Prices for key battery metals, such as lithium and nickel, have experienced a significant collapse since the beginning of the year. This is largely due to a supply glut and decreased demand for electric vehicles in China. Lithium, in particular, has seen a massive decline in price, falling 30% in just a fortnight and 63% since the start of the year.
The mining giant Rio Tinto recently hinted at the end of the three-year boom in lithium prices. However, they are still optimistic about strong “market fundamentals” for the battery mineral in the long term, citing predicted supply shortages. Despite the price collapse, billionaire mining magnates like Gina Rinehart and Chris Ellison are buying up Australia’s battery-metal assets.
The jockeying for lithium projects experienced a setback when Albemarle, a New York-listed company, abandoned its $6.6 billion bid for Liontown Resources. This came after Rinehart acquired a 19.9% stake in the lithium hopeful. Liontown Resources has since suffered a 32% collapse in its share price and scrambled to secure a $1.18 billion funding package.
The surge in demand for lithium in recent years was driven by carbon-conscious government stimulus and the need for lithium-ion batteries to power electric vehicles. Australia is responsible for mining about 53% of the world’s lithium supply, with China being the primary buyer.
The high prices of lithium earlier this year were a result of supply anxiety and strong demand for electric vehicles. However, throughout the year, the supply and demand mismatch has eased, leading to a decrease in price. Refiners and manufacturers also bought more lithium than needed in previous months, contributing to inventory glut.
Rio Tinto expects the trend of decreased demand to continue due to slowing electric vehicle sales growth in China and lower immediate demand for raw materials. Additionally, increased lithium mine output and supplies from non-traditional regions may further drive down prices. Analysts predict that lithium prices will settle around $2200 to $2400 per tonne in the December quarter.
Overall, the collapse in prices for battery metals is a result of a supply glut and decreased demand for electric vehicles. This has led to a decline in the price of lithium, as well as other metals like nickel and copper. The market outlook for these metals is uncertain, with stakeholders expressing caution about the future demand for electric vehicles.