Assessment of the Supply Chain under Uncertainty: The Case of Lithium

Abstract

Modeling the global markets is complicated due to the existence of uncertainty in the information available. In addition, the lithium supply chain presents a complex network due to interconnections that it presents and the interdependencies among its elements. This complex supply chain has one large market, electric vehicles (EVs). EV production is increasing the global demand for lithium; in terms of the lithium supply chain, an EV requires lithium-ion batteries, and lithium-ion batteries require lithium carbonate and lithium hydroxide. Realistically, the mass balance in the global lithium supply chain involves more elements and more markets, and together with the assortment of databases in the literature, make the modeling through deterministic models difficult. Modeling the global supply chain under uncertainty could facilitate an assessment of the lithium supply chain between production and demand, and therefore could help to determine the distribution of materials for identifying the variables with the highest importance in an undersupply scenario. In the literature, deterministic models are commonly used to model the lithium supply chain but do not simultaneously consider the variation of data among databases for the lithium supply chain. This study performs stochastic modeling of the lithium supply chain by combining a material flow analysis with an uncertainty analysis and global sensitivity analysis. The combination of these methods evaluates an undersupply scenario. The stochastic model simulations allow a comparison between the known demand and the supply calculated under uncertainty, in order to identify the most important variables affecting lithium distribution. The dynamic simulations show that the most probable scenario is one where supply does not cover the increasing demand, and the stochastic modeling classifies the variables by their importance and sensibility. In conclusion, the most important variables in a scenario of EV undersupply are the lithium hydroxide produced from lithium carbonate, the lithium hydroxide produced from solid rock, and the production of traditional batteries. The global sensitivity analysis indicates that the critical variables which affect the uncertainty in EV production change with time.