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Lithium Producers Sound the Alarm

Low Lithium Prices Endanger Supply

Ein Werk zur Lithiumgewinnung in Argentinien zu sehen.
Lithium recovery from Orocobre at the Salar de Olares salt lake in Argentina.
© Orocobre

Lithium prices have fallen due to the pandemic. This could endanger the supply in the coming years.

Manufacturers of electric cars and batteries would have to pay higher prices now to secure future access to lithium. With these words Reuters quotes Paul Graves, CEO of lithium producer Livent Corp.

The demand for electric vehicles (EV) will increase strongly in the coming years. However, the corona pandemic has halted the long-term growth trend, resulting in a short-term oversupply of lithium and the price of lithium has now fallen by 10 percent.

As a result, manufacturers of EVs and batteries want to take advantage of the opportunity to renegotiate delivery terms and pay less - while at the same time demanding that lithium production be increased by the end of the decade. According to Paul Graves, this is a contradiction, he calls it "Vodoo-Economics": "If you don't want to have a reasonable discussion with me about how high the price of lithium has to be for me to make investments, then I won't invest.” 

Livent, for example, has put on hold a lithium mining project in Argentina. It would take at least six months to get the necessary permits to resume construction there and it would take several years to start production there, as Graves explains.

Competitor Albemarle Corp. has also put expansion plans on hold for the time being because of a sharp drop in sales.

"If every EV manufacturer demanded the purchase quantities they had planned for 2023 today, they would not receive more than 15 percent of what they actually wanted," Graves said.

In the past, battery manufacturers such as Panasonic had signed contracts with lithium suppliers, but now more and more EV manufacturers are thinking about signing contracts directly with lithium manufacturers.

While the lithium price is low at the moment, long-term contracts at higher prices should be concluded to enable the industry to build new mines, Graves said: "If not, the situation will reverse itself, then the lithium producers will demand significantly higher prices.

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