Australia lithium companies positive despite low prices

Australian lithium mining firms remain positive that an upswing in prices towards the middle of the decade will support their operations going forward, even though lithium prices are at a five-year low.

Lithium prices are bottoming out and should increase later in the decade, according to a number of speakers at the Diggers and Dealers mining forum in Kalgoorlie, Western Australia.

"It's still a very bright blue sky, but there is a bit of cloud cover passing through. It's no surprise really, given that lows always follow periods of highs and the industry went through a strong period of highs," Australian mining firm Pilbara Minerals chief executive Dale Henderson said.

Price volatility is common in new and rapidly growing industries, such as lithium. The lithium market is connected to the electric vehicle (EV) industry, which has grown from nothing in just a few years.

The combination of government stimulus measures, technological developments and the different rates of consumer adoption are all coming together at the same time, Henderson said. "Businesses are rushing to capitalise on the opportunity… It has been volatile and it won't be a straight line and I don't expect it to be a straight line any time soon."

Long-term demand picture unchanged

Most mining companies remained resolute in their long-term goals, despite some industry cutbacks in the first half of this year, maintaining that long-term lithium demand will support their operations.

Australian producer Core Lithium suspended operations at its Grants open pit mine in January. The company is looking for an opportunity to re-enter the market when prices rise, Core Lithium chief executive Paul Brown said. He cited multiple industry participants that have said a price of around $18/kg LCE is needed to support this. Argus assessed lithium carbonate prices at $9.70-10.20/kg cif China on 6 August, their lowest since 2021.

"We can't, in an industry as immature as it is, constantly move our strategy from one thing to another," Australian lithium firm Liontown Resources chief executive Tony Ottaviano said. "When you see a 60pc price reduction in six months, there is only one response a company can do and it is blunt. We need to hold our heads while others are losing theirs and push through and look at the long term. Having very credible customers that are also strategic in their outlook is critical to getting that done."

The EV market is maturing and despite slowing demand growth in the US and Europe, EV uptake is expected to continue as new models become competitive with internal combustion engine (ICE) vehicles, Ottaviano said. In China, EV prices are already competitive with those of ICE vehicles, he said. "We don't see that yet in North America and Europe, but that will come."

To meet the expected rise in lithium demand from EV manufacturing, new investment is needed into lithium, which is being discouraged by current low prices, speakers at the conference said.

"The question on supply is, can the industry turn up with 80 new projects by 2035 that aren't financed yet, by the next decade? Each of those on average is 20,000t LCE. The investment required for that at the moment is not going to be easy to come by," IGO chief executive Ivan Vella said. IGO owns 49pc of the world's largest lithium mine, Greenbushes, in Western Australia.

Argus estimates global lithium demand will rise to 3.2mn t LCE by 2034 (see graph)

By Thomas Kavanagh

Global lithium demand

Global lithium reserves