World lithium supplies hit speed bump

Materials World magazine
29 Aug 2019

Oversupply and slowing EV sales are affecting lithium prices.

Lithium prices are dropping due to the double impact of new operations coming online and steadying sales of electric vehicles (EVs) in major markets. With 17% of all global reserves, Australia is the world’s biggest lithium exporter and the country expects exports to increase by 23% over the next two years, rising to a value of AUS$1bln.

According to the government report, Resources and energy quarterly report, June 2019, the country has six new mines starting or ramping up production this year, in a mixture of new and expanding operations.

These include Alliance Mineral Assets’ Bald Hill, Talison Lithium’s Greenbushes, Galaxy Resources’ Mt Cattlin, and Pilbara Minerals’ Pilgangoora mine expansion. Progress in the Australian lithium export market has contributed to the metal oversupply and is thought to have caused lithium prices to fall 30% on the stock exchange. In the report, the government stated that it expects lithium hydroxide prices to decline by 15% over the year, but that it will pick up after two years. As such, Australian miners are bolstering supplies ready for the step-up in demand.

Lithium is essential for applications such as ceramics and glass production, but its use in energy products like rechargeable batteries has caused the metal’s price spike in recent years. This is expected to continue, as global EV production is predicted to go from two to 50 million sales by 2030, but the rate of growth is likely to slow in the short term.

2018 saw a sharp spike in sales of EVs largely due to China, which recorded a 62% rise in sales on the previous year, selling 1.3 million EVs, according to China’s Association of Automobile Manufacturers. Growth continued into the first quarter of 2019, at 90% over 2018 figures, which sounds high but is a dramatic decline on Q1 2018.

However, the Chinese market – responsible for one in every two EV sales – has slowed significantly this year after the government decided to cut subsidies for EVs due to their popularity. The Association of Automobile Manufacturers has predicted a modest rise in Chinese EV sales of 1.6 million for 2019.