Africa spodumene assessments support lithium pricing in a diversified global market

A maturing lithium market driven by global demand for batteries for electric vehicles and other applications requires transparent pricing to support its development. As supply chains diversify and disquiet grows around existing China-centric price indexes, demand is increasing for price references reflecting sales from different producers around the world.

To support this evolution, Argus has launched two lithium spodumene (concentrate) prices on a fob southern Africa basis, at 2-4pc lithium and 5.5pc lithium.

Africa is a major emerging hub for lithium spodumene used to produce battery-grade lithium. Several producers have begun output in recent months in Zimbabwe, the Democratic Republic of Congo, Namibia and South Africa, with new supply chains developed out of central and southern Africa, including the revamped Lobito international corridor and Tazara railways. These have expanded the continent’s role in the global lithium market.

Yet pricing for rising lithium exports from Africa remains tethered to China-based references, which are increasingly unable to reflect regional nuances. As recently demonstrated by recent auctions in Australia — held by Albemarle, Mineral Resources, Pilbara Lithium and Sigma Lithium among others— a growing premium to currently used China price assessments is being achieved by producers in origin countries, sometimes of as much as $100/t.

China, as a major consumer with dynamic spot-based commodity markets that form the basis of the assessments (indexes), is a strong reference price (Argus publishes a comprehensive suite of independently assessed China lithium prices spanning the full value chain). But with active spot markets now emerging at ports such as Walvis Bay in Namibia, Beira and Maputo in Mozambique and Dar Es Salaam in Tanzania, there is enough of a centre of gravity to support a dedicated price reflecting the African export market.

The need for dedicated regional pricing is supported by shifts in lithium trade flows. Not all of Africa’s lithium is destined for China. Global efforts to diversify supply chains away from overreliance on Chinese lithium refiners mean some of Africa’s future lithium concentrate output will make its way to Europe, North America and other regions.

As the market evolves, a suite of new regional prices for spodumene and other lithium concentrate prices will be necessary to provide market transparency. Argus is striving to deliver these
mechanisms. With the additional fob southern Africa indexes, Argus now offers a range of regional pricing for 6pc lithium concentrate, including for China and Australia, and two grades (5.5pc and 2-4pc) in Africa, with a view to adding more in the future as the market develops.

The insights in this blog are derived from the Argus Battery Materials service, the definitive resource for miners, refiners and consumers of battery materials. Delivering over 130 price battery price assessments, decades of historical data, forecasts for key battery metals and chemicals (including a 10-year demand outlook for the EV industry) and grants access to our bespoke Argus Metals platform with dedicated tools to optimise daily workflows.

Author: Thomas Kavanagh, Editor, Metals.