Bloomberg News;
Since 2021, lithium prices have surged 10-fold, only to crash back to earth, wiping out billions of dollars in miners’ shares and forcing supply cuts. The ripple effects of this ride are only just beginning.
The reversal of fortunes for the electric-vehicle battery metal has been nothing short of stunning. Its rapid ascent to a record in late 2022 sparked a rush by mining and refining companies to expand output, while automakers scrambled to lock in supply deals.
A little over a year later, it’s a different landscape. Major producers are issuing profit warnings, and in Australia — the No. 1 source of unprocessed lithium — miners are retrenching. Even Greenbushes, the country’s largest project, announced cutbacks this week.
The turnaround is bad news for the nation’s economy, where the hope was that energy-transition metals would breathe new life into a mining sector dominated by iron ore and coal. It’s already prompted discussions of government support, with one industry group calling for tax credits and royalty reform.
Lower lithium prices are, in theory, good for automakers as well as EV buyers. But in practice, the slump may deter investors as they wait to see whether the market has bottomed.