Lithium, already surging on a strong demand and price turnaround, continues to attract massive funding support around the world. But the story is increasingly about more than simply producing additional lithium. Governments are also working to build more secure and diversified critical-mineral supply chains, reducing their reliance on overseas sources for commodities considered strategically important to their economies, technology industries and national security. A large part of that push reflects China's dominance across the midstream — the country accounts for the majority of the world's lithium refining and battery chemical processing capacity, which is why Western policy has focused not only on mining but also on processing, refining and recycling capability.

In early August, US President Donald Trump committed another US$2 billion to the critical mineral sector. The investment reflects growing concerns in Washington that a lack of secure domestic supplies could leave the US exposed across strategically important industries. President Trump has voiced concerns about how a lack of supply will affect the nation's defense and technical future.

The support for critical mineral mining and mining-related projects has again highlighted the importance of commodities like lithium to North America's energy future. President Trump says the US should be a 'minerals superpower'.

"We're reclaiming America's rightful place as the minerals superpower of the world," he stated.

The White House declared: "Critical materials build and power the modern world from cars to military weaponry and factory machinery to smartphones and computers. It is vital that the United States have sufficient and secure mining, processing, refining, manufacturing, and recycling to reduce reliance on foreign countries."

The US is not the only North American nation investing heavily in developing a local supply chain. The Canadian government has also committed billions of dollars to critical minerals under national strategies, with specific individual lithium and refining investments totalling hundreds of millions. Canada has launched a broader multi-billion dollar Critical Minerals Strategy and packages that have unlocked billions in overall mining and processing capital, though exact cumulative totals dedicated exclusively to lithium across all regional grants remain part of these wider critical mineral envelopes.

This could create a more supportive funding and policy environment for the growing number of ASX-listed miners building a strong lithium position in the US and Canada. For those companies, the direction of future policy decisions — such as additional funding rounds, permitting reforms and offtake or processing incentives — is a key factor shaping the economics of North American lithium projects, alongside the underlying commodity price.

Market Growth and Demand

The overall global lithium market is forecast to grow from US$19.52 billion in 2026 to US$78.49 billion by 2034, driven by rising demand for electric vehicles and energy storage systems. Global lithium demand reached 1.6 million tonnes in 2025 and is projected to hit 3.7 million tonnes annually by 2030.

Lithium prices have increased dramatically in the last 12 months, with spodumene concentrate increasing almost fourfold and lithium hydroxide almost tripling from mid-2025 lows. Two notable supply shocks contributed to the rise in prices over the period: the Jianxiawo mine's permit lapsing in mid-2025 curbed supply to China's battery mineral supply chains, a situation exacerbated later by Jianxi province revoking expired mining permits of the lepidolite mines in December 2025.

The International Energy Agency (IEA) is another body expressing confidence that lithium and critical minerals will power the future. The IEA says global lithium demand is forecast to rise by over 11% annually to 2031, as policy settings, improving technology and falling costs drive EV adoption and battery energy storage system (BESS) deployment.

The IEA reports battery energy storage systems as the fastest growing power technology at present. In 2025, 108 GW of new battery storage capacity was deployed worldwide, 40% more than in 2024. This includes the US, where a record 58 GWh of new BESS capacity was installed in 2025. Meanwhile, US EV sales are projected to grow from 1.9 million in 2026 to nearly 3.6 million by 2031.

In its "Global Critical Minerals Outlook 2026", the IEA noted that demand for key energy minerals has grown at close to 10% per year on average in recent years, significantly outpacing demand growth for base metals, which averaged around one per cent annually.

"Lithium demand has been particularly strong, increasing by around 25% per year on average over the past two years. Across key energy minerals, the energy sector drove, on average, around 75% of demand growth in 2025, up from 70% in 2024."

Australia's Position

Locally, Australia remains the world's leading lithium producer and is set to hold that position for some time to come. The Australian government's Office of the Chief Economist recently reported the nation will remain the world's largest supplier of extracted lithium, with global lithium extraction projected to grow by 10% annually by 2031.

Globally, extracted lithium is forecast to reach almost 2.4 million tonnes (Mt) of lithium carbonate equivalent (LCE), with China, Australia and Argentina leading growth over this period. Continued strong demand growth over the outlook is expected to see Australia's total mine production grow by more than eight per cent annually to 2031. While Australia's refined output is expected to grow by over 20% annually, spodumene is forecast to account for the vast majority of Australia's lithium export value in the outlook period. That dynamic underlines a well-documented challenge for Australia: it leads the world in extraction, but most of the value from refining into battery-grade chemicals has historically been captured offshore — a gap the projected growth in Australian refined output is expected to partially close.

For investors, the question is increasingly where the next wave of lithium supply will come from — and which projects can become part of the more diversified supply chains governments are now seeking to build. That is particularly relevant for the growing number of ASX-listed companies developing lithium projects in North America and locally. Key developments to monitor include the pace of new government funding commitments and permitting outcomes in the US and Canada, further Chinese supply-side policy decisions of the kind that influenced recent prices, and progress on Australian refining capacity.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions.