A subdued lithium market and the suspension of some operations like Core Lithium’s (ASX:CXO) Finniss project near Darwin in the Northern Territory highlights the growing pains of a maturing sector, industry insiders say.
Despite being one of the most vital commodities needed for global decarbonisation, the production of electric vehicles (EVs), and other battery-related appliances, lithium has fallen slightly out of favour with the market.
According to Trading Economics, lithium carbonate prices have stabilised below US$13,652 per tonne in January 2024. As reported by Mining.com.au in December 2023, the price of lithium carbonate had plummeted more than 81.23% since the start of 2023.
Much of the downward pressure has been caused by oversupplied markets in Asia, primarily fuelled by the global adoption rate of EVs slowing amid high interest rates.
Speaking to Mining.com.au, Northern Territory Minister for Mining Mark Monaghan says the backdrop in lithium is a testament to its infancy, but remains optimistic the continued push for net zero carbon emissions will revive the battery metal.
“Lithium is still trying to find its feet in the market, however, it is the critical mineral that is needed to transition to renewables and our government is committed to creating a net zero future.”
Wild fluctuations
These sentiments are echoed by junior lithium explorer Torque Metals (ASX:TOR) Managing Director Cristian Moreno, who says the market is witnessing ‘the second down cycle in what is a growing long term uptrend’.
“The lithium market is immature. In such markets you get wild fluctuations in prices as the market develops scale. We have had ups and downs in the market.
The last 12 months is a down cycle in an up trend in both prices, supply, and demand.
The trend of decarbonisation in the global economy remains in place and will continue to grow. EV design is in an early stage of development and as new designs and production efficiencies emerge EV will become more competitive and sales will accelerate.”
Torque Metals holds a portfolio of projects in Western Australia considered prospective for lithium, gold, and nickel mineralisation.
Diversified explorer Astute Metals (ASX:ASE) is another ASX-listed company which remains bullish on a growing lithium market rebound. Executive Director Matt Healy tells Mining.com.au all indications point to a reversal of the current downward trend.
“There seems to be some indication that we will see a reversal of the trend at some point in 2024, and a number of well-informed market commentators are aligned in this view.
We are confident of the underlying longer-term demand fundamentals of the lithium market, driven by EV demand.”
Astute Metals is currently advancing its Nevada-based lithium strategy with the current forecasts in mind.
“We are confident of the underlying longer-term demand fundamentals of the lithium market, driven by EV demand“
Despite positive sentiments from these industry sources, lithium producer Core Lithium has been forced to suspend mining at its Finniss Lithium Operation near Darwin in the Northern Territory due to the aforementioned price drop.
Finniss represents the Northern Territory’s only lithium producing mine and employs 300 workers. Up to 150 workers are expected to be laid off due to the suspension.
Core Lithium could not be reached for comment prior to going to press.
However, Monaghan remains optimistic that Core Lithium — just like the lithium market — will bounce back later in the year.
“Mining in the [Northern] Territory is in a strong place. Core Lithium alone has spent $300 million in the Territory to date, and [in] Q4 of 2023 the NT recorded our highest ever mineral exploration expenditure, up 30% to $74.4 million.
I am confident Core Lithium and the market for lithium will bounce back, and so does the Grattan institute who expect lithium to skyrocket by 41% by 2040.”
Write to Adam Drought at Mining.com.au
Images: Torque & Core Lithium
