Australia's lithium mining boom hit by sagging prices


Australia

09/26/2024 Phil Mercer :Business reporter ften called “white gold” and the key component in rechargeable batteries, the metal lithium is so light that it floats on water, but its price has sunk like a stone over the past year. Due to a combination of falling global sales of electric vehicles, and a world oversupply of lithium ore, the cost of the main lithium compound has fallen by more than three quarters since June 2023. This decline has had a particularly hard impact on Australia, because it is the world’s largest producer of lithium ore, accounting for 52% of the global total last year. Australia also has the second-largest reserves of the mineral after Chile, with the vast majority in Western Australia, and a smaller amount in the Northern Territory. The sharp decline in lithium prices has led to mine shutdowns. Adelaide-based Core Lithium announced back in January that due to "weak market conditions" it was suspending mining at its Finniss site near Darwin, with the loss of 150 jobs. Then in August, US firm Albemarle said it would be scaling back production at its Kemerton lithium processing plant, located some 170km (100 miles) south of Perth. This is expected to lead to more than 300 redundancies. Arcadium Lithium followed suit this month, announcing that it would be mothballing its Mt Cattlin mine in Western Australia, blaming low prices. The firm’s shares are listed in both the US and Australia. Yet as some producers are putting work on hold, others are expanding theirs, confident that global demand for lithium - and prices - will bounce back. Pilbara Minerals is one such firm. The Perth-based miner aims to boost its lithium ore production by an additional 50% over the next year. “What we've learned historically from lithium pricing is that it can change, and it can change rapidly," managing director Dale Henderson recently told ABC News. “It doesn't faze us that much because we know the long-term outlook is fantastic.” This confidence is echoed by Kingsley Jones, founder, and chief investment officer at Canberra-based investment firm Jevons Global, which monitors the mining and metals sectors. “Lithium remains very strategic to the energy transition,” he tells the BBC. “Storage batteries for electricity is a big growth area,” he adds, pointing to the increased need for batteries to store the power generated by solar and wind power. But some analysts have warned that oversupply will keep the market under pressure until at least 2028.