It’s no exaggeration to say lithium has had a rocky year, but could the tide be turning for the critical mineral? Australian Mining investigates.
The Federal Government’s ‘Resources and Energy Quarterly’ (REQ) for March 2024 forecasts strong demand for lithium in the coming years as electric vehicles (EVs) become more widespread.
But while the world’s hunger for lithium is set to more than double by 2029, Australia’s export earnings for the metal are projected to fall by more than half between now and then.
That’s a decrease of $21 billion to $9 billion over five years. But the outlook is not so grim with the REQ emphasising that prices are extremely difficult to predict with certainty. Lithium exports are also coming off record high levels.
Encouragingly, the REQ expects lower prices to be offset by a projected 70 per cent increase in Australia’s lithium mine production to 2029.
Overall global lithium supply is projected to broadly keep pace with rising demand, with promising project pipelines among large producers such as Australia and China, supported by new and emerging producers like Argentina and Zimbabwe.
The REQ said EVs will drive global lithium consumption to 2029, with a forecast 16 per cent rise every year, reaching 2.3 million tonnes by the end of the decade.
A wave of investment in lithium production in recent years from companies such as Mineral Resources, Albemarle and Pilbara Minerals have contributed to a sharp rise in global lithium supply.
This coincided with stilted demand in key lithium markets such as China, causing lithium prices to plummet. But prices could have bottomed out.
In February 2024, the lithium spodumene price fell to an average of $US1000 per tonne (t), while the lithium hydroxide price fell to average $US13,350/t.
But it’s important to remember commodities rise and fall in waves, and prices have returned to similar levels as was seen prior to the 2021 rally.
Indeed, the REQ foresees a steady rise in prices to 2026 before edging back again. The spodumene price is forecast to rise to about $US1360/t, and lithium hydroxide is tipped to push $US18,000/t.
Lithium is a high stakes game primed to reap rewards for those brave enough to come to the table. And Australia is certainly along for the ride.
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