Lithium price rise: Electric vehicle demand leads to record surge

Australian miners are set to money in on the hovering costs, regardless of manufacturing slowdowns by Covid-19 shutdowns and labour shortages.

Costs for lithium salts, lithium carbonate and lithium hydroxide, rose by between 400-500 per cent final 12 months, and present no indicators of slowing down as provides battle to maintain up with demand.

Battery-grade lithium carbonate was buying and selling at $US9600 per tonne in January 2021, in keeping with S&P International Platts, however by the tip of final month the worth was almost $US50,000.

On Monday, spot costs had been sitting at $US59,600.

Lithium-rich spodumene focus, an unrefined ore mined in Australia, is up roughly 480 per cent because the begin of final 12 months and almost six instances larger than September 2020 when the present cycle turned optimistic.

Spodumene sometimes comprises about 6 per cent lithium and is shipped abroad for processing, often in China.

Pricing agency Benchmark Mineral Intelligence stated Australian spodumene focus was fetching $US2400 per tonne in January, up from $US1650 per tonne in December, the Australian Monetary Evaluate reported.

Western Australia is the world’s main producer of spodumene, however miners say Covid-19 restrictions have hampered their means to ramp up manufacturing to completely make the most of the worth increase.

Exporter Pilbara Minerals final week revised down its steerage by about 60,000 tonnes to 380,000-440,000 shipped tonnes for the complete 12 months.

“The manufacturing impacts in mining and processing are largely because of labour shortages throughout the trade, on account of ongoing border lockdowns to scale back the results of Covid-19 distribution by the neighborhood,” the corporate stated in its December quarterly replace.

Pilbara Minerals, which companions with the likes of Chinese language battery big CATL and Nice Wall Motor, warned it could revise down its manufacturing steerage for a second time later this month.

“There’s some danger there are additional impacts to labour availability with ongoing neighborhood distribution of Covid-19 in Western Australia,” it stated.

Pilbara Minerals managing director Ken Brinsden instructed the AFR he anticipated Pilbara to fetch contract costs for spodumene of between $US2600 and $US3000 per tonne within the March quarter.

Surging electrical car gross sales in Europe and China are a key driver of the present lithium market circumstances.

The China Affiliation of Car Producers predicts new vitality car (NEV) gross sales will attain 5 million in 2022, up from 3.4 million in 2021.

Business sources instructed S&P International Platts final month that development of lithium capability was anticipated to lag far behind demand in 2022.

“I simply can’t see how provide can sustain with projected demand for this 12 months,” one worldwide dealer stated.

One other European provider instructed the publication the rise in lithium salts costs was not wholesome for the market as a result of the fabric has a robust cyclic nature.

“There’s a mismatch between demand and provide, so costs will attain a peak in a short time but in addition drop equally shortly,” he stated, in keeping with S&P International Platts.

“Value course nonetheless reveals an uptrend, however undecided when costs will attain an all-time excessive, the provider stated, including that market is provide pushed now however will depend on who has higher want — producers or shoppers.”

Monetary Occasions columnist John Dizard issued an identical warning this week that the “absurd” rise in lithium costs had been pushed by “panic shopping for, not rational value discovery”.

He known as for a actuality test on the outlook for the electrical car sector, given the restrictions of battery expertise.

“‘Know-how’, or using totally different battery chemistries and extra environment friendly use of accessible supplies, is constrained by physics or weight requirement,” he wrote. “Even intensive engineering and venture growth won’t readily bridge the hole in lithium necessities till 2030, 2035 or 2050, or no matter coverage goal is picked.”

Dizard cautioned that “magical considering won’t assist”.

“As Christophe Pillot, a batteries advisor and the director of Avicenna Vitality in Paris, says, there isn’t a equal in batteries of ‘Moore’s Legislation’, which states the variety of elements that may be crammed on to an built-in circuit doubles yearly,” he wrote.

“Even China can’t engineer away all its lithium necessities, which rely closely on ore imported from Australia and salts from Chile.”

Which means the demand for lithium will proceed – however miners will stay cautious of investing in new initiatives, after earlier value collapses.

Dizard quoted one nameless mining investor who stated, “Yeah, ultimately some deranged Australian diggers will are available in, and the individuals simply holding stock now will promote in some unspecified time in the future. Then the costs will collapse, as within the final cycle.”

frank.chung@information.com.au