Looking ahead: lithium losing lustre or is a lift looming?

The price of lithium has plummeted in 2023.

At US$13,659 per tonne, the price of lithium carbonate has of 20 December 2023, plummeted more than 81.23% since the start of the year, as growing supply from all major producers outpaced the rise in demand from battery users and the EV market, as per Trading Economics. 

Data from S&P Global Commodity Insights also corroborates lithium’s decline, demonstrating a reduction in lithium spodumene prices by 76% from the recorded high in November 2022. Further, lithium hydroxide and carbonate assessed prices in China have both fallen 74% over the same period.

The crash in prices has been attributed to downward pressure caused by oversupplied markets in Asia, primarily fuelled by the global adoption rate of electric vehicles (EVs) slowing amid high interest rates. 

Analysts from Goldman Sachs predict investors can expect the global lithium market to be in a 202,000 tonne surplus in 2024. In turn, Goldman Sachs forecasts further downward pressure in 2024 due to oversupply. 

On the contrary, American financial services firm Morningstar forecasts lithium prices will stabilise in the first half of 2024 before averaging at US$30,000 per tonne as a result of inventory destocking and new supply delays catching up to current prices. 

Morningstar, however, views the volatility as creating ‘strong’ opportunities for investors. Being a critical component of the ‘green’ revolution, lithium has a range of uses in both chemical and technical applications. 

Lithium comes in various forms, such as lithium carbonate, lithium hydroxide, and lithium chloride, and is used in lubricant greases, pharmaceuticals, catalysts, air treatment, and, most commonly in batteries — both non-rechargeable and rechargeable. 

According to the United States Geological Survey (USGS), roughly 74% of the lithium produced is funnelled towards the manufacturing of batteries, while the outstanding 26% is put towards ceramics and glass, lubricating greases, continuous casting mould flux powders, and a plethora of other uses. 

To fund these industries and pursue their dreams of establishing their own respective lithium streams, a wave of ASX-listed explorers and developers this year flocked to foreign jurisdictions in search of the vital commodity.  

One such company that had success in the lithium foray was Pan Asia Metals (ASX:PAM), which signed a string of memorandums of understanding (MoU) to break into the ‘world-class’ Atacama region in Chile, as reported in July.   

Another was Torque Metals (ASX:TOR) which in September signed an option agreement to acquire the sole interest in both the New Dawn Lithium and Penzance Nickel projects, a package of 14 tenements covering 200km-square in Western Australia’s Goldfields region.    

Together, these projects, including the company’s pre-existing Paris Gold Project, form what is now known as the Penzance Exploration Camp. 

Astute Metals (ASX:ASE) is another ASX-listed company which saw success in the lithium field after the company expanded its lithium footprint in Nevada, US, with the addition of the Red Mountain Project to its portfolio, as reported in September.

Since then, the company has begun planning an initial scout drilling program at Red Mountain to test lithium in soil anomalism in a number of strategic locations. Drilling is scheduled for the end of Q1 2024.

Images: Pan Asia & Torque
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.