Prices for lithium, one of the key ingredients for the
batteries that power electric vehicles (EVs) and high tech devices, are expected
to climb in two years, when shortages in the market caused by curtailed
production and halted expansions start to emerge.
Car sales, EVs included, have plummeted this year as global
economic growth projections have already proved wrong as the coronavirus pandemic
has hit global markets.
In Western Europe alone, where EVs sales were supposed to soar this year, the acquisition of new car fell by 90% in April.
But demand is set to pick up, says Benchmark Mineral Intelligence, a battery supply chain researcher and price discovery company. And what that happens “the supply side won’t be able to react quickly enough,” Simon Moores, managing director at BMI, told Reuters.
The London-based company, which also tracks battery
megafactory (>1Gwh capacity) construction around the globe, believes that
when demand comes back, lithium prices would bounce after 2022.
Before coronavirus, lithium prices were in free fall due to an avalanche of new supply. The glut, worsened by Beijing’s cut in government subsidies for purchasers of EVs in China — the world’s largest market — made majors tame their growth plans.
BMI had forecast supply at 572,000 tonnes for 2023, but now sees
that number at 543,000 tonnes, with a shortfall of 8,000 tonnes. The company believes
the deficit in later years to grow significantly.
For this year, BMI sees global lithium output reaching 324,000
tonnes, with demand for the metals slightly lower, at 315,000 tonnes
Guilty of charge
Chile’s SQM, the world’s second-largest producer of the
metal, pushed back a key expansion at its Atacama salt flat
operations from the end of 2020 to late 2021.
Australia’s Wesfarmers (ASX: WES) delayed a final investment decision on the Mount Holland project in Western Australia by a year to early 2021.
Albemarle (NYSE: ALB), the world’s leader, has also had to
adjust plans. It postponed last year a project to add about 125,000 tonnes of
processing capacity. It also revised a deal to buy into Australia’s Mineral Resources’ (ASX: MIN)
Wodgina lithium mine and said it would delay building 75,000 tonnes of
processing capacity at Kemerton, also in Australia.
The lithium giant showed further signs of distress early
this month. It cut its 2020 budget and pulled its annual forecast amid the
global spread of the coronavirus.
That was one of the first signs that the lithium industry is
beginning to feel the pain of falling EVs sales, which are projected to slide
further for the rest of the year.
China’s Tianqi Lithium Corp., the country’s top producer of the battery metal, also postponed commissioning the first phase of its flagship plant in Kwinana, as it struggles to pay back debt.