Lithium batteries start as raw materials pulled from underground brine pools and hard-rock mines, mostly in Australia, Chile, China, and Argentina. These four countries account for over 80% of the world’s lithium supply. From there, the mineral goes through chemical refining, cell manufacturing, and assembly before it ends up in your phone, laptop, or electric car. The journey spans multiple continents and involves several other critical minerals beyond lithium itself.
Where Lithium Is Found in the Ground
Lithium exists in two main geological forms, and the extraction method depends on which one you’re dealing with. The first is hard-rock mining, where lithium sits inside a mineral called spodumene. Australia dominates this method, producing 88,000 tonnes in 2024, roughly 37% of global output. Miners blast and crush the rock, then heat-treat it to make the lithium chemically accessible.
The second source is brine, meaning lithium-rich saltwater trapped underground, often beneath vast salt flats. Chile (20.7% of global production) and Argentina (7.6%) sit in what’s called the “Lithium Triangle” of South America, where brine is pumped to the surface and spread across massive evaporation ponds. Over months, the sun does most of the work, concentrating the lithium as water evaporates. China (17.3%) uses both methods, mining hard rock domestically while also tapping brine deposits in its western provinces.
A newer approach called Direct Lithium Extraction, or DLE, is gaining traction. Instead of waiting months for evaporation, DLE uses chemical filters to pull lithium out of brine in hours. Some companies are also exploring geothermal brine recovery, which extracts lithium from the hot water already being pumped up at geothermal power plants.
The Other Minerals Inside a Battery
Lithium gets the naming credit, but a lithium-ion battery contains several other metals that are just as essential. The cathode, which is the positive side of the battery and the single most expensive component, typically contains some combination of nickel, cobalt, and manganese. Cobalt has drawn particular attention because the majority of the world’s supply comes from the Democratic Republic of the Congo, where mining conditions have raised serious human rights concerns. On a global basis, rechargeable battery electrodes are the leading use of cobalt.
The anode, or negative side, is almost always made of graphite. The battery also needs copper for wiring, aluminum for structural components, and a liquid electrolyte to shuttle charged particles between the two sides. Each of these materials has its own supply chain, its own set of producing countries, and its own environmental footprint.
From Raw Mineral to Battery-Grade Chemical
Raw lithium ore or brine concentrate isn’t useful to battery makers on its own. It first has to be refined into one of two chemical forms: lithium carbonate or lithium hydroxide. Both can come from either brine or hard-rock sources, but they serve different battery types.
Lithium carbonate is used to produce cathodes for more basic battery chemistries, including lithium iron phosphate (LFP) batteries, which are popular in cheaper electric vehicles and energy storage systems. Lithium hydroxide is the critical ingredient for the higher-energy nickel-based cathodes used in most premium electric vehicles. At industrial scale, lithium hydroxide is mainly produced by converting lithium carbonate using a chemical reaction with calcium hydroxide, though some newer processes skip that step entirely by converting spodumene or lithium salts directly.
China processes the majority of the world’s battery-grade lithium chemicals, even when the raw material was mined in Australia or South America. This refining bottleneck is one of the key chokepoints in the global battery supply chain.
Where Battery Cells Are Manufactured
Once you have battery-grade chemicals, the next step is cell manufacturing, where the cathode, anode, separator, and electrolyte are assembled into individual battery cells. This stage is overwhelmingly concentrated in Asia. In 2024, China’s CATL held 37.9% of the global electric vehicle battery market, up from 36.6% the previous year. BYD, also Chinese, ranked second at 17.2%. South Korea’s LG Energy Solution came third with 10.8%, followed by China’s CALB and South Korea’s SK On, each around 4.4%.
That means two Chinese companies alone account for over 55% of the world’s EV battery production. The United States and Europe are investing heavily in new battery factories, often called gigafactories, but catching up to this manufacturing lead will take years. Most of these new plants are joint ventures with Asian companies who bring the production expertise.
Water and Environmental Costs
Lithium extraction carries real environmental trade-offs, especially in arid regions. A study of two brine operations in Argentina’s salt flats found total water footprints of 51 and 135.5 cubic meters per ton of lithium carbonate produced. But the broader water impact is even larger when you account for brine consumption: 537 and 320 cubic meters per ton, respectively. Brine isn’t freshwater, but pumping it out can lower underground water tables and affect the surrounding ecosystem.
Hard-rock mining avoids the water intensity problem but creates its own issues: large open pits, rock waste, and significant energy use during the heating process that converts spodumene into a usable form. Neither method is impact-free, which is one reason recycling is becoming a priority for the industry.
Recycling and the Circular Supply Chain
As billions of lithium batteries reach end of life, recycling is becoming a meaningful secondary source of raw materials. The European Union’s Batteries Regulation sets mandatory recycling efficiency targets: by the end of 2025, recyclers must recover at least 65% of the material in lithium-based batteries. Material-specific recovery targets kick in by 2027, requiring 90% recovery of cobalt, copper, and nickel, and 50% for lithium itself. By 2031, those targets rise to 95% for cobalt, copper, and nickel and 80% for lithium.
These numbers matter because recycled materials can re-enter the supply chain without any mining at all. A battery made partly from recovered cobalt and nickel reduces dependence on Congo’s cobalt mines and Indonesia’s nickel smelters. The technology for battery recycling already exists at commercial scale, using either high-temperature smelting or chemical leaching to separate the valuable metals. The challenge is collecting enough spent batteries to make the economics work, which is why regulatory mandates are driving the pace.
Why Geography Matters for Price
The cathode material, meaning the lithium, nickel, cobalt, and manganese combined, represents a significant share of the total battery pack cost. When prices for any of these metals spike, battery prices follow. Lithium carbonate prices, for example, surged roughly tenfold between 2021 and late 2022 before crashing back down, sending shockwaves through the EV industry in both directions.
This price volatility is directly tied to the concentrated geography of the supply chain. When Australia’s mines slow production, or when Chile changes its lithium royalty structure, or when export restrictions tighten in China, the effects ripple through to the price of every electric car and grid storage system on the planet. Governments in the U.S., Europe, and elsewhere are now treating battery supply chains as a national security issue, funding domestic mining, refining, and manufacturing to reduce that dependence.