Featured photo: Carla Gottgens/Bloomberg

The global lithium market is experiencing significant upheaval due to a sharp decline in demand from the Chinese electric vehicle sector. The price of lithium has plummeted over 80% in the past year, reaching its lowest level since 2020. The oversupply issue has forced miners, predominantly in Australia, to curtail production and reassess expansion plans.

As the industry grapples with the fallout, companies are feeling the strain. Pilbara Minerals, a key player in Australia’s lithium industry, has announced a 46% drop in revenue, leading to the decision not to pay a first-half dividend. Liontown Resources had its A$760mn loan agreement scrapped due to the sliding lithium price, prompting a review of its mine expansion and financing options. Albemarle, one of the world’s largest lithium companies, is cutting capital expenditure and costs to weather the storm.

The situation has prompted a sense of urgency within Australia, as mining minister Madeleine King met industry leaders to address the impact on local miners and strategize a response to the crisis. Analysts warn that China could capitalize on the downturn to expand its influence in the global lithium market.

This turmoil presents a challenge for the entire lithium supply chain, as manufacturers struggle to manage the surplus of lithium and electric vehicle sales in China cool off. The industry is facing a pivotal moment, and how it adapts to the shifting landscape will shape the future of the lithium market.

Source: Financial Times