By Nicolás Deza Cell manufacturers are running out of inventories they had accumulated. "We will see a rapid increase in the prices of battery materials when purchases restart," said Livent CEO Paul Graves. The expansion in Phoenix in Catamarca will deliver its first volumes of carbonate in 2024. Lithium prices could recover in 2024 due to deficiencies in the supply of carbonate in the face of a sustained demand for electric vehicles according to Livent Corporation, one of the global players in the industry that is the largest producer of the mineral in Argentina. The American company, which will change its name to Arcadium Lithium when its merger with the Australian Allkem takes place, also announced a slight delay in the first delivery of the volumes of lithium carbonate obtained in its expansion project in Catamarca due to different production problems. Livent executives traced the panorama of the lithium industry during a call with investors to present the results of the third quarter of the year. Lithium prices registered a significant drop this year after reaching peak prices in 2022. The company attributed this drop to a decision by car battery manufacturers to reduce the manufacture of battery cells, thus decreasing purchases of battery-grade lithium carbonate and other materials. However, executives observed that this behaviour did not respond to a lower demand for electric vehicles but to the fact that manufacturers preferred to consume inventories of cells they had accumulated rather than produce new ones. "What we see is that the energy storage supply chain, in general terms, is working through inventories that were built in late 2022 and early 2023. We see that this reduction in stocks occurs in the downstream of lithium, with battery cell producers, mainly in China, reducing or even stopping production, since they reduce their cell inventories, "said the president and CEO of Livent, Paul Graves. Demand and supply Livent points out that demand for electric vehicles continues to grow: global sales in September grew by 25% year-on-year. Sales since the beginning of 2023 grew by 37%. The company evaluates that the growth in lithium supply will not meet demand when manufacturers finish liquidating their cell stocks, so it anticipates a likely increase in lithium prices. "Since the long-term underlying demand of the final market remains strong, and inventory levels in the supply chain decrease to levels that cannot withstand more than a few weeks or perhaps months of sales, if history repeats, we will see a rapid increase in the prices of battery materials when purchases restart," Graves said. A critical factor is the origin of lithium and its costs. The growth in the supply of lithium carbonate recorded in recent times came from producers who process African espomudena or Chinese lepidolite. Obtaining lithium carbonate from these resources has costs that are three or four times higher than lithium brines in South America. This type of offer would not be competitive with current prices, so producers will have problems continuing to produce, which constitutes a strategic advantage for Livent, which aims at a low-cost type of production. Catamarca Livent anticipated investors that it expects to significantly increase the volumes delivered to its customers next year, potentially 50% more than in 2023. In that sense, he pointed out that there are some delays in his production expansion project in the Fénix project in Catamarca. The American producer is carrying out an expansion in Phoenix to add an additional 20,000 tons of lithium carbonate in 2024, in two stages of 10,000. The first stage was to deliver the first volumes of carbonate by the end of this year, but Livent announced that the delivery will only materialise in the first quarter of 2024. The second stage still has a delivery date for the first volumes for the second half of the same year. The company reported that it had difficulties in attracting specialised labour to its expansion project and problems importing inputs and spare parts. "Problems are always discovered in the transition from construction to commissioning in the initial stage. However, we are discovering that they are more difficult to solve when operating in remote regions and, especially, in jurisdictions where access to specialised labour is limited due to the lack of local talent," Graves said. Arcadium Lithium The merger of Livent with the Australian Allkem was one of the strong news of the year in the global lithium market. The new company will finally be called Arcadium Lithium when the merger materialises at the end of this year.Allkem has a majority stake in Sales de Jujuy, the company that exploits lithium development in the Salar de Olaroz. The company is executing an investment plan for US$ 1.5 billion to triple lithium production in Olaroz.
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