Supply constraints for lithium, cobalt, and nickel are not a short-cycle problem, new capacity development timelines mean the deficit persists for years
Decision Focus
IndexBox published its Battery Raw Material Market Forecast 2026–2035 in June 2026, projecting a compound annual growth rate of 8.5% across the decade, with the market index reaching 245 by 2035 against a 2025 baseline of 100. The primary demand engines are electric vehicle production targets—annual EV sales are forecast to exceed 40 million units by 2035—and grid-scale stationary storage, which is expected to surpass 1,500 GWh of installed global capacity by the same year.
The operational signal for Mining Operations Directors is not the headline growth rate. It is the confirmed supply-side deficit underneath it: lithium, cobalt, and nickel face structural shortfalls until new mining and refining capacity comes online, with the primary expansion geography identified as Latin America, Australia, and Africa. That gap between sustained demand acceleration and constrained supply is where production decisions carry real strategic weight.
90-Second Brief
In recent days, a ten-year demand forecast confirms that EV and grid storage markets will continue to absorb battery raw materials at scale, with EVs accounting for approximately 65% of total demand as of 2025. Supply constraints for lithium, cobalt, and nickel are not a short-cycle problem, new capacity development timelines mean the deficit persists for years. Asia-Pacific, led by China’s refining dominance, controls 65% of current market share, creating geopolitical concentration that is now driving Western and Australian governments to fund domestic supply chain development. Battery recycling is expected to begin contributing meaningfully to primary supply by 2030, but remains years away from materially relieving the structural shortfall.
What Is Really Happening?
The deeper driver is a structural mismatch between the pace of demand growth and the project development timeline for new mining and refining capacity. When demand bifurcates between high-volume EV applications and performance-critical grid storage, it creates two separate procurement logics pulling on the same raw material base. EV manufacturers have begun securing direct offtake agreements and equity stakes in upstream assets because spot market exposure at scale is no longer viable.
Compounding this is a chemistry shift that redistributes which materials benefit most. The move from nickel-rich NMC to lithium iron phosphate in mass-market EVs reduces cobalt and nickel demand intensity per vehicle while increasing lithium and graphite consumption. For operators in cobalt and nickel, this is not a demand collapse—both materials retain structural roles—but the growth rate premium shifts to lithium and graphite over the forecast period. Grid storage reinforces that direction: utility-scale projects are increasingly LFP-dominant, favoring lithium and graphite consumption per gigawatt-hour deployed.
The geopolitical layer adds a second dimension beyond commodity fundamentals. China controls a dominant share of global lithium refining and cobalt processing. Policy responses—the US Inflation Reduction Act, Canada’s critical minerals strategy, the EU’s Critical Raw Materials Act—are redirecting capital toward Latin America, Australia, and Africa as alternative supply corridors, creating a specific expansion window for operators positioned in those geographies.
Why It Matters for Mining Operations Directors
For directors running lithium, cobalt, nickel, or graphite operations, the forecast creates a credible demand floor for extending mine plans and justifying sustaining capital. A nine-year growth trajectory at 8.5% annually is unusual in mining; it provides the planning certainty to make operational investments in throughput, recovery, and fleet that typically require a clear demand outlook to secure corporate approval.
The supply deficit sharpens that case further. When structural shortfalls are confirmed across multiple key materials, production that is online and executing reliably commands a strategic premium that paper reserves do not. Every tonne not produced because of fleet availability, plant downtime, or grade underperformance is a tonne the market needs. In this cycle, reliability and cost discipline—not volume expansion alone—define competitive position.
Chemistry shift risk is the exception worth monitoring. Directors overseeing operations where cobalt or nickel are the primary value driver should distinguish between overall market growth and demand growth specific to their material. LFP penetration in EVs moderates cobalt and nickel intensity per vehicle—it does not eliminate demand, but it changes the slope of the growth curve for those materials relative to lithium and graphite. That shift should factor into mine plan sensitivity analysis and capital conversations around expansion.
Forward View
Three fronts are worth tracking as this forecast plays out. First, the speed and scale of new capacity development in Latin America, Australia, and Africa will determine how long the structural deficit persists—project approvals, permitting timelines, and infrastructure readiness in those regions are the real constraint on when new supply enters the market. Second, battery recycling reaching meaningful supply contribution by 2030 introduces a partial offset to primary production demand; not a reversal, but a headwind that operators should model into long-range planning beyond the mid-decade mark. Third, the progression of grid storage deployments toward longer-duration systems—four to eight hours rather than two—will increase material intensity per project and may sustain demand for lithium and graphite even as EV growth moderates past 2030.
What Is Still Uncertain
The forecast rests on assumptions that carry genuine execution risk. EV adoption in Europe and North America has shown sensitivity to subsidy policy and charging infrastructure rollout; a slower adoption pace would moderate demand growth below the baseline trajectory without eliminating it. Trade disruptions affecting China’s refining dominance—sanctions, export controls, or tariff escalation—could reshape the supply architecture faster than new Western capacity can absorb the gap, producing short-term price spikes rather than orderly transitions. The emergence of sodium-ion or other alternative chemistries at commercial scale post-2030 is a technology risk that remains genuinely difficult to price into a ten-year operational investment case. None of these conditions invalidate the structural demand thesis, but each one changes the timing and distribution of where the growth materializes.
One Question for Your Team
Given the confirmed supply deficit in lithium, cobalt, and nickel through this decade, and the chemistry shift reducing cobalt and nickel intensity per vehicle, does your current mine plan and capital allocation reflect where demand growth is actually concentrated—or is it still aligned to a material mix that the market is gradually moving away from?
Sources
- Indexbox — Battery Raw Material Market Forecast 2026-2035: Growth Driven by Energy Transition and Supply Chain (Link)
