Lithium price tumble by 60pc margin
THE world market price of lithium has plummeted by a massive 60 percent in the past four months to nearly US$30 000 per tonne of lithium carbonate, latest official data show.
Lithium carbonate is the feed material in the battery manufacturing industry.
The metal is a crucial raw material in the production of batteries used in electric vehicles and other electronic gadgets like cell phones, laptops and other portable electric equipment.
According to data released by a leading metals information provider based in China, the Shanghai Metals Market (SMM), the price of lithium carbonate has plunged from US$80 000 per tonne in December 2023 to US$30 000 as of yesterday.
In an interview yesterday, Prospect Lithium Zimbabwe (PLZ) deputy general manager, Trevor Barnard, said lithium is one of the commodities mineral that has posted strong performance in the last two years.
PLZ is developing a lithium mine in Goromonzi, Mashonaland East province following the conclusion of a US$377,8 million upfront cash consideration under a share sale agreement from Prospect Resources by China’s Huayou International Mining for 87 percent stake in Prospect Lithium Zimbabwe.
“Certainly the price of lithium has increased dramatically in 2021 where at one stage in November 2022, the price of lithium was at around US$80 00 per tonne for lithium carbonate.
“We mine lithium minerals which is concentrated and that is converted into lithium carbonate mostly in China with a heavy battery manufacturing industry, but of course, there are also some large manufacturers in South Korea and Japan.
“We have seen high demand for lithium which was really driven by demand for electric vehicles in China, Europe and USA (United States of America), those are the three main markets for electric vehicles and batteries,” he said.
The past high demand for electric vehicles in Europe, China and USA was largely driven by changes in legislation and people would be paid an incentive to buy an electric vehicle instead of an internal combustion engine vehicle like diesel or petrol vehicle engine.
“But those incentives have now been starting to be reduced rather than taken away and what we see is a reduction in demand for electric vehicles and because of that we have seen the price of lithium carbonate has dropped.
“So, in November the price of lithium carbonate was around US$80 000 per tonne, it’s now coming down to around US$30 000,” said Barnard.
Due to the incentives on electric motor vehicles being taken away by the governments of the aforesaid countries, electric vehicle sales have also gone down.
For instance, between January 2022 and January this year, in China the demand for electric vehicles dropped by more than 6 percent.
“The other reason was also that large battery manufacturers and big companies in China, South Korea and Japan are reducing offering discounts.
“When they sell their products to their customers to move the batteries, their batteries are being sold at lower and lower prices . . . and a lot of these stocks which they have got in the stores, they have manufactured using lithium which they ordered at very high price,” he said.
Barnard said there has also been a supply of battery minerals and lithium specifically from across the world where such new projects have cropped up in Argentina, Canada, Australia, China and Zimbabwe.
On the contrary, he said in the past there were few suppliers of lithium and this saw the price going up.
“This downward trend we are expecting that to continue and hoping that the price will stabilise for lithium carbonate between US$25 000 and US$30 000 per tonne which means that the price for lithium minerals will be a bit less than US$2 000 per tonne for spodumene and 6 percent which is the premium product.
“These prices are set by the market — the large companies in the world buy the lithium of a market and that determines the price and we have to follow that market,” he said.
“We are hoping that the price will stabilise and we are hoping that there will be a sustainable price for the lithium minerals which would lead to a lower battery price and electric vehicle price which means that the market will start to increase again and sell more vehicles.”
ebusinessweekly
