Iran has discovered a massive deposit of lithium, which they say could be the world’s second-largest lithium deposit in one of its western provinces.

The reserve was discovered in Hamedan, a mountainous province, according to Mohammad Hadi Ahmadi, an official at Iran’s Ministry of Industry, Mines and Trade.  It is believed the deposit holds 8.5 million tons of lithium, which is often called “white gold” for the rapidly growing electric vehicle industry.

If the claimed figure is accurate that would make the deposit the second-largest known lithium reserve in the world after Chile, which holds 9.2 million metric tons of the metal, according to the United States Geological Survey (USGS). Lithium is a key element in batteries for devices and electric vehicles.

The lucrative element is a crucial component in the cathodes of lithium-ion batteries in EVs, as well as in rechargeable batteries like those used in cellphones. The metal’s price has skyrocketed in the last year due to higher demand for electric vehicle parts, global supply chain problems and inflation.

However, prices fell more recently, undergoing a correction amid a drop in EV sales and slow business activity in China, the fastest-growing EV market.

Big boost for Iran

This represents a big boost for Iran, which has been weighed down by several years of heavy international sanctions and faced with a spiralling currency, which hit its lowest point against the greenback US dollar in late February. Iran would benefit greatly from the ability to export such valued resources although its trading partners would likely be limited due to those sanctions.

Isolated from the global financial system, Iran continues to draw penalties from Western nations that accuse Tehran of supplying Russia with weapons that are being used in its war in Ukraine. Iran’s government has spent nearly six months cracking down violently on women’s rights and anti-government protesters.

In terms of the global lithium market, such an addition to the world’s known reserves could push prices of the metal down further, depending on Iran’s capacity to export. Iran is also one of the world’s top producers of oil and gas, but its inability to export widely due to sanctions has slashed its capacity to bring in revenue and foreign currency as well as its ability to contribute to global supply.

In the next two years, Goldman expects lithium’s supply to grow on average by a substantial 34% year on year, led by Australia and China, which hold some of the world’s largest supplies of the metal.