According to a report from the US bank, the prices of the so-called white gold remain under pressure due to constant increases in supply and it estimates that the current surplus will reach its peak in 2025. For 2024 it projects a price of US$ 14,500 per ton of carbonate lithium.
The lithium boom and the role it will play in electromobility generates great expectations about the prices of the so-called white gold. In Latin America, specifically in the well-known lithium triangle - an area made up of Argentina, Bolivia and Chile that has 80% of the world's reserves with favorable conditions for their extraction - the evolution of prices is important, taking into account the dozens of projects underway for the extraction of this mineral.
In this sense, the Bank of America (BofA) report “Global Metals Weekly - Geopolitics supersedes economics in lithium supply”, which analyzes trends in the lithium market, points out that the prices of this resource remain under pressure due to constant increases. of supply, and does not expect the current surplus to peak until next year.
The US bank points out that to correct this mismatch between supply and demand or “rebalancing problem”, it is necessary that the penetration rates of electric vehicles be between 7 and 10 percentage points higher to compensate for the current surplus in the lithium market. “Instead, we have lowered electric vehicle penetration rates by 2 percentage points.”
Speaking specifically of prices, for lithium carbonate the financial entity projects a price of US$ 14,500 per ton in 2024 (currently at US$ 12,500) and for lithium hydroxide a price of US$ 14,000 per ton in 2024 (currently at US$12,500). In the case of spodumene, he expects it to be priced at US$1,200 per ton in 2024 (currently it is US$1,020).
In an alternative scenario, if economic logic prevails and marginal producers close their projects as we saw in the 2015/21 cycle, the market could take more than two years to reset (i.e. rebalance through lower supply). “However, we are not optimistic that this schedule will be met and we see a limited potential for price increases for now,” he says.
Likewise, BofA says it will be difficult for the lithium industry to operate at a loss indefinitely. “Several weaker, higher-cost operations may come under pressure, and their closure could return some normality to the market, which is one of the reasons we are still factoring in higher lithium prices,” the report states.
GEOPOLITICAL WEIGHT
One of the key conclusions of the bank's report indicates that geopolitics increasingly outweighs economics in lithium supply decisions and new projects.
In this sense, he mentions the case of the Australian mining company Liontown, which recently issued US$250 million in convertible bonds to LG Energy Solution, as part of a broader investment package that includes extending a purchase agreement for 10 years, accompanied by the objective to produce lithium at its Kathleen Valley lithium project, located in Western Australia, that complies with the Inflation Reduction Act.
Meanwhile, Lithium Americas has obtained a US$2.26 billion loan under the United States Department of Energy's Advanced Technology Vehicle Manufacturing Loan Program to finance the first phase of the 40Kt Thacker Pass project.
Finally, after initially revoking the license for Rio Tinto's Jadar project, Serbia's government recently reinstated the project, while also signing a critical agreement under which the European Union will help the country develop a supply chain. integrated supply of batteries for electric vehicles.
