lithium discovery

The Elasticity of Supply: A Promising Lithium Discovery

The recent discovery of a massive lithium deposit in the Nevada-Oregon border has got people really excited. This deposit is huge, potentially bigger than any others we know of. Why does this matter? Because lithium is super important for making batteries for electric cars. It is a main chapter of electric batteries. and that’s a big deal for fighting climate change.

The importance of Lithium discovery:

Until now, the United States were a little bit worried because we depend on foreign countries for discovery, whereby, a majority of it is from countries such as Chile, Bolivia, Argentina, China, and Australia. This new discovery that may be weighing up-to 40 million tons is a game-changer. It ensures we meet increased demand for electric cars and it is patriotic as the country will not be importing this important component. So, it’s pretty exciting news!

Elasticity of Supply: A Historical Perspective:

Economists have long observed that resource shortages tend to stimulate discovery, innovation, and conservation, primarily driven by market prices. Put simply, when a resource becomes scarce and its price rises, the market incentivizes the search for new supplies. The Lithium Americas Corporation played a significant role in making this discovery, and this trend is evident worldwide as regions that were previously underexplored for lithium resources are now the focus of increased investigation. Just as Adam Smith’s invisible hand theory predicts, the pursuit of profit drives the search for valuable resources.

Exploring New Frontiers and Substitutes:

While new supplies often become available, there is another dimension to the principle of elasticity of supply: innovation. In the case of lithium, innovation extends beyond the discovery of new deposits to potential substitutes and advancements in battery technology.

Some promising avenues include aqueous magnesium batteries, solid-state batteries, sodium-based batteries, sodium antimony telluride intermetallic anodes, sodium-sulfur batteries, seawater batteries, graphene batteries, and manganese hydrogen batteries. The search for alternatives and innovations in lithium usage continues, creating diverse opportunities for technological breakthroughs.

The various options available show how the market can adjust to resource challenges. While we can’t guarantee the success of each potential substitute, the odds of failure are slim. So, history teaches us that responding to resource scarcity with innovation is a powerful driver of progress, even if we don’t know which innovation will succeed.

The Significance of Elastic Supply in Lithium Discovery:

The quest for lithium is not confined to a single region. Reports occasionally surface about substantial lithium deposits in regions such as Afghanistan, where the Taliban has sought to capitalize on mineral rights by selling them, primarily to China.

The geographic diversity of lithium prospecting is a testament to the far-reaching consequences of supply elasticity. While some locations may present challenges due to geopolitical instability, the elasticity of supply ensures that the search for lithium can span continents.

Exploring Resource Scarcity: A Deeper Look:

It is important to acknowledge the recurring theme of resource scarcity in human history. The 1972 Club of Rome report, “The Limits to Growth,” and the resource concerns of the 1970s serve as reminders of past worries about dwindling resources.

But interestingly, many of the worries about running out of vital resources haven’t really come true. In fact, we keep finding more of some resources like coal and oil. This situation has both positive and negative aspects, creating a complex scenario. The elasticity of supply has been a consistent force driving resource exploration and innovation.

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Challenges in Meeting Growing Demand:

While the Nevada-Oregon lithium discovery is a promising development, the global demand for electric vehicles continues to grow rapidly. In 2022, there were 45 lithium mines worldwide, with 11 more expected to open in the current year and an additional seven in 2024.

This represents progress but may not be sufficient to meet the escalating demand for electric vehicles and the various other applications of lithium-based batteries in electronics and devices. Expectations for robust lithium prices and exploration opportunities are likely to persist.

Conclusion:

The recent lithium discovery in Nevada-Oregon showcases the principle of elasticity of supply, which means that when resources become scarce, we find new ways to obtain them. This discovery is a significant step in addressing the growing demand for lithium used in electric vehicle batteries and various other applications. As we confront climate change and seek sustainable solutions, the concept of elasticity of supply will guide our resource management efforts.

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