Commodities, Finance, Lithium, News

Lithium price balloons as supply squeeze hits

Rio Tinto

One of the most significant commodity trends to emerge in early-2022 has been the lithium price jump as producers are unable to keep up with the world’s insatiable appetite for the resource.

Lithium carbonate prices in China breached 300,000 yuan ($64,830) per tonne in January, trending more than 500 per cent higher than a year before. At the time of writing, lithium carbonate stood at 306,500 yuan per tonne.

The price hike comes as domestic producers struggle to keep up with demands from the rapidly advancing electric vehicle (EV) movement, one buoyed by projections of higher EV sales.

According to research firm Canalys, global EV sales increased by 160 per cent in the first half of 2021 when compared to the year earlier. Canalys found total global car sales were up 26 per cent across the same timeframe.

The primary lithium resource in Australia is spodumene concentrate, which is converted by international customers into lithium carbonate or lithium hydroxide for batteries.

Australia is home to what is considered the world’s largest hard-rock deposit of spodumene, Greenbushes in Western Australia, currently owned by Tianqi Lithium Corporation/IGO (51 per cent) and Albemarle Corporation (49 per cent) in a joint venture arrangement.

Other current Australian lithium operations include Pilbara Minerals’ Pilgangoora project in WA, Allkem’s Mt Cattlin project near Ravensthorpe in WA and the Mt Marion project in the Goldfields region of WA.

Mineral Resources and Albemarle are also working towards a restart of their Wodgina lithium project in WA, while there are emerging lithium projects in the Northern Territory, headlined by Core Lithium’s Finniss project near Darwin.

S&P Global Platts suggests the ongoing discrepancy between lithium supply and demand will see lithium carbonate prices continuing in an upward trajectory.

In a 2022 commodities outlook report, Fitch Solutions said they see China lithium carbonate prices averaging $US21,000 per tonne across this year, an increase from the $US18,006 per tonne average for 2021.

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