Lithium price: Worst may be over for Australian producers

Investment in battery and electric vehicle manufacturing continues apace around the world with Tesla already producing units on a trial basis at its giant Shanghai gigafactory despite only breaking ground this year.

But the breakneck expansion of the EV industry, where lithium-ion batteries dominate, has not been enough to lift prices for the raw material which continued to decline according to the October price assessment released today by industry tracker Benchmark Mineral Intelligence.

Thanks to a slew of new hard-rock mines and expansions Australia quickly became the number one producer of lithium, but the additional supply and weakening conditions in the downstream industry in China have piled pressure on prices.

In recent months Australian spodumene (feedstock for lithium hydroxide) producers have trimmed expansions plans, scaled back projects and reduced output targets in an effort to shore up the market.

On Friday, Mineral Resources and Albemarle went one step further and announced that their Wodgina joint venture in Western Australia would be put on care and maintenance due to “challenging” market conditions.

Despite these efforts, the price of spodumene concentrate (6% lithium) fell another 5% during October to average $480–$550 a tonne. In July last year, prices were above $900 a tonne.

Benchmark says industry sources “expect spodumene prices to stabilise in the coming months, however there will be little upward pressure and the supply chain will have to clear a significant backlog of material before margins improve.” 

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