https://www.miningweekly.com

Deferred expansion plans fuel prospect of lithium price spike after 2022

28th May 2020

By: Reuters

  

Font size: - +

LONDON – Shelved expansion plans for lithium projects due to collapsing demand for the material used to make electric vehicle batteries leaves the market facing a price spike after a couple of years when shortages start to emerge.

Auto sales including electric vehicles have slumped this year due to economic damage from the coronavirus. But sales are expected to accelerate over coming years as auto makers plough on with plans to meet stringent emission regulations.

"When demand comes back, the supply side won't be able to react quickly enough," said Simon Moores, MD at Benchmark Minerals Intelligence, adding that lithium prices would bounce after 2022.

Delays include Chile's SQM and Australia's Wesfarmers pushing back a final investment decision on the Mount Holland project in Western Australia to early 2021.

Tianqi Lithium Corp, one of the world's biggest producers, also postponed commissioning the first phase of its flagship plant in Kwinana.

Benchmark Mineral Intelligence (BMI) estimates supplies at 324 000 t and demand at 315 000 t this year.

BMI had forecast supply at 572 000 t for 2023, but now expects that number at 543 000 t and a shortfall of 8 000 t. It expects the deficit in later years to balloon.

"It could take the best part of a decade to get a new mine to integrated chemical plant fully operational," Moores said.

Lithium prices have fallen about 40% over the past 12 months due to weak demand. Prices for lithium hydroxide, typically used to improve performance of high nickel content batteries, were about $8,375 a tonne in April from about $13 300/t in May 2019.

Robert Baylis, MD at consultants Roskill, expects supply to tighten in the short term due to stronger "post-Covid-19" demand and a possible structural deficit emerging towards the middle of this decade.

"Even major incumbent lithium producers are at risk of failing to meet targets and expansion plans, highlighting the technical and financial hurdles involved with bringing sizable volumes of new capacity online," Baylis said.

Edited by Reuters

Comments

The functionality you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION