As lithium prices hover at multi-year lows and oversupply becomes a concern, the industry finds itself in a bit of a pickle with sluggish electric vehicle demand. However, amidst this rocky terrain, major players like Chile and India are boldly pushing forward with big expansion plans,
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Curious Trends in Lithium
Today, the price of lithium carbonate is hovering at about 110,500 CNY/T, down nearly 36% over the past year. The downturn is putting pressure on the lithium mining industry, which is facing oversupply. Additionally, the global EV industry is experiencing lackluster demand and intense price competition, leading to tit-for-tat price cuts between major players like Tesla (NASDAQ:TSLA) and China’s LI Auto (NASDAQ:LI).
Chile and India Charge Forward
Now, one might safely assume that industry participants would want to scale back their capacities and postpone the development of new mines. Yet, the industry is doing anything but that. Chile—the second-largest lithium producer globally—is aiming to double its output over the next decade. And it’s not alone.
Importantly, lithium is considered a critical component in the world’s transition towards a greener future and is regarded by countries as a means to achieve energy independence. Consequently, India, one of the world’s largest economies, is actively pursuing lithium exploration in Latin America, Africa, and domestically. The country has also acquired five lithium blocks in Argentina.
China’s Tianqi Lithium: Some Wins and Some Losses
On the other end of the spectrum is China, which has emerged as a key player in the global lithium supply chain. Despite this, Chinese companies like Tianqi Lithium (HK:9696) are facing significant challenges. This week, Tianqi issued a warning about widening losses, attributed to weak product prices and a tax dispute in Chile. Notably, Tianqi’s warning came despite a recent stabilization in lithium prices.
What Is the Price of LIT?
Importantly, Tianqi’s challenges suggest that the lithium industry may require further and sustained price gains to alleviate its pressures. Meanwhile, the Global Lithium & Battery Tech ETF (LIT) has declined by nearly 17% this year.
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