innovations aim to enhance energy density, reduce costs, and improve charging times, thereby supporting the broader adoption of EVs and energy storage systems,” Thomas adds.
The BESS is yet to come
Currently the cheapest energy source globally is solar power. While China dominates in solar installation, Brunswick’s CEO notes it remains a global phenomenon with 1GWh of solar power installed every 12 hours (down from 20 hours only 2 years ago) and is broadly mixed across Europe, Africa, and the Middle East.
“As electrical power becomes more available this increases society’s electrification and incentivises the population to invest in electrical products such as EVs and grid owners into storage capacity,” Charles tells Mining.com.au.
New technologies such as AI or robotics require an incredible new amount of electrical power and will also contribute to the sector’s growth, he adds.
Venari Minerals (ASX:ASE) CEO Matt Healy tends to agree. He says the rapid penetration of renewable energy into Western energy markets has resulted in excess electricity necessitating storage technology. Healy says for this reason, global BESS deployments in H1 2025 are up 58% over the first six months of 2024, making BESS the ‘dark horse’ of lithium demand.
As an example, in August this year GenusPlus (ASX:GNP) began construction at the Merredin Big Battery Project (pictured above), as part of Western Australia’s transition to clean energy for the Wheatbelt and Eastern Goldfields regions.
As a joint project between the privately held Atmos Renewables and Nomad Energy, the 100 megawatt/four-hour Merredin Big Battery Energy Storage System (BESS) is expected to be commissioned in October 2026.
With an estimated life of 25 years, the project will make $20,000 per year through the Merredin Battery Community Legacy. Construction is expected to create up to 70 jobs and five jobs in operation, with commitments to locally sourced employment and additional support for First Nations peoples.
“Grid-scale batteries play an important role in our clean energy transition, storing excess energy during the day and discharging it at night – helping to stabilise and strengthen our electricity grid”
Energy and Decarbonisation Minister Amber-Jade Sanderson says this project will add to the state’s reach in the battery sector, including government-owned batteries in Kwinana and Collie.
“Grid-scale batteries play an important role in our clean energy transition, storing excess energy during the day and discharging it at night – helping to stabilise and strengthen our electricity grid,” Sanderson says.
“Together with new transmission lines, wind, solar, and gas generation where needed, they are important elements of the energy grid of the future.”
The Merredin BESS is a part of the state’s larger scheme to implement more renewable energy projects across the region.
The winning strategies?
Downstream integration will play a significant part in the sector’s expected rise. Owning conversion and refining capability – or tight partnerships with refiners – is poised to move up the margin stack.
Cost and ESG leadership will also be a factor. PwC reports projects that combine low cash costs with credible water, community and emissions credentials will obtain premium access to responsibly oriented offtake partners and capital.
Meanwhile, S&P Global says portfolio optionality – flexibility to supply carbonate versus hydroxide, hard-rock versus brine streams, or to pivot feedstock into recycling when economics favours it will be a winning strategy.
Structured offtake, tolling, and hedging to smooth revenue and de-risk financing in volatile markets.
Looking ahead to 2030, the race is on for profitable scale and regional sovereignty. The lithium sector is unlikely to either revert to a simple boom nor settle into a low-value commodity grind.
Instead, industry sources agree it will bifurcate – a commodity-grade mining cohort supplying feedstock into an increasingly regionalised processing and cell-manufacturing map, and a downstream cohort — refiners, cathode makers, recyclers — that capture disproportionate value.
For investors and corporates, industry sources agree the imperative is clear – secure offtake and processing, demonstrate credible ESG performance, and plan for a volatile price path even as cumulative battery demand through 2030 remains transformative.
Those that can marry geology with chemistry, capital discipline with agile commercial models, and do so in a fractured, geopolitical supply landscape, are likely to lead the charge.
Write to Adam Orlando at Mining.com.au
Images: PwC, Atmos Renewables, ChemX, & DISR
