Plunge in lithium prices

Lithium is a key metal in the manufacture of batteries. The rapid electrification of the automotive sector, particularly in Europe with the end of combustion engines in new vehicles from 2035, is driving demand for this metal through the roof. According to the International Energy Agency, annual lithium consumption is set to rise from 126,000 tonnes in 2022 to 1.3 million tonnes in 2050. As a result of the frantic demand for this metal, which is essential for batteries, the price of lithium carbonate has reached 80,000 dollars a tonne in 2022. China, which has taken the global lead in the race for electric cars, has managed to secure its supply and now processes 60% of its lithium consumption on its own territory. But the explosion in demand has prompted investors to look for new deposits, particularly in Australia, which produces almost half the world’s demand, in the “golden triangle” of Argentina, Bolivia and Chile, and in France and Germany in the Rhine valley. Tensions over supplies and the risk of a shortage have therefore eased as production has increased. And lithium prices have plummeted by almost 75% since the start of the year. Prices for other metals needed in batteries, such as cobalt and nickel, have also collapsed. The sharp correction in the price of these metals is therefore good news for carmakers and for buyers of electric vehicles.